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(vii) I impose a penalty of Rs.9,00,000/- (Rupees Nine Lakhs Only) under section 112(a)(ii) of Customs Act, 1962 and a penalty of Rs. 20,00,000/- (Rupees Twenty Lacs Only) under Section 114AA of the Customs Act, 1962 upon Shri Nitin Khandelwal, Partner of M/s KLM Overseas.

(viii) I impose a penalty of Rs. 2,00,000/- (Rupees Two Lakhs only) under Section 112(a)(ii) of Customs Act, 1962 and a penalty of Rs. 50,00,000/- (Rupees Five Lakhs only) under Section 114AA of Customs Act, 1962 upon Sh. Anshul Khandelwal, Partner of M/s KLM Overseas."

5. KLM is a partnership firm of which Nitin and Anshul are partners. It imported goods which appeared to the department to have been undervalued on the basis of the pieces of evidence unearthed during another investigation against M/s Wide Impex, New Delhi. M/s Wide Impex is the partnership firm of Shri Mayank Khandelwal and Nitin. Another SCN was issued to the proprietor of another firm called M/s Royal Blanket. Shri Mayank Khandelwal, brother of Nitin is the proprietor of Royal Blanket and he had appointed Nitin as a manager who was a fully competent and authorized to represent the firm. During investigation against M/s Wide Impex, Nitin gave a statement on 09.01.2018 on the strength of the authorization letter dated 08.01.2018 given by Shri Mayank Khandelwal, the owner of Wide Impex, who could not join to the investigation as he was ill. In this statement, Nitin explained that he used to visit China to place orders for goods on behalf of Wide Impex which were then sold to three persons in which Shri Prateek Jain, Rajnish Maurya and Shri Piyush; he would undervalue the goods by submitting fake invoices for the sake of customs clearance and the amount shown in these invoices would be remitted through bank. The remaining amount (difference between the actual price and the under-invoiced value) would be paid by the buyers Prateek Jain, Rajnish Maurya and Shri Piyush directly to the exporter.

6. Further, he explained that Shri Anuj Gupta co-ordinates the export of goods from China and two invoices would be issued for each consignment-a genuine invoice showing the value of goods in RMB and a fake invoice showing the value of goods in USD. He would use the fake invoices for customs clearance. Nitin further said that he had three email accounts in which he would get the invoices viz,nitin.khandelw[email protected],nitinkhandelw[email protected] and nitin[email protected]. Invoices would be sent from three email id's viz, [email protected], [email protected] and [email protected].

8. During investigation, it emerged that apart from imports by Wide Impex there were also invoices pertaining to consignments imported by KLM in the email of nitin.khandelw[email protected]. This led to the investigation against KLM. Summons were issued on 15.03.2018 to Shri Rajeev Gupta another partner of KLM. In response, his advocate submitted that he was undergoing alcohol de-addiction and submitted a medical certificate and requested to waive his appearance.

9. Summons dated 02.04.2018 were issued to Shri Anshul Khandelwal and he submitted that the day-today business of KLM was looked after by Nitin. After completing the investigation, the show cause notice dated 20.06.2019 was issued to KLM, Nitin and Anshul proposing to reject the transaction value in 19 Bills of Entry filed by KLM under Rule 12 of Customs Valuation (Determination of value of imported goods) Rules, 20076 and re-determine the values as shown in tables 1 and 2 of the SCN. It was also proposed to recover the differential duty under section 28(4) along with interest, hold the imported goods liable for confiscation and impose penalties on KLM, Nitin and Anshul. The show cause notice sought reply within 30 days but no reply was sent by any of the three noticees even after six months. The Principal Commissioner fixed personal hearing on 07.11.2019, 27.11.2019, 07.12.2019 and 07.01.2020 but nobody appeared. In all cases, letters were sent from the counsel of KLM, Nitin 6 Valuation rules and Anshul that he was out of station. As sufficient opportunity was granted, the Commissioner proceeded to decide the matter. He framed the following four questions for decision: