Custom, Excise & Service Tax Tribunal
Prius Technologies vs Ce & Cgst Noida on 24 October, 2024
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
ALLAHABAD
REGIONAL BENCH - COURT NO.I
Customs Appeal No.70294 of 2020
(Arising out of Order-In-Original No.09-COMMR-NOIDA-CUS-2019-20, dated -
28/02/2020 passed by Commissioner, Customs, Noida)
M/s Prius Technologies .....Appellant
(B-7, Prabhat Kiran Building,
Rajendra Place, New Delhi-110008)
VERSUS
Commissioner, Customs, Noida ....Respondent
(Customs House, Noida) WITH Customs Appeal No.70295 of 2020 (Arising out of Order-In-Original No.09-COMMR-NOIDA-CUS-2019-20, dated - 28/02/2020 passed by Commissioner, Customs, Noida) Shri Manoj Kumar .....Appellant st (HE-104, 1 Floor, Street No.5, Pulprahladpur, New Delhi-110044) VERSUS Commissioner, Customs, Noida ....Respondent (Noida) AND Customs Appeal No.70296 of 2020 (Arising out of Order-In-Original No.09-COMMR-NOIDA-CUS-2019-20, dated - 28/02/2020 passed by Commissioner, Customs, Noida) Shri Ankit Khetterpal .....Appellant (217, Avtar Enclave, Pachim Vihar, New Delhi, 110020) VERSUS Commissioner, Customs, Noida ....Respondent (Customs House, Noida) 2 Customs Appeal No.70294 to 70296 of 2020 APPEARANCE:
Shri A.K. Prasad, Advocate & Ms. Surabhi Sinha, Advocate for the Appellant Shri Manish Raj, Authorized Representative for the Respondent CORAM: HON'BLE MR. P.K. CHOUDHARY, MEMBER (JUDICIAL) HON'BLE MR. SANJIV SRIVASTAVA, MEMBER (TECHNICAL) FINAL ORDER NO.-70697-70699/2024 DATE OF HEARING : 24.10.2024 DATE OF DECISION : 24.10.2024 P. K. CHOUDHARY:
Since all the three appeals are arising out of a common impugned order, they are taken up together for hearing and disposal. The present appeals are filed against the Order-In- Original No. 09-COMMR-NOIDA-CUS-2019-20 dated 28.02.2020 read with Corrigendum to Order-In-Original dated 25.06.2020.
2. Briefly stated, the facts of the case are that:-
a) M/s. Prius Technologies, New Delhi (hereinafter referred to as 'the Appellants') (Prop. Shri Ankit Khettarpal) had imported a consignment of 236 pcs of old and used Multi-Functional Devices (MFD's), all of Canon brand, in two containers at ICD, Loni, District Ghaziabad, UP, vide Bill of Entry No. 5510783 dated 9-3-2018. The value declared by the Appellants was US$ 57,240/- (Rs.
38,26,129/-).
b) The Bill of Entry was filed under 'First Check'. The consignments were opened and examined by the customs officers in the presence of a Customs empaneled Chartered Engineer, Shri Vinod Kumar Goel, on 16-03-2018 and he suggested a fair C&F value of the imported consignment at US$ 65,960/- (Rs. 44,09,005/-).
3 Customs Appeal No.70294 to70296 of 2020
c) Thereafter, the Lucknow Zonal Unit of DRI took over the investigations and searched the office premises of the Appellants on 19-03-2018 and got the consignments re- examined by another customs empaneled Chartered Engineer, Shri Varun Chandok, who suggested the FOB value of the consignment at US$1,25,988/-(Rs. 84,21,038/-).
d) DRI also searched the residential premises of Shri Ankit Khettarpal, Prop. on 3-04-2018.
e) DRI eventually did not accept the valuation indicated by either of the two Chartered Engineers but on their own determined the FOB value of the consignment at US$3,02,852/-(Rs. 2,15,80,160/-) relying extensively on Board's Circular No. 25/2015-Cus dated 15-10-2015 and a letter dated 02.04.2018 (RUD-3) from Cannon India Pvt Ltd.
f) The goods were seized by DRI on 11-04-2018.
g) The seized goods were provisionally released on 25- 02-2019 on the intervention of the Hon'ble Allahabad High Court.
h) During the course of investigations, the DRI recorded the statement of Shri Ankit Khettarpal and also one Shri Manoj Kumar, authorized person of the Customs Broker.
i) A show cause notice (SCN) dated 12-09-2018 was issued to the Appellants proposing to enhance the value of the consignment from Rs. 38,26,129/- to Rs. 2,15,80,160/- and holding the goods liable for confiscation under section 111(d) and 111(m). Penal provisions were invoked under section 112 of the Customs Act, 1962. The 4 Customs Appeal No.70294 to 70296 of 2020 show cause notice also alleged contravention of Actual User Condition as provided in para 2.31 of the Foreign Trade Policy 2015-20 relating to second-hand goods.
j) In their reply dated 04-04-2019, the Appellants raised a number of points including the contention that there was no under-valuation, but the adjudicating authority vide her order dated 28-02-2020 (the impugned order) confirmed the enhanced valuation of Rs. 2,15,80,160/- and upheld the contravention of para 2.31 (Actual User Condition) of the FTP. The Adjudicating Authority imposed Redemotion fine of Rs. 10,00,000/- on the Appellants, a penalty of Rs. 5,00,000/- on the Proprietor, Shri Ankit Khettarpal and a penalty of Rs 2,00,000/- on Shri Manoj Kumar, representative of the Customs Broker.
3. Hence the present appeal before the Tribunal
4. Learned Advocate appearing on behalf of the Appellants has submitted as under:-
a) The impugned order has not discussed all the points raised in the replies to the show cause notice of the 3 Appellants and is, therefore, not a speaking order.
b) No grounds have been given by the adjudicating authority for rejecting the transaction value of the MFD's. She has straightway gone to Board's Circular dated 15-10-2015 and has not followed the mandate of the Customs Valuation Rules, 2007.
c) No grounds have been given for rejecting the valuation done by Shri Vinod Kumar Goel, the Customs empaneled Chartered Engineer.5 Customs Appeal No.70294 to
70296 of 2020
d) No grounds have been given for rejecting the valuation report of even the second Chartered Engineer, Shri Varun Chandok.
e) Even the Board's Circular dated 15-10-2015 was not followed as it permits the importer to select any Chartered Engineer empanelled by the Customs House. In the instant case no such option was given and in fact DRI substituted its own knowledge in place of that of the two Chartered Engineers.
f) The department neither attempted nor showed any contemporaneous imports of similar or identical items at higher prices.
g) The department has gone by the valuation suggested by an interested party, namely, M/s. Canon India Pvt Ltd, who import brand new MFD's in India and are against any person importing used/second hand MFDs as it affects their business adversely.
h) The letter dated 2-04-2018 (RUD-3) of M/s. Canon India Pvt Ltd suggesting various values is itself not reliable as it refers to imports 3 to 14 years back. The department has not cited the relevant valuation rule which permits this type of valuation.
i) The letter from Canon India Pvt Ltd does not provide any evidence that MFD's were actually imported at the prices indicated by them. Neither copies of Bills of Entry or invoices were provided by Canon India Pvt Ltd nor were they made RUD's to the show cause notice.
j) Though second-hand MFD's were 'restricted' at the time of import as per para 2.31 of the FTP, these second-hand 6 Customs Appeal No.70294 to 70296 of 2020 MFD's were subsequently, that is w.e.f. 17-05-2019, made freely importable. Hence, the contravention of para 2.31 of the FTP was merely a technical breach for which huge amount of fine which comes to nearly 26% of the declared value is unreasonable.
k) The show cause notice did not make Shri Ankit Khettarpal a noticee to the show cause notice. Without this Shri Ankit Khettarpal could not have been penalized. No occasion was given to him to rebut any charges in his individual capacity. In any case nothing was concealed by him from the department.
l) As regards Shri Manoj Kumar, penalty has been imposed for filing Bill of Entry in respect of a restricted product without any Authorisation from the DGFT. This cannot be a ground for imposing penalty under section 112 of the Customs Act, 1962.
m) In view of the above, the 3 Appeals may kindly be allowed.
5. The learned Authorized Representative appearing on behalf of the Department has justified the order of the Commissioner.
6. We find that Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 provided as under:-
Rule 3. Determination of the method of valuation.- (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10;
(2) Value of imported goods under sub-rule (1) shall be accepted:
Provided that -7 Customs Appeal No.70294 to
70296 of 2020
(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which -
(i) are imposed or required by law or by the public authorities in India; or
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;
(b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued;
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and
(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below.
(3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price.
(b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time.
(i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India;
(ii) the deductive value for identical goods or similar goods;
(iii) the computed value for identical goods or similar goods:
Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of rule 10 and cost incurred 8 Customs Appeal No.70294 to 70296 of 2020 by the seller in sales in which he and the buyer are not related;
(c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) If the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through rule 4 to 9.
7. We further observe that in the report of Shri Vinod Kumar Goel, Chartered Engineer dated 16.03.2018 the description of goods have been given vis-a-viz 'Make', 'Model', 'Country of Origin', 'Year of Manufacture', 'Machine Serial Number' etc. and he has observed as under:-
The Goods are old & used.
For make, model, Country of origin & year of
manufacturing is as per annexure
Residual life of machines & spares is 8-10 year, subject to
periodical overhauling and maintenance.
The MFD are for printing A3 size prints
No major repairing / overhauling has been noticed except
routine servicing
No extra parts are there.
For valuation pl refer valuation annexure sheet.
The Digital Multifunction Devices are designed to work as
Printer, Scanner, Copier and Fax (Optional).
He estimated the value of the imported consignment at US$65,960/- (Rs.44,09,005/-).
8. Further, another Customs empanelled Chartered Engineer Shri Varun Chandok also submitted his report which contained the details such as 'Model', Machine Serial Number', 'Year of Manufacture', 'Country of Origin', 'Estimated Suggestive FOB Value', 'Rate of Depreciation' and 'Estimated Suggestive Depreciated FOB Value' and he suggested the FOB value of the consignment at US$1,25,988/- (Rs.84,21,038/-). However, both the reports were not accepted by the DRI and the consignment 9 Customs Appeal No.70294 to 70296 of 2020 was estimated at US$3,02,852/- (Rs.2,15,80,160/-) relying on Board's Circular No.25/2015-Cus dated 15.10.2015 and a letter dated 24.02.2018 from Cannon India Pvt. Ltd. The letter received from M/s Cannon India Pvt. Ltd is as under:-
9. We find that in the above letter Canon India Pvt. Ltd. has mentioned the rates on FOB basis and has quoted way back up to the year 2005 and they have also mentioned that they have discontinued their import and sale from last 3 to 14 years depending on the respective models. In this letter, year of manufacture and country of origin has not been mentioned. It is a fact on record that the Appellant did not possess any certification as required under the Foreign Trade Policy, 2015-20 10 Customs Appeal No.70294 to 70296 of 2020 for old and used goods. It is the case of the Appellant that the value suggested by the 02 independent experts was rejected by the Department without any logical grounds and re- determination of the value on the basis of the figures supplied by M/s Cannon India Pvt. Ltd. is not correct and legal.
10. Further, depreciation of electronic goods should be up to 90% as per CBEC's Circular No.27/98-Cus dated 24.04.1998, instead of 70% fixed by the Department.
11. We find that the transaction value as declared should normally be accepted and should be rejected only if the Revenue has evidence to show that the transaction value do not actually reflect the actual value as against contemporaneous imports at much higher price can be a reason. In the present case, Revenue has not produced any evidence to that effect. It is a settled principal of the commercial transaction that the prices of the transacted goods can be determined only on the date of transaction and not on any other date whether previous or subsequent. The prices may fluctuate on account of the vagaries of market but the contractual price agreed upon by the contracting parties would be sacrosanct unless the contract provides so. The contractual price entered between the parties need to be tested against the prevailing market prices on the date of contract rather than any subsequent date.
12 In Eisher Tractors Ltd., Haryana v. Commissioner of Customs, Mumbai-1, (2001) 1 SCC 315 = 2000 (122) E.L.T. 321 (S.C.), the Hon'ble Supreme Court has held as under:-
"6. Under the Act Customs duty is chargeable on goods. According to Section 14(1) of the Act, the assessment of duty is to be made on the value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed, the value has to be determined under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation - in the course 11 Customs Appeal No.70294 to 70296 of 2020 of international trade. The word "ordinarily" necessarily implies the exclusion of "extraordinary" or "special"
circumstances. This is clarified by the last phrase in Section 14 which describes an "ordinary" sale as one "where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale ...". Subject to these three conditions laid down in Section 14(1) of time, place and absence of special circumstances, the price of imported goods is to be determined under Section 14(1A) in accordance with the Rules framed in this behalf.
xxx xxx xxx
9. These exceptions are in expansion and explicatory of the special circumstances in Section 14(1) quoted earlier. It follows that unless the price actually paid for the particular transaction falls within the exceptions, the Customs Authorities are bound to assess the duty on the transaction value.
xxx xxx xxx
12. Rule 4(1) speaks of the transaction value. Utilisation of the definite article indicates that what should be accepted as the value for the purpose of assessment to Customs duty is the price actually paid for the particular transaction, unless of course the price is unacceptable for the reasons set out in Rule 4(2). "Payable" in the context of the language of Rule 4(1) must, therefore, be read as referring to "the particular transaction" and payability in respect of the transaction envisages a situation where payment of price may be deferred.
xxx xxx xxx
13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using 12 Customs Appeal No.70294 to 70296 of 2020 reasonable means consistent with the principles and general provisions of these Rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India". If the phrase "the transaction value" used in Rule 4 were not limited to the particular transaction then the other rules which refer to other transactions and data would become redundant.
xxx xxx xxx
22. In the case before us, it is not alleged that the appellant has misdeclared the price actually paid. Nor was there a misdescription of the goods imported as was the case in Padia Sales Corpn. [1993 Supp. (4) SCC 57] It is also not the respondent's case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. In doing so, the Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor's price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commercially-acceptable measure which may be resorted to by a vendor for a variety of reasons including stock clearance. A price list is really no more than a general quotation. It does not preclude discounts on the listed price. In fact, a discount is calculated with reference to the price list. Admittedly in this case a discount up to 30% was allowable in ordinary circumstances by the Indian agent itself. There was the additional factor that the stock in question was old and it was a one-time sale of 5-year-old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to anyone else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1)."
13. We also find that the Tribunal in the case of Viraj Impex Pvt. Ltd. V/s Commissioner of Customs (I), Mumbai reported as 2022 (382) E.L.T. 375 (Tri-Mumbai) has held as under:-
4.2 Commissioner (Appeals) has by the impugned order recorded her finding while upholding the assessment order enhancing the value as declared by the importer as follows :
"I have gone through all the relevant documents & submissions made by both the parties relating to the 13 Customs Appeal No.70294 to 70296 of 2020 issues. The question is to decide whether the value loading by the Department is proper or not.
6. It is submitted by the appellants that they have entered into a contract with the supplier on 19-1-2012 backed by Irrevocable Letter of Credit dated 20-1-2012 and prices matching with London Metal Bulletin (L.M.B.) dated 23-1-2012 to 30-1-2012. Thus they contend that their price was unquestionable. But the respondents through their written submission vide letter F. No. S/26-Misc-69/2011-12 GR IV, dated 15-5-2013 have refuted the appellant's contention, on the ground of the guidelines of the Directorate of Valuation that goods are valued as per the L.M.B. prices on or near the Bill of Lading date. In the instant cases the B/L date for both the Bills of entry was 26-3-2012. Hence, the value of goods was assessed as per the LMB issue dated 26-3- 2012 at US $ 721.64/722.
In context to the submission in respect of the appropriate assessable value by the respondents, I put reliance on the judgment in the case of Radhey Shyam Ratanlal v. Commissioner of Customs (Adjudication), Mumbai, as reported in 2009 (238) E.L.T. 14 (S.C.) wherein at para 20 it is held, -
"....... Therefore, the provisions of sub-section (1) of Section 14 would prevail when the transaction value required to be determined under Rule 4 does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation. There cannot be any dispute with regard to said interpretation that it is the provision which will always prevail. In other words the deemed value contemplated under Section 14(1) would prevail when the price declared does not reflect the price at which such or like goods are ordinarily sold or offered for sale for delivery at the time and place of importation...."
In view of the above, the price prevailing as per the L.M.B. issue dated 26-3-2012 becomes binding on the assessing officer to load the value to @ US $ 721.64 & US $ 722 PMT respectively, for both the Bills of entries. This is further strengthened by the fact that both the parties are relying on the prices reflected through L.M.B albeit different dates. I also find that in case of Bill of entry of Rajan Kumar and Bros. Impex vide No. 6429986, dated 31-3-2012, as cited by the appellants cannot be taken for comparison as the goods therein are of different specification.
7. The appellants have pleaded about their business association with their overseas supplier since December, 2006, which should be taken into consideration for favour of price benefit. In light of the observation by the Apex Court in the matter of Basant Industries v. Additional Commissioner of Customs, 14 Customs Appeal No.70294 to 70296 of 2020 Mumbai as reported at 1996 (81) E.L.T. 195 (S.C.) wherein it is held that, -
"it is essential to bear in mind the fact that in the business world, consideration of relationship with the customer are also relevant factor."
The appellants may have a long relation with their overseas suppliers but any benefit extended to them by their supplier is neither reflected in the various documents including the sales contract submitted by the appellants nor they could prove the same."
4.3 The entire findings of the Commissioner (Appeals) are based on the London Metal Bulletin, which as per her is to be as close as possible to the date of Bill of Lading. The above contention of the Commissioner (Appeals) cannot be upheld. In case of Aggarwal Industries Ltd. [2011 (272) E.L.T. 641 (S.C.)], Hon'ble Apex Court has held as follows :
"11. On a plain reading of Section 14(1) and 14(1A), it is clear that the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in Section 14(1) of the Act. Section 14(1) is a deeming provision as it talks of deemed value of such goods. The determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1) of the Act. Conjointly read, both Section 14(1) of the Act and Rule 4 of CVR, 1988 provide that in the absence of any of the special circumstances indicated in Section 14(1) of the Act and particularized in Rule 4(2) of CVR 1988, the price paid or payable by the importer to the vendor, in the ordinary course of international trade and commerce, shall be taken to be the transaction value. In other words, save and except for the circumstances mentioned in proviso to sub-rule (2) of Rule 4, the invoice price is to form the basis for determination of the transaction value. Nevertheless, if on the basis of some contemporaneous evidence, the revenue is able to demonstrate that the invoice does not reflect the correct price, it would be justified in rejecting the invoice price and determine the transaction value in accordance with the procedure laid down in CVR, 1988. It needs little emphasis that before rejecting the transaction value declared by the importer as incorrect or unacceptable, the revenue has to bring on record cogent material to show that contemporaneous imports, which obviously would include the date of contract, the time and place of importation, etc., were at a higher price. In such a situation, Rule 10A of CVR, 1988 contemplates that where the department has a 'reason to doubt' the truth or accuracy of the declared value, it may ask the importer to provide further explanation to the effect that the declared value represents the total amount actually paid or payable for the imported goods.
Needless to add that 'reason to doubt' does not mean 'reason to suspect'. A mere suspicion upon the 15 Customs Appeal No.70294 to 70296 of 2020 correctness of the invoice produced by an importer is not sufficient to reject it as evidence of the value of imported goods. The doubt held by the officer concerned has to be based on some material evidence and is not to be formed on a mere suspicion or speculation. We may hasten to add that although strict rules of evidence do not apply to adjudication proceedings under the Act, yet the Adjudicating Authority has to examine the probative value of the documents on which reliance is sought to be placed by the revenue. It is well settled that the onus to prove undervaluation is on the revenue but once the revenue discharges the burden of proof by producing evidence of contemporaneous imports at a higher price, the onus shifts to the importer to establish that the price indicated in the invoice relied upon by him is correct."
12. In Eicher Tractors Ltd. (supra), relied upon by the Tribunal, this Court had held that the principle for valuation of imported goods is found in Section 14(1) of the Act which provides for the determination of the assessable value on the basis of the international sale price. Under the said Act, customs duty is chargeable on goods. According to Section 14(1), the assessment of duty is to be made on the value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed it has to be decided under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place and importation in the course of international trade. The word "ordinarily" implies the exclusion of special circumstances. This position is clarified by the last sentence in Section 14(1) which describes an "ordinary" sale as one where the seller or the buyer have no interest in the business of each other and price is the sole consideration for the sale or offer for sale. Therefore, when the above conditions regarding time, place and absence of special circumstances stand fulfilled, the price of imported goods shall be decided under Section 14(1A) read with the Rules framed thereunder. The said Rules are CVR, 1988. It was further held that in cases where the circumstances mentioned in Rule 4(2)(c) to (h) are not applicable, the Department is bound to assess the duty under transaction value. Therefore, unless the price actually paid for a particular transaction falls within the exceptions mentioned in Rule 4(2)(c) to (h), the Department is bound to assess the duty on the transaction value. It was further held that Rule 4 is directly relatable to Section 14(1) of the Act. Section 14(1) read with Rule 4 provides that the price paid by the importer in the ordinary course of commerce shall be taken to be the value in the absence of any special circumstances indicated in Section 14(1). Therefore, what should be accepted as the value for the purpose of assessment is the price actually paid for the 16 Customs Appeal No.70294 to 70296 of 2020 particular transaction, unless the price is unacceptable for the reasons set out in Rule 4(2). [Also See :
Rabindra Chandra Paul v. Commissioner of Customs (Preventive), Shillong, (2007) 3 SCC 93 = 2007 (209) E.L.T. 326 (S.C.)]."
Further in case of Sanjivani Non-Ferrous Trading Pvt. Ltd. [2019 (365) E.L.T. 3 (S.C.)], Hon'ble Supreme Court observed as follows :
"10. The law, thus, is clear. As per Section 14(1) and 14(1A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of 'deemed value' of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4(1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value."
4.4 From the observations made by the Hon'ble Apex Court the transaction value as declared by the importer should form the basis for determination of the assessable value for levy of customs duty. The transaction value as declared should normally be accepted and should be rejected only if the Revenue has evidence to show that the transaction value do not reflect the actual transaction price in the course of international trade. Contemporaneous import at much higher transaction value, can be a reason for rejection of the declared transaction value. Interestingly Revenue has not produced any evidence to that effect, on contrary appellants have produced the evidence before the Commissioner (Appeals) where in the same goods from the same supplier and shipped in the same vessel have been assessed accepting the transaction value which is less than that declared by the appellant. It is evident from the Bill of Entry No. 6429986, dated 31-3-2012 filed by M/s. Rajan Kumar & Bros Impex that the goods imported by them were also 17 Customs Appeal No.70294 to 70296 of 2020 "Cold Rolled Steel Sheet in Coils (CRCA)" of DC01 grade and imported from the same supplier in the same vessel where assessed on the basis of declared transaction value of US $ 710 Per MT, which is even less than the transaction value US $ 713 per MT declared by the appellant. We do not find any reason for rejecting the transaction value declared by the appellant when Revenue has admitted a lower transaction value for the import of same goods.
4.5 It is settled principle of the commercial transactions that the prices of the transacted goods can be determined only on the date of transaction and not on any other date whether previous or subsequent. The prices may fluctuate on account of the vagaries of market but the contractual price agreed upon by the contracting parties would be sacrosanct unless the contract provides so. The contractual price entered between the parties need to be tested against the prevailing market prices on the date of contract rather than any subsequent price. The Appellant's contract was entered into on 19-1-2012 and the goods were shipped in March, 2012. The contract price was US $ 713 per M. Ton. The appraisal price given in Metal Bulletin dated 30-1-2012 for production and exports of March, 2012 of Chinese Mills, was in the range of US $ 685-695. Thus the Appellant's price was even higher than the appraisal price given in the Metal Bulletin of January, 2012 for production and export of March, 2012. The London Metal Bulletin prices of subsequent date 26-3-2012 giving the appraisal price for production and exports of May, 2012 to be in the range of US $ 715 to 730 per MT, cannot form the basis of enhancing the value and for rejecting the transaction price. In case of Drunkey Exports P. Ltd. [2004 (165) E.L.T. 417 (T. - Kol.)] tribunal has held as follows :
"6. As regards the valuation we find that the Tribunal in the case of Prabhu Dayal Prem Chand reported in 2003 (156) E.L.T. 922 (T) has held that transaction value of copper scrap is not to be rejected on the basis of the prices indicated in L.M.E. Bulletin when there is no corroborative evidence of contemporaneous imports on the higher price. Similarly is the other decision of the Tribunal in the case of 2002 (140) E.L.T. 306 (T) CC, Nhava Sheva v. Sangeeta Metals India. It was observed that the London Metal Exchange prices are only indicative of the prevailing market price, but in the absence of any contemporaneous imports of identical goods reliance on LME cannot be sustained. Inasmuch as in the present case there is no other evidence for enhancement of the value we do not find any justification in doing so. Accordingly that portion of the impugned order vide which the Commissioner has enhanced the value, is set aside."
4.6 Commissioner (Appeals) has in her order placed reliance on decision of Hon'ble Apex Court in case of Radhey Shyam Ratanlal [2009 (238) E.L.T. 14 (S.C.)]. The reasons as noted for by the Hon'ble Apex Court for the rejection of transaction value are extracted below :
18 Customs Appeal No.70294 to70296 of 2020 "21. We are required to apply the aforesaid provision to the facts and circumstances of the present case and when done so it would appear that the appellant although claimed a transaction value, but such value could not be supported by production of the original contract or the invoices relating to procurement of cloves to the appellant under the ten Bills of Entry in question. The said documents were called for and were directed to be produced, but same could not be produced. The alleged contract dated 23-11-2000 cannot be termed as a contract between the parties and it is merely a certificate issued by M/s. Ketan Trading Co.
22. The respondent department has also relied upon the contemporaneous documents like the Weekly Bulletin of Spices Market and also the Public Ledger.
The Weekly Bulletin of Spices Market published by the Trade Information Services of the Spices Board of the Ministry of Commerce and Industry, Government of India indicated that the price of Indonesian cloves on 24-11-2000 was US $ 4765 PMT and that of Zanzibar cloves was US $ 4650 PMT. Such bulletin also indicates that by 23-12-2001 the price of Zanzibar cloves had reached Rs. 6,100/- PMT. The Public Ledger which is also considered as International Publication of repute indicates that the price of cloves in the international market on 27-11-2000 was US Dollars 4700 which reached US Dollars 6300 on 26-3-2001."
From the above we find that the facts of the above case are completely distinguishable and the said decision could not be the reason for rejection of the transaction value declared by the appellants.
5.1 From the discussions as above we are unable to sustain the impugned order, setting aside the same we allow the appeals."
14. We find that the facts of the present case are squarely covered by the abovementioned decisions. We do not find any justification for rejection of the transaction value as declared by the Appellants and accordingly the same is upheld. Since the Appellant has not produced the required permission from the Director General of Foreign Trade, the redemption fine and penalty upon the Appellants are justified. However, considering the high quantum of redemption fine imposed, same is reduced to Rs.4 lakhs. Further, the penalty on the importer Shri Ankit Khetterpal, Proprietor, is reduced to Rs.2 lakhs. As we do not find any adverse role played by the Representative of the CHA, Shri Manoj Kumar, the penalty of Rs.2 lakhs imposed on him 19 Customs Appeal No.70294 to 70296 of 2020 under Section 112(a) & 112(b) of the Customs Act, 1962, is set aside.
15. Accordingly, the appeal filed by Prius Technologies being Customs Appeal No.70294 of 2020 & the appeal filed by Shri Ankit Khetterpal being Customs Appeal No.70296 of 2020 are partly allowed as discussed in Para 14 above and the Appeal filed by Shri Manoj Kumar being Customs Appeal No.70295 of 2020 is allowed.
(Operative part of the order pronounced in open court) (P. K. CHOUDHARY) MEMBER (JUDICIAL) (SANJIV SRIVASTAVA) MEMBER (TECHNICAL) Nihal