Transaction value cannot be rejected merely on the grounds that transaction is between the related persons

NPT Papers Pvt Ltd  Vs C.C. Mundra (CESTAT Ahmedabad)

It is well settled law that even if the foreign suppliers are related to indian importers the transaction value cannot be rejected on the grounds that a transaction is between the related person when identical or similar goods were sold at the same price to unrelated parties.

FULL TEXT OF THE CESTAT AHMEDABAD ORDER

These six appeals arise out of order-in-original no. MUN-CUSTM-000-COM-13-19-20 dated 30.12.2019 passed by the Principal Commissioner of Customs, AP & SEZ Mundra. The details of duty demand confirmed and penalty imposed are shown in the tables below:

M/s. NPT Papers Pvt Ltd (NPT)

S.No.	Imports through	Period of duty demand	Duty demanded (in Rs)	Penalty imposed (in Rs.)
1.	Mundra Port	18-02-2014to22-06- 2017	1,37,54,699/-	(i)1,37,54,699/-u/s114A (ii)30,00,000u/s114AA
2.	ICD, TKD, New Delhi	14-10-2014	12,41,304/-	(i)12,41,304/-u/s114A (ii)3,00,000/-u/s114AA
3.	Chennai Sea Port	15-11-2014	4,086/-	(i) 4,086/-u/s114A (ii) 1,000/-u/s114AA

M/s. Salwan Papers Pvt Ltd (SPPL)

S.No.	Imports through	Period of duty demand	Duty demanded (in Rs)	Penalty imposed (in Rs.)
1.	Mundra Port	29-08-2014to11-05- 2017	42,89,772/-	(i) 42,89,772/-u/s114A (ii)10,00,000/-u/s114AA
2.	ICD, TKD, New Delhi.	11-11-2014to22-11- 2014	19,41,375/-	(iii) 19,41,375/-u/s114A (iv)4,50,000/-u/s114AA

M/s. Salwan International Papers Pvt Ltd (SIPPL)

S.No.	Imports through	Period of duty demand	Duty demanded (inRs)	Penalty imposed (in Rs.)
1.	Mundra Port	14-11-2014to08-12-2014	23,54,921/-	(i) 23,54,921/-u/s114A (ii) 5,00,000/-u/s114AA

Shri Prakash Chand Garg, Director NPT

S.No.	Imports through	Penalty imposed (inRs.)
1.	Mundra Port	(i) 15,00,000/-u/s112(a) (ii)10,00,000/-u/s114AA
2.	ICD,TKD, NewDelhi	(i) 1,25,000/-u/s112(a) (ii)75,000/-u/s114AA
3.	Chennai Sea Port	(i) 5,000u/s112(a) (ii) 1,000u/s114AA

Shri Ashish Garg, Director SPPL & SIPPL

S.No.	Imports through	Penalty imposed (in Rs.)
1.	Mundra Port	(i) 2,00,000/-u/s114AA
2.	ICD,TKD, NewDelhi	(i) 2,00,000/-u/s112(a) (ii) 1,50,000/-u/s114AA

Shri Vijay Garg, Director SPPL &SIPPL

S.No.	Imports through	Penalty imposed (in Rs.)
1.	Mundra Port	(i) 2,50,000/-u/s112(a). (ii) 2,00,000/-u/s114AA
2.	ICD,TKD, NewDelhi	(ii) 2,00,000/-u/s112(a) (iii) 1,50,000/-u/s114AA

1.1 The facts of the case are that M/s NPT, SPPL, SIPPL are the importers of inter alia, stocklot of coated/uncoated paper in rolls in mix size and gsm from various countries. The dispute in the present case basically is with regards to the imports of stocklot of coated/uncoated paper (the goods) from M/s Korco AB, Sweden by M/s NPT, SPPL, SIPPL. That during the disputed period M/s NPT had imported 43 consignments of the goods all from M/s Korco AB, Sweden. However, in respect of SPPL out of 18 consignments imported by them 2 consignments were imported from M/s Crown Commercial House, Hong Kong and 3 consignments from M/s Affluent Enterprises Limited, Hong Kong and remaining 13 consignments from M/s Korco AB, Sweden. With regards to SIPPL, all 9 consignments were imported from M/s Korco AB, Sweden. It is the case of Department that the above three importers were declaring the unit price of the goods ranging from US$ 400 to US$ 500 PMT whereas the actual value of the goods ranged from US$ 605 to US$ 646 PMT.

2.1 The Directorate of Revenue Intelligence (DRI) Zonal Unit Bangalore searched various premises of M/s NPT including go downs at Alipur Delhi from where DRI seized 750 MT of the goods valued at Rs 250 lakhs from the said go down vide mahazar dated 25.12.2014. A search was also conducted at NPT go down located in Chennai from where DRI officers seized imported as well as locally procured paper valued at Rs 255 lakhs.

2.2 A Show Cause Notice was issued by the Additional Director, DRI, Bangalore to M/s NPT answerable to Joint/Additional Commissioner of Customs(Import),ICD, Tughlakabad, New Delhi proposing seizure of stocklot of coated/uncoated papers in rolls seized from NPT, go down Alipur, Delhi on 25.12.2014.

2.3 The matter was adjudicated by Additional Commissioner of Customs ICD TKD New Delhi vide order dated 9.2.2017 ordering confiscation of seized goods and allowed the same to be redeemed on the fine of Rs 25 lakhs (Rupees Twenty-Five Lakh Only) and penalties were also imposed on the importer.

2.4 The Commissioner of Customs (Appeals) vide his order No. CC(A) Cus/D-II/ICD TKD (Import)/589/2017 dated 9.8.2017 set aside the Order-In-Original dated 9.2.2017 and held in there was no clear and cogent evidence to reject the transaction value for the purpose of assessment and while doing so he relied upon various judgments of the Supreme Court.

2.5 A letter dated 31.1.2018 was received from Second Secretary (Trade) Embassy of India, Brussels to DRI, Bangalore containing 21 pages which included a covering letter from Federal Public Service Finance, General Administration of Customs and Excise, Administration of Inquiry and Investigation Central Component dated 19.1.2018 to Embassy of India certain export declaration of the supplier to NPT and invoices of higher value. (Procured documents)

2.6 Three statements from Shri Prakash Chand Garg were recorded during the investigations which are dated 23.1.2015, 24.4.2018 and 8.8.2018. In his first statement dated 23.1.2015 wherein he was interalia, asked why “Stock lot of coated/uncoated paper in rolls in mix sizes” was declared at Mundra ranging from $250 to $436PMT whereas for the identical/similar items imported through the port of Chennai, the price declared per metric ton ranges from$510to $ 600 to which he stated that the goods being imported through Mundra and Delhi by them, contain two-three qualities of coated/uncoated paper in each of the rolls. Each quality has different variations in GSM and its size differs from 8″ to 100″.He also stated that the goods imported through Chennai port, contained non-transitional paper roll which contained only one quality having only one GSM in single roll. In his second statement dated 24.4.2018 he more or less reiterated what he had stated in his first statement dated 23.1.2015. While recording his third statement dated 8.8.2018 he was confronted with the five export declarations and four invoices which were received from the Belgium Customs. In answer he stated that from going through the copies of four invoices of M/s Korco AB, Sweden he accepted that these invoices show correct price of these consignments as ranging from US$605 to US$ 646. He further stated that he did not exactly remember how that price was shown in the supplier invoice. He promised to verify from his end and come back to them with proper explanation in 10 days. He further stated that after seeing the invoices he would accept that the goods were supplied to them at higher rate of 605 US$ to 646 US$. However, they had shown to the Customs 400 US$ to 550 US$.

2.7 However, Shri Prakash Chand Garg retracted his statement dated 8.8.2018 by filling an affidavit dated 9.8.2018 before the DRI.

2.8 That, vide covering letter dated 29.8.2018 of Consul (Eco), Consulate General of India, Hong Kong addressed to Additional Director General, DRI, New Delhi forwarded particulars of M/s Affluent Enterprises Ltd which was one of the suppliers of papers to M/s NPT, M/s SPPL and M/s SIPPL. According to these papers Sh. Prakash Chand Garg was one of the Directors in the said M/s Affluent Enterprises Ltd. It was also informed that one Shri Vikash Khatuwala was the owner of two firms namely M/s The Crown Commercial House, Hong Kong and M/s Trans Oceanic Co Hong Kong.

2.9 A Show Cause Notice dated 16.2.2019 was issued under Section 28(4) of the Customs Act 1962 by invoking extended period of limitation to aforementioned six Appellants on the basis of four invoices and five export declarations forwarded by the Indian Embassy Brussels vide letter dated 31.1.2018 and also on the basis of the statement recorded from Shri Prakash Chand Garg dated 8.8.2018. A proposal was made to reject the transaction value of 43 consignments imported from M/s. KorCo AB, Sweden by M/s NPT during the period February,2014 to June,2017 and differential duty was demanded as per the chart extracted hereinabove. It was alleged that M/s Affluent Enterprises Ltd, Hong Kong was one of major suppliers of goods to M/s NPT. Shri Prakash Chand Gargwas the Director of M/s Affluent Enterprises Ltd and the said M/s Affluent Enterprises Ltd was the major supplier of stock lot of coated/un-coated paper to M/s NPT, M/s SPPL and M/s SIPPL. It was alleged that on further analysis of the verification report it was revealed that other shareholders of M/s Affluent Enterprises Ltd. are Shri Ashish Garg, Shri Vikash Khatuwala and M/s NPT Overseas Pvt Ltd ( Earlier M/s Hanuman Food Grains Pvt Ltd). It is seen from the database available with the Company Master Data tab from Ministry of Corporate Affairs website that Mr. Vijay Garg who is the Director of M/s SIPPL and M/s SPPL is also the Director of M/s NPT Overseas Pvt. Ltd. Hence, it is clear that according to Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 that M/s SIPPL and M/s SPPL are both related to M/s Affluent Enterprises Ltd, Hong Kong. From all above a complex web of transactions emerges from the family of Mr. Prakash Chand Garg. It is clear that both his children, namely Mr. Ashish Garg and Mr. Vijay Garg are Directors of two entities M/s SPPL and M/s SIPPL. It further emerges that all three of them have either direct or indirect stake in M/s Affluent Enterprises Ltd who happens to be one of the major suppliers of stock lot of paper for all three of the above companies. Finally it is seen that M/s SIPPL‟s registered address is the same as the residential address of all the three above. It is clear that all three companies are inter linked and inter related and cannot be called entities independent to each other. This relationship was not revealed to the Customs Department. With regard to M/s. The Crown Commercial House, Hong Kong, it i s the case of the DRI that Shri Vikash Khatuwala was the owner of M/s. The Crown Commercial House, Hong Kong and he were also holding a stake in M/s. Affluent Enterprises Ltd, Hong Kong. The said M/s The Crown Commercial House, Hong Kong has also supplied goods to M/s NPT, M/s SPPL and M/s SIPPL. Reliance has been placed on Rule 3 of the Customs Valuation Rules, 2007 to allege that Affluent Enterprises Ltd was related to all the three entities. Reliance has been placed on the balance sheets of M/s NPT, M/s SPPL and M/s SIPPL for the financial year 2017-18. According to these documents there had been transfer of funds from one entity to another. Therefore, the transaction value of both M/s SPPL and M/s SIPPL was also sought to be rejected and the evidence of M/s NPT has been applied in respect of the imports affected by M/s SPPL and M/s SIPPL. A duty demand of Rs 74,640/- was demanded on the ground that the invoices procured from Belgium Customs in respect of Bills of Entry No. 6735100 and 6735402 both dated 12.9.2014 when compared with invoices submitted by M/s NPT to the Indian Customs it was found that the total quantity was declared as 438.94 MT whereas in original invoice/export declaration recovered from the overseas supplier, the quantity was mentioned as 447.497 MT. Hence there was a misdeclaration of the quantity to the extent of 8.552 MT. The duty has been demanded by invoking Rule 9 of CVR, 2007 from all the three importers. Penal action was also proposed against the three importers under Section 114A and 114AA of the Customs Act and penal action under Section 114AA and 112(a) of the Customs Act was proposed against Shri Prakash Chand Garg, Shri Ashish Garg and Shri Vijay Garg.

2.10 The matter was adjudicated by the Principal Commissioner of Customs, AP and SEZ Mundra vide order dated 30.12.2019 in which he has confirmed the differential duty demand and imposed penalties as shown in table in para-1 above.

3 Shri K.K Anand, Ld. Advocate appeared for all the six Appellants and advanced the following submissions: –

3.1 That the DRI officers had seized 750 MT of the goods pertaining to M/s NPT from their godown at Alipur Delhi. There is no dispute that the seized goods were part of the imported goods which are the subject matter of the present dispute. Though the Additional Commissioner had ordered confiscation of the goods and had imposed penalties but on appeal the Commissioner of Customs (Appeals) New Delhi set aside the Order-in-Original and he categorically held that there was no evidence of under valuation by M/s NPT for the purpose of assessment. The said Order-in-Original was set aside on the ground that there was an evidence of imports of identical/similar goods at the same value. This order has attained finality as the department did not challenge this order in appeal. This fact has been accepted by the Principal Commissioner vide para 24.3.3 of the Order-in-Original. Therefore, the declared value which was in the range of US$ 400 PMT to US$ 455 PMT has also attained finality in respect of all the consignments under dispute.

3.2 Shri Anand took us through the actual invoices submitted to Indian Customs as well as copies of four invoices and five export declarations procured from the Belgium Customs and also a comparative chart of the same. He stated that these documents are not admissible in evidence due to several discrepancies some which are as under: –

(i) The procured invoices neither bear any signatures nor are authenticated either by the Belgium Customs or by the Indian Embassy.

(ii) The invoices do not even bear the stamp or signature of the supplier company or its representative.

(iii) The same are on a plain paper merely giving certain data which could be fabricated or filled by any person.

(iv) The invoices are not on the standard format of invoice which were issued by M/s Korco AB in their normal course of business.

(v) The procured invoices and the actual invoices bear different numbers and in some cases the dates are also different.

He relied upon the following judgments in which such type of documents have been held to be not admissible as evidence.

(i) Commissioner Of Customs, Visakhapatnam, vs. Truewoods Pvt Ltd, reported at 2016(331) ELT 15(SC).

(ii) Collector of Customs, Bombay vs. East Punjab Traders, reported at 2016 (331) ELT 15 (SC)

(iii) Commissioner of Customs, Calcutta vs. South India Television (P) Ltd, reported at 2007 (214) ELT 3(SC)

(iv) Taito Watch Manufacturing Inds vs. Commissioner of Customs, Jaipur, reported at 2004(173) ELT 16 (Tri-Del) which was upheld by the Supreme Court as reported in 2015(321) ELT A277(SC)

(v) Truewoods Private Limited vs. Commissioner of Customs, Visakhapatnam, reported at 2006 (204) ELT 288 (Tri. -Bang)

(vi) Haji Sumar vs. Commissioner of Customs, Chennai reported at 2020 (371) ELT 533 (Tri. -Chennai)

3.3 That no reliance can be placed on the aforementioned documents as the Appellant had requested for cross-examination of three persons viz. Shri Aseem Nanda, Second Secretary (Trade), Embassy of India, Brussels, Shri Brigitte Decatte, Fiscal Expert, Administration of Enquiry and Investigation, Brussels & Shri Jean Smets, Adviseur- Eerstaanwezend Inspector, Brussels, as the differential duty was solely based on documents received from overseas but the Principal Commissioner on erroneous reasoning denied the same.

3.4 That no reliance can be placed on the said documents as M/s. NPT had also sent copies of these documents (procured by the DRI from Belgium Customs) to the supplier, M/s KorCo AB, Sweden, for their comments, vide NPT e-mail dated 26.07.2019. In response the supplier denied ever having supplied these documents to the Customs and denied their correctness and genuineness. The supplier of the goods M/s. KorCo AB, Sweden informed M/s NPT that they had received certain mails from one Mr. Parthasarthy Bhaskar claiming to represent Directorate of Revenue Intelligence, Bangalore India asking for their sales account statement and also details of receipt of payment (either cash or bank transfer) to all the three importers. In response to the mail received from DRI Bangalore M/s Korco AB had emailed a chart giving the details of transactions like invoice number, transaction number, date of receipt of payment& the amount received by their banker from their Bank for the year 2017-18, which was readily available to them. They also clarified to them that all payments were made by bank transfer only. These documents were enclosed with reply to the Show Cause Notice but the Principal Commissioner has taken no cognisance of the same.

3.5 Shri Anand showed us Annexure 1A to the Show Cause Notice which pertains to eight consignments imported at sea port Mundra during period 19.5.2014 to 19.12.2014 which related to four invoices of higher value and five export declarations which were sent by the Belgium Customs. Thereafter, he took us through Annexure 1B to the Show Cause Notice by which DRI had demanded differential duty from M/s NPT on 32 consignments imported through sea port Mundra during period 18.2.2014 to 22.6.2017. It is his submission that the higher value of US$605 to US$646 per MT has been applied in respect of these 32 consignments on the basis of said four invoices of higher value and corresponding export declarations. He stated that in respect of the very 32 consignments they were able to procure export declarations of 16 consignments from the supplier and took us through a chart in this regard which has been enclosed in Synopsis cum Written submissions. The earliest export declaration pertains to Bill of Entry No 7823907 dated 26.12.2014 which showed the value of goods at Euro 269 PMT which when converted to US dollar comes to 335 PMT. According to Shri Anand the value of goods in an export declaration is on the basis of FOB value whereas the invoices are raised by the suppliers on CIF value. It is due to this reason the value declared in an export declaration will always be less than the invoice value. In this regard he has invited our attention to one of the export declarations relied upon by the DRI which has been relied upon as RUD 31D wherein in the export declaration the value PMT has been shown as Euro 427 whereas in the corresponding invoice the FOB value has been shown as US Dollar 622. The remaining 15 export declarations pertain to period 2.3.2016 to 22.6.2017. All the remaining 15 export declarations were matching with the invoice value declared to the Indian Customs as would evident from the chart. In this regard, he stated that all these export declarations were part to the reply of Show Cause Notice as Annexure-12 and are available at pages 1636 to 1780 of Paper Book Vol.3 but the Principal Commissioner has not rendered any finding on the same.

3.6 He stated that M/s NPT had also brought on record ample evidence which showed that they had imported identical/similar goods from M/s Korco AB, Russia at sea port Mundra which were imported at the same price as imported from European Union. In this regards he took us through invoices, bills of entry, and some export declarations which were also enclosed with the reply to the Show Cause Notice. He also took us through evidence of identical/similar goods which were imported by M/s NPT from different suppliers located in European Union as well as imports undertaken from the suppliers located in USA and Canada almost at the same price. He also took us through the copies of the invoices and Bills of entry at which other indian importers had imported identical/similar goods at the same price. It is his contention that the entire aforementioned evidence was placed before the Principal Commissioner in reply to the Show Cause Notice but he has totally overlooked the same and has not rendered any finding on the same.

3.7 That there is nothing incriminating in the statement dated 8.8.2018 of Shri Prakash Chand Garg. Nowhere in the said statement had Shri Prakash Chand Garg accepted any under valuation on the part of NPT. In any event the said statement was retracted on the next day i.e. 9.8.2018 by filling an affidavit. He states that Principal Commissioner in para 26.5 of the order has held that there was no evidence to show that the said retraction had been received by the officers of DRI. According to him, there is nothing on record to show that the Adjudicating Authority had sought any comments from the DRI before arriving at such a conclusion. According to him, in any case the said affidavit was enclosed with reply to the Show Cause Notice which was filed on 11.11.2019. In this regard, he has relied upon the judgment of Honorable High Court of Delhi in the case of Commissioner vs. Vishnu & Co Pvt Ltd reported at 2016(322) E.L.T 793 (Del.) wherein it has been held that a retraction which was given more than 20 months after the initial statement was held to be proper piece of evidence. In any event, according to him when statement was retracted by the way of an affidavit and the said affidavit was before the Adjudicating Authority, he should have called Shri Prakash Chand Garg for examination as held by Honorable Supreme Court in the case of Mehta Parikh & Co. vs. Commissioner of Income Tax, Bombay reported at 1956 SCR 626. It is his further submission that statement of Shri Prakash Chand Garg dated 8.8.2018 could not be admitted as evidence without complying with the provision of Section 138 of the Customs Act 1962. In this regards he placed reliance on the following judgments:

(i) G-TECH INDUSTRIES VS. UNION OF INDIA, REPORTED AT 2016 (339) ELT (P&H)

(ii) HI TECH ABRASIVES LTD VS. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, RAIPUR, REPORTED AT 2018 (362) ELT 961 (CHHATTISGARH)

(iii) COMMISSIONER OF CENTRAL EXCISE, DELHI-1 VS. KUBER TOBACCO INDIA LTD, REPORTED AT 2016 (338) ELT 113 (TRI.-DEL.).

3.8 That the entire investigation was with regards to imports effected by M/s NPT. No investigation whatsoever was undertaken with regards to imports effected by M/s SPPL and M/s SIPPL whereas the higher value shown in four invoices and five export declarations has been applied across the board in respect of imports effected for M/s SPPL and M/s SIPPL which is legally not sustainable.

3.9 That even in respect of the imports effected by M/s SPPL out of 18 consignments, 13 consignments were imported at Sea Port Mundra and 5 consignments were imported at ICD TKD, Delhi during period 29.8.2014 to 11.5.2017. They have brought two export declarations on record which are available at pages no. 1904 and 1913-1914 of Paper Book Vol.4 which show the price of Euro 339 PMT and Euro 304.44 PMT which when converted to US Dollar comes to 363 PMT and 325 PMT respectively. Even in this case there is no finding of the Principal Commissioner to this vital piece of evidence.

3.10 That all the three importers have been treated as related persons merely because the Directors of same are family members and merely because of inter se transfer of funds from one company to other during the financial year 2017-18. Shri Anand took us through a chart which showed that these payments were either received against some sales transactions or these entries related to repayment of loan etc.

3.11 That another reason for treating M/s NPT, M/s SPPL and M/s SIPPL as related persons was that Shri Prakash Chand Garg was Director in a company named M/s Affluent Enterprises Ltd, Hong Kong from which M/s SPPL had imported three consignments during the disputed period. In respect of another company named as M/s The Crown Commercial House, Hong Kong from which M/s SPPL imported two consignments was owned by one Shri Vikash Khatuwala who was holding a stake in company M/s Affluent Enterprises Ltd, Hong Kong. Hence the imports effected by M/s SPPL both from M/s Affluent Enterprises Ltd, Hong Kong and M/s The Crown Commercial House, Hong Kong have been treated from related persons. The declared price from the above two was in the range of US$400 PMT which was enhanced to US$ 625 PMT on the basis of the procured documents from Belgium Customs. It is the contention of Shri Anand that even in respect of the imports effected by M/s SPPL both M/s Affluent Enterprises Ltd, Hong Kong and M/s The Crown Commercial House, Hong Kong transactions were at arms length and they were exporting identical/similar goods to other buyers in india almost at the same price. In this regards he took us through a chart where the export price of identical/similar goods was in range of 395 US$ PMT to 425 US$ PMT from M/s Affluent Enterprises Ltd, Hong Kong and M/s The Crown Commercial House, Hong Kong to other indian buyers. He stated that this evidence was placed before Principal Commissioner but he totally overlooked the same.

3.12 It is the contention of the Ld Advocate that the circumstances relied upon by the DRI do not make M/s NPT, M/s SPPL and M/s SIPPL as related to each other. Further merely because Shri Prakash Chand Garg was a Director in M/s Affluent Enterprises Ltd or that Shri. Ashish Garg was a shareholder in said M/s Affluent Enterprises Ltd cannot be ground to treat them as related persons. Shri Vijay Garg was Director of M/s NPT Overseas Pvt Ltd. which is a distinct legal person from M/s NPT Papers Pvt Ltd. It is his contention that it is well settled law that even if the foreign supplier of the indian importers is related person, transaction value cannot be rejected only on the ground that the transactions are between ^„related person‟. In this regards he has placed reliance on the following judgments:

(i) COMMISSIONERVS .CLARIANT(INDIA)LIMITED-2007(210)E.L.T.481(S.C.),

(ii) ANIL KUMAR ANAND VS. COMMISSIONER OF CUSTOMS (PREV.) 2019(366)E.L.T.601(S.C.)

(iii) R. MAURYA VS. COMMISSIONER OF CUSTOMS, BHOPAL-2019 (370) E.L.T. 906 (TRI. -DEL.)

3.13 That it is the submission of Shri Anand that except for reproducing Rule 2(2) of CVR which is a deeming provision to treat one person to be related to another no particular clause of the same has been invoked in the Show Cause Notice to treat three importers as related persons of M/s Affluent Enterprises Ltd. There is absolutely no foundation laid down in the Show Cause Notice as to how M/s The Crown Commercial House, Hong Kong was a related person of the three importers. In support of this submission, he has placed reliance of the law laid down by the Hon‟ble Apex Court in the case of Commissioner vs. Brindavan Beverages Pvt Ltd reported in 2007(213) ELT 487(SC).

3.14 That the Adjudicating Authority has erroneously adopted Rule 9 of CVR, 2007 to reject the transaction value by adopting the actual value of the nearest period whereas the fact remains that the prices declared to the customs were the prices which were actually paid to the suppliers. As per law the only ground for rejection of transaction value can be that enumerated in Rule 12 of the CVR, 2007. Rule 12 requires that the proper officer should have reason to doubt the truth or accuracy of the value declared to empower him to ask the importer to furnish further information including documents, etc. There is nothing on record to show that the department sought documents from the Appellants which the appellants did not provide. The only reason to doubt the truth or accuracy of the value declared could be in connection with the 8 Bills of Entry for which four invoices and five export declarations were procured by the department from the Belgium Customs. Even the documents procured from Belgium Customs are not admissible in law in view of his above submissions.

3.15 That as per Section 14 of the Customs Act, 1962, read with Rule 3 (1) of the Customs Valuation Rules, 2007, the price actually paid is to be considered as the transaction value. The price, therefore, which was actually paid to M/s. KorcoAB, Sweden, M/s The Crown Commercial House, Hong Kongand M/s Affluent Enterprise Ltd, Hong Kong by M/s NPT, M/s SPPL and M/s SIPPL should have been the assessable/transaction value of the goods. The assessing officer was bound to accept the price payable for the goods as transaction value. No evidence has been brought on record to reject the transaction value. On the contrary M/s NPT, SPPL and SIPPL have given ample evidence as discussed above that all over the world the price was the same of stocklot of coated/uncoated papers. In support of this submission the Ld Advocate placed reliance on the following judgments:-

(i) COMMISSIONEROFCUSTOMS,CALCUTTAVS.SOUTHINDIATELEVISION(P)L TD REPORTEDAT2007(214)ELT3(SC)

(ii) EICHER TRACTORS LTD VS. COMMISSIONER OF CUSTOMS,MUMBAI REPORTED AT 2000 (122) ELT 321(SC)

(iii) COMMISSIONEROFCUSTOMS,MUMBAIVS.J.D.ORGOCHEMLTD REPORTED AT 2008(226)ELT9(SC)

(iv) C.E. & S.T., NOIDA VS. SANJIVANI NON-FERROUS TRADING PVT LTD REPORTED AT 2008(226)ELT9(SC)

(v) DAHLER INDIA PVT LTD VS.COMMISSIONER OF CUSTOMS,PUNE REPORTED AT 2017(357)ELT1129(TRI.-MUM)

3.16 That in the instant case there is no evidence to show that any amount was paid directly or indirectly, to the suppliers over and above the value shown in the invoice presented before Indian Customs. When there is no evidence of sending extra remittance to the supplier/exporter, the DRI could not have resorted to Rule 9 of CVR 2007 to reject the transaction value. In support of these submissions he placed reliance on the following judgments:-

(i) BAYER INDIA LTD VS. COMMISSIONER OF CUSTOMS, MUMBAI REPORTED AT 2006 (198) ELT 240 (TRI.-MUMBAI) which has()  been upheld by the supreme court as reported at- 2015(324) ELT17(SC).

(ii) Tele Brands (India) Pvt Ltd Commissioner of Customs(Import),Mumbai reported at-2016(336)ELT 97(Tri.-Mum).

3.17 That the Principal Commissioner in his order has ordered confiscation of 548 MT of goods seized at godown premises of NPT at Chennai and allowed the same to be redeemed on a Redemption Fine of Rs 11 lakhs under Section 125 of the Customs Act, 1962. It is his submission that since the declared value is the correct assessable value the said goods are not liable for confiscation.

3.18 That in view of above submission, learned counsel prayed for setting aside the differential duty, penalties on all the six Appellants and Redemption Fine imposed on M/s NPT.

4. On the other hand, Shri S.N Gohil, Superintendent (AR) appearing on behalf of the department made the following submissions :-

4.1 That the documents which have been relied upon by the DRI were obtained from official channels by the Second Secretary (Trade), Embassy of India, Brussels from the Belgium Customs. Therefore, its authenticity cannot be doubted.

4.2 That there was a request from M/s NPT to inspect the documents received from Belgium Customs, and for providing original/legible/ English translated copies of the said documents. This request was acceded to by DRI Bangalore. The Director of M/s NPT accompanied by his counsel had inspected these documents on 20.9.2019. The DRI had provided them with the legible and translated copies of the desired documents. The Director of M/s NPT Shri Prakash Chand Garg had expressed their satisfaction of having seen all the RUD Nos 30 to 31E and 33.

4.3 Similarly the Council (Eco), Consulate General of India, Hong Kong had also forwarded particulars about the two suppliers i.e. M/s Affluent Enterprises Ltd, Hong Kong and M/s The Crown Commercial House, Hong Kong according to which Shri Prakash Chand Garg was one of the Director in M/s Affluent Enterprises Ltd and Shri Vikash Khatuwala owner of M/s The Crown Commercial House has stake in M/s Affluent Enterprises Ltd. Hence all the three importers have been rightly treated as related persons of the above two entities located in Hong Kong who were supplying goods to the three importers.

4.4 That there was vast difference between the declared value shown in the invoices presented to the customs and the actual value of the goods shown in procured invoices and export declarations.

4.5 That the Principal Commissioner on basis of evidence on record has rightly considered all the three importers to be related persons of one another and all the three companies are inter-linked and inter-related and cannot be called entities independent of one other.

4.6 That the analysis of various bank A/c statements pertaining to M/s NPT, SPPL, SIPPL for the period of 01.4.2017 to 31.3.2018 disclosed that there were huge transactions among the three importers which show that they are related units.

4.7 That Shri Prakash Chand Garg Director of M/s NPT in his statement dated 8.8.2018 when confronted with documents obtained from Belgium Customs had accepted its genuineness and also accepted the undervaluation.

4.8 That the Principal Commissioner has for cogent reasons denied the cross examination of three officials as requested by the Appellants.

4.9 That the Principal Commissioner has correctly invoked Rule 9 of CVR, 2007 to reject the transaction value as there was sufficient reasons to doubt the truth and accuracy of the transaction value. Rule 12 of CVR, 2007 fully empowers the proper officer to re-determine the price under Rule 9 of CVR, 2007 keeping in view the modus operandi resorted by all the three Importers to undervalue the goods. He therefore supported order-in-original in totality.

4.10 In support of his various submissions he has placed reliance on the following judgments:

(i) TRANSWORLD POLYMERS P LTD VS. CC, NHAVASHEVA REPORTED AT 2018 (363) ELT 996 (TRI-AHMD)

(ii) MARTWIN ELECTRONICS VS. CST, AHMEDABAD REPORTED AT 2016(331) ELT 85 (TRI-AHMD)

(iii) KONIA TRADING CO VS. COMMISSIONER CUSTOMS, JAIPUR REPORTED AT 2006(199) ELT 644 ( TRI-DEL)

(iv) LAXMI ENTERPRISES CC, NEW DELHI REPORTED AT 2018(361) ELT 1054 ( TRI-DEL)

(v) LAXMI ENTERPRISES VS. COMMISSIONER, NEW DELHI REPORTED AT 2020(372) ELT A33(SC)

(vi) SRI KRISHNA SALES CORPORATION CC, MUMBAI REPORTED AT 2017-TIOL-3650-CESTAT-MUM.

(vii) CC(SEA), CHENNAI VS. NATIONAL LAMINATION INDUSTRIES REPORTED AT 2016(331) ELT 18 (SC)

(viii) UNIVERSAL ABRASIVES & MINERAL P LTD CC, CHENNAI REPORTED AT 2010(258) ELT 382(TRI-CHENNAI)

(ix) TELESTAR TRAVELS P LTD VS. SPECIAL DIRECTOR OF ENFORCEMENT REPORTED AT 2013(289) ELT 3 (SC)

5 We have carefully considered the various submissions made by both the sides and perused the records. We find that the differential duty against all three importers has been confirmed by the Principal Commissioner by invoking Rule 9, of CVR 2007. According to the Principal Commissioner, M/s NPT, M/s SPPL and M/s SIPPL had been undervaluing the imports of stocklot of coated/uncoated paper purchased from M/s Korco AB, Sweden as it is evident from overseas verification and investigation by which the export documents/invoices were received from foreign supplier through Belgium Customs. He also relied upon statement dated 8.8.2018 given by Sh. Prakash Chand Garg which according to him is admissible/confessional statement. It has been held in case when direct evidence is not available the values are adoptable by adopting to value of identical items from the same country. He therefore, redetermined the declared value of imported goods based on Rule 9 of CVR,2007 for three related entities namely M/s NPT, M/s SPPL and M/s SIPPL.

5.1 The comparative chart in respect of the value declared on the basis of actual invoices and the invoices/export declarations procured from Belgium Customs is as under :

Sr. No.	Bill of Entry No. & Date	Invoice No & Date (submitted to Indian Customs)	Value declared to Indian Customs (in US$)	Number given to         export documents received from Belgium Customs
1	5531276 19.5.14	1001401 19.4.14	400	148EE0000 015896657 18.4.14
2	5762012 10.6.14	1001480 13.5.14	400	148EEOO00 018947266 9.5.14
3.	5762306 10.6.14	1001482 13.5.14	400	148EE0000 018947266 9.5.14
4.	6228695 24.7.14	1001561 25.6.14	400	148EE0000 024046867 13.6.14
5	7749575 19.12.14	1002096 17.11.14	400	14BEE0000 046211n4 14.11.14
6.	7749m 19.12.14	1002097 17.11.14	400	148EE0000 046211n4 14.11.14
7.	673510 12.9.14	1001712 11.8.14	400	14BEE0000 032215782 8.8.14
8.	6735402 12.9.14	1001713 11.8.14	400	14BEE0000 032215782 8.8.14

–

Invoice received from Belgium Customs	Value as per the document received from Belgium Customs.	Difference in value.	RUDs No .	Page No. of the paper book
13077 4.1.14	630	230	31 A & 32 A	215 & 248 of paper book Vol.1
No invoice relied upon	635	235	31 B 328	226 & 252 of paper book Vol.1
-do-	635	235	318 & 32 C	226 & 252 of paper book Vol.1.
13368 13.6.14	625	225	31C & 32 0	229 & 258 of paper book Vol.1
13954 17.11.14	605	205	31 E & 32 E	247 & 261 of paper book Vol.1
13954 17.11.14	605	205	31 E & 3 2F	247 & 263 of paper book Vol.1
13632 10.8.14	646	246	31 D & 32 G	245 & 265 of paper book Vol.1
13632 10.8.14	646	246	31 D & 3 2H	245 & 268 of paper book Vol.1

6. We have gone through the actual invoices submitted to Indian Customs and four invoices procured from Belgium Customs. We find the following discrepancies which are very vital to the case at hand:

(i) Four invoices and five export declarations relied upon by the DRI do not bear any signatures of the Belgium Customs or any other official of the Indian Embassy at Brussels. These are photocopies which only contain the seal of Directorate of Revenue Intelligence, Zonal Unit Bangalore. These documents were shown to Sh. Prakash Chand Garg while recording his statement dated 08.08.2018.It is mentioned on these documents as seen and bear the signatures of Sh. Prakash Chand Garg dated 08.08.2018.

(ii) The procured invoices neither bear stamp nor signature of M/s Korco AB, Sweden who were the suppliers of the material. We have gone through actual invoices presented before the Indian customs which duly bear the signature of one Ulla Hoberg of M/s Korco AB, Sweden.

(iii) The procured invoices are only on the plain paper whereas the actual invoices bear the name along with the logo of the supplier M/s Korab. Further a perusal of above comparative chart will reveal that invoice numbers of procured documents are different and in some cases dates are also different, when compared with the invoices presented before the Indian Customs.

(iv) On comparison of the actual invoices presented before Indian Customs and the procured invoices, the same are not on the standard format of invoices which were actually issued by M/s Korco AB, Sweden in their normal course of business. The actual invoices contain certification as –“We hereby certify that this invoice is true and correct” whereas, in the procured invoices, there is no such certification.

(v) The procured invoices only mention invoice no. whereas the actual invoices mention commercial invoice.

(vi) The mode of writing the date and font of both types of invoices are also different.

6.1 We find that neither the Show Cause Notice nor the Order-in-Original rely upon any provision of law under which the documents procured from Belgium Customs have been relied upon against the three importers but the only section under which such documents can be relied upon is Section 139(ii) of the Customs Act,1962. For the sake of convenience Section 139 ibid is reproduced below:

“Section 139.Presumption as to documents in certain cases Where any documents, –

(i) is produced by any person or has been seized from the custody from or control of any person, in either case, under this Act or under any other law, or

(ii) has been received from any place outside India in the course of investigation of any offence alleged to have been committed by any person under this Act,

And such document is tendered by the prosecution in evidence against him or against him and any other person who is tried jointly with him, the court shall-

(a) presume, unless the contrary is proved, that the signature and every other part of St\(:h document which purports to be in the handwriting of any particular person or which the court may reasonably assume to have been signed by, or to be in the handwriting of, any particular person, is in that person’s handwriting, and in the case of a document executed or attested, that it was executed or attested by the person by whom it purports to have been so executed or attested;

(b) admit the document in evidence, notwithstanding that it is not duly stamped, if such document is otherwise admissible in evidence;

(c) in a case falling under clause (i) also presume, unless the contrary is proved,the truth of the contents of such document.]

(d) [Explanation: For the purposes of this section “document” includes inventories, photographs and lists certified by a Magistrate under sub­section (lC) of section 110.]”

In our considered opinion, the relied upon documents do not meet the test of Section 139(ii) of the Customs Act, 1962 and hence are not admissible in evidence. Since these documents are neither signed nor authenticated and also full of numerous discrepancies as explained above, no presumption can be raised about its truthfulness. In support of our above findings we rely upon the following judgments:-

(i) Commissioner of Customs, Vishakhapatnam vs. Truwoods Pvt Ltd reported at 2016 (331) E.L.T 15 (SC) – The Hon’ble Apex Court in para 4 of their judgment observed as under: –

“4. It would be pertinent to observe that in support of its case, the Revenue has produced certain documents purported to have been issued by Italian customs authorities as per which the price of these very goods was shown higher by the manufacturer of these goods through whom the goods were purchased by M/s. Pargan Singapore for sale to the assessee. The assessee had challenged the admissibility of these documents in evidence on the ground that they are not authenticated. This argument has been accepted by the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as “CESTAT‟). CESTAT has found that the documents procured by the Revenue do not bear any signatures and are photocopies which are not even attested and accordingly, the assessable value could not be enhanced on the basis of such documents. In arriving at this conclusion, while doubting the genuineness of those documents, the CESTAT has kept in mind the provisions of Section 139 of the Customs Act and has relied upon various judgements of the Tribunal on this issue”.

(ii) Collector of Customs, Bombay vs. East Punjab Traders reported at 1997 (89) E.L.T 11 (SC) –wherein para 5 and para 6 of the judgment the Hon’ble Apex Court held as under:

“5. The single Technical Member, who wrote the minority judgment, however, held the view that it was not essential V on the part of the Customs Officer to strictly prove the documents as required by the Evidence Act and that the authenticity of the documents, though copies, could not be doubted as they had been collected by the Collector from foreign sources and could be admitted in evidence by virtue of Section 139(ii) of the Customs Act, 1962 which permits the raising of a presumption in respect of documents received from any place outside Indian in the course of investigation of any offence alleged to have been committed by any person under the Act. The majority points out that these documents, which are photocopies, do not bear the signature either of the exporter, the forwarding agent, the stevedore or the Customs Officer. In fact, they do not bear any signature whatsoever and, therefore, the authenticity of these documents is suspect and iris not possible to presume that the originals are duly signed. It is for this reason that the majority did not consider it safe to place reliance on photocopies of copies of the documents recovered by the Customs Officer not from the Customs Department in Japan but from the agencies which are stated to have exported the material in question. It is also found that one of these copies of the alleged declarations bears the seal of the Customs at Kobe and the name of the vessel is shown to be ^„Raya Fortune’ but the itinerary of that vessel collected at the instance of the Indian Customs shows that the said vessel had never touched Kobe which raises a serious doubt as to how far this document is authentic. The majority raises the question as to how the declaration at Kobe and shipment from Osaka are reconcilable noting that there is no explanation coming forth. The majority feels that the authenticity of the documents itself is suspect. In these circumstances, the presumption to be raised under Section 139(ii) of the Customs Act could not be raised because the document did not bear any signature, did not come from proper custody and it is difficult to understand why the Indian Customs did not interact with the Japan Customs and obtain authentic copies of the document from the latter. Merely because the Department offered cross-examination of the steamer agent from whom the export declaration had been obtained and the respondents chose not to avail of that opportunity is no ground for holding that the requirements of Section 139 are satisfied for the purpose of raising the presumption. In order to raise the presumption under the said provision, the basic facts had to be laid. Even though they bear a serial number and stamp of Japan Customs, the fact remains that they are copies of copies and indisputably bear no signature of the exporter, the forwarding agent, the stevedore or the Customs Officer; no signature at all of any of them. The discrepancy in regard to copies bearing the seal of customs at Kobe also raises a serious doubt whether the copies relate to any of the consignments in question. In these circumstances, if the majority was disinclined to place reliance on these document, we find it difficult to hold that it was in error in doing so”.

6. The difference in the value is again worked out on the strength of these very documents. Once these documents evidence on the question of the value of the consignments since the Collector of Customs had reached the conclusion that there was an incorrect declaration made by the respondents in regard to the value of the consignments on the basis of these documents”.

6.2 In the both above judgments the Hon’ble Apex Court has categorically laid down that if the documents procured from abroad which purportedly show higher value than the declared value, no reliance can be placed on the same if the said documents are neither authenticated nor attested even if they bear a serial number and stamp. No reliance can be placed on the same if they are only copies and bear no signature of the exporter or the forwarding agent or the Customs Officer of the exporting country. We hold that since the procured documents do not contain the details as mandated by the Hon’ble Apex Court in above two judgments the same cannot be relied upon against the three importers. Similarly corresponding five export declarations are also not admissible in the same manner. Further we find that in respect of two Bills of Entry at serial number 2 and 3 of the above chart only one export declaration dated 9.5.2014 has been relied upon without bringing on record corresponding invoices. No explanation has been given by the DRI as to if the purported export declaration of higher value was available why corresponding invoices were not provided by the Belgium Customs as export declaration is always prepared on the basis of an invoice. Further, the duty of Rs. 74,640 has been confirmed on the ground that there was a difference in weight to the extent of 8.552 MT in respect of two Bills of Entry both dated 12.9.2014 as the procured invoices showed the actual quantity 447.492 MT where the actual invoices showed the total quantity imported as 438.940 MT. Since we have already held hereinabove that the procured invoices are not admissible in evidence hence the charge of misdeclaration in quantity of import of goods in respect of two Bills of Entry can also be not sustained.

6.3 We note that during the investigation the DRI Zonal Unit Bangalore had sent contents e-mail dated 22.1.2019 to one Mr. Jens Galatius representing M/s Korco AB, Sweden. In this email the DRI stated that they were investigating one company known as M/s NPT and two of its sister concerns. The preliminary investigation revealed that they were not revealing the actual prices of the products which they had purchased from its supplier to Indian Customs and asked the supplier for their sales account statement and also details of receipt of payment (either cash or bank transfer) in respect of M/s NPT, M/s NPT International and M/s Salwan International. The supplier in their reply to the DRI Zonal Unit Bangalore vide their return e-mails dated 28.1.2019 and 29.1.2019 made a chart giving the details of transactions like invoice numbers, transaction numbers, date of receipt of payment and amount received by their banker for the year 2017-2018 which was readily available to them. The supplier also clarified that all the payment were made by bank transfer only. The supplier forwarded these mails to M/s NPT vide their letter in response to M/s NPT‟s letter dated 26.7.2019. It was also stated by the supplier that documents sent by the Belgium Customs to DRI Bangalore were unsigned and were not issued by their office. These documents were filed by their forwarding agent by himself. The unit price on the invoice was incorrect and did not match with their commercial invoices and orders. All the aforementioned e-mails and letter by the supplier were duly filed with reply to the Show Cause Notice. However, there is no reference to this correspondence in the Show Cause Notice. In fact it was obligatory upon the DRI to have rebutted this correspondence with the supplier while issuing the Show Cause Notice. Further the importers in their reply to the Show Cause Notice had brought this correspondence on record but the Principal Commissioner has chosen to completely overlook the same and has rendered no finding upon the same.

6.4 That the authenticity, genuineness and admissibility of procured documents can be examined from another angle. Under Section 2(41) of Customs Act the word “value” is defined in relation to any goods to mean the value determined in accordance with provisions of Section 14(1). The value to be declared in bill of entry is the value referred to above and not merely the invoice price. On the plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). Therefore, the transaction value under Rule 3(1) of CVR, 2007 must be the price paid or payable on such goods at the time and place of importation in the course of international trade, when the seller and buyer have no interest in the business of each other and price is sole consideration for the sale. Therefore, what has to be seen by the department is the value or cost of the imported goods at the time of importation that is at the time when the goods reach customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the department has to give cogent reason for such rejection. This is because the invoice price forms the basis of transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable department has to find whether there are any imports of identical or similar goods at higher price around the same time. Unless the evidence is gathered in that regard, question of rejecting the invoice price or transaction value cannot arise in the absence of such evidence and invoice price has to be accepted as the transaction value. In the present case, it is noted that M/s NPT had imported 43 consignments of stocklot of coated/uncoated paper rolls in mix size and gsm from M/s Korco AB, Sweden out of which in sixteen cases they have brought on record export declarations pertaining to the period 26.12.2014 to 22.6.2017. These export declarations show price lesser than invoice price due to the reasons that invoice price is inclusive of insurance and freight whereas the export declaration only reflects the cost of goods. Similarly in respect of M/s SPPL, they had imported thirteen consignments from M/s Korco AB, Sweden during period 29.8.2014 to 11.5.2017. M/s SPPL has also brought on record two export declarations the details of which have been given in submissions portion. We have gone through these export declarations which pertain to the disputed consignments themselves and pertain to the invoices which were filed before Indian Customs and value declared in the same range from US$ 400 PMT to US$ 455 PMT. Similarly we have also gone through the invoices and export declarations (which have been enclosed in some cases) of identical/similar goods namely stocklot of coated/uncoated paper rolls in mix size and gsm imported by M/s NPT from same company i.e. M/s Korco AB Russia, imports from other suppliers located in Europe to M/s NPT, supplies from European suppliers to other parties in India, imports from USA and Canada by M/s NPT. In all these supplies, the price of identical/similar goods range from US$ 400 PMT to US$ 435 PMT. This evidence was placed before the Principal Commissioner but he has not rebutted or controverted the same. In the face of this unimpeachable evidence the procured documents completely loose its evidentiary value. In support of our finding that even in cases where the department procures evidence of higher value at the place of export, the value cannot be enhanced unless there is an evidence of import of identical or similar goods at a higher value, we rely upon on law laid down by the Hon‟ble Apex Court in case of Commissioner of Customs Calcutta vs. South India Television P Ltd reported in 2007(214) ELT 3(SC) where in para 6 , para 7 and para 8 it has been laid down as under :-

“6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), “value” is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word “value” is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the Bill of Entry is the value referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade 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 or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries; collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts‟ proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of “deemed value”. Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determining the price at which goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion”.

7. Applying the above tests to the facts of the present case, we find that there is no evidence from the side of the Department showing contemporaneous imports at higher price. On the contrary, the respondent importer has relied upon contemporaneous imports from the same supplier, namely, M/s. Pearl Industrial Company, Hong Kong, which indicates comparable prices of like goods during the same period of importation. This evidence has not been rebutted by the Department. Further, in the present case, the Department has relied upon export declaration made by the foreign supplier in Hong Kong. In this connection, we find that letters were addressed by the Department to the Indian Commission which, in turn, requested detailed investigations to be carried out by Hong Kong Customs Department. The Indian Commission has forwarded the export declarations in original to the Customs Department in India. One such letter is dated 19-9-1996. In the present case, the importer has alleged that the original declarations were with the Department. That certain portion of the originals were not shown to the importer despite the importer calling upon the adjudicating authority to do so. Further, by way of Interlocutory Application No. 4 in the present civil appeal, an application was moved by the importer calling upon the Department to produce the original declaration in the Court. No reply has been filed to the said I.A. till date. In the circumstances, we are of the view that the Department had erred in rejecting the invoice submitted by the importer herein as incorrect. Further, the Department received from the Hong Kong supplier a Fax message dated 22-7-1996. That was produced before the Commissioner. In that message, he had explained that the manufacturer of the impugned goods was getting export rebates and, therefore, it is possible that the manufacturer had over-invoiced the price in order to claim more rebate. The goods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the aforestated reasons, we find no infirmity in the impugned judgment of the Tribunal”.

8. Before concluding, we may point out that in the present case at the stage of show cause notice, the Department invoked Rule 8 on the ground that the invoice submitted by the importer was incorrect. In Eicher Tractors (supra) this Court observed that Rule 4(1) of the Customs Valuation Rules refers to the transaction value. Utilization of the word ^„the‟ as definite article indicated that what should be accepted as the transaction value for the purpose of assessment under the Customs Act is the price actually paid by the importer for the particular transaction, unless it is unacceptable for the reasons set out in Rule 4(2). In the said judgment, it has been further held that, the word ^„payable‟ in Rule 4(1) also refers to the “transaction value” and payability in respect of the transaction envisaged a situation where payment of price stood deferred. Therefore, this decision of the Supreme Court directs the Revenue to decide the validity of the particular value instead of rejecting the transaction value. We wish, however, to clarify that it is still open to the Department based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules”.

6.5 Learned Counsel submitted that no reliance could be placed on the procured documents without cross examination of three persons namely Sh. Aseem Nanda Second Secretary (Trade), Embassy of India, Brussels, Brigitte Decatte, Fiscal Expert, Administration of Enquiry and Investigation, Central Component, Brussels and Mr. Jean Smets Adviseur- Eerslaanwezend Inspector, Brussels for which a request was made before the Principal Commissioner but he chose to deny the same. However, we find that in the facts of present case when the said documents do not commend any evidentiary value for the reasons stated by us in the preceding paragraphs even grant of cross examination would not have altered the factual position that these documents are not admissible in evidence.

6.6 We further find a part of the disputed goods imported by M/s NPT weighing 750 MT were seized by the DRI from its go down at Alipur Delhi. The Commissioner of Customs (Appeals) vide order dated 9.8.2017 has categorically held that there was no clear and cogent evidence of undervaluation on the part of M/s NPT. While passing the order Commissioner (Appeals) relied upon various judgments of Hon‟ble Supreme Court and this Tribunal. The Commissioner (Appeals) relied upon the data of contemporaneous imports where the values of similar goods were imported at the same value at which M/s NPT had imported the goods. It is an admitted position that this Order-in-Appeal was accepted by the department as no appeal was filed by the department before this Tribunal. Even the Principal Commissioner has accepted the same in para 24.3.3 of the Order-in-Original. It would mean that the department had accepted the legal position that when there was evidence of imports of identical/similar goods at the same value, transaction value cannot be rejected. We may note here that the documents from Belgium Customs were received subsequent to the passing of above Order-in-Appeal i.e. on 31.1.2018 but the fact remains that when the Commissioner (Appeals) passed the order in favour of M/s NPT, the DRI Bangalore unit was in process of investigation and had already entered into correspondence with Embassy of India, Brussels. If the DRI or the Customs Department was of the view that M/s NPT and two other importers had indulged in undervaluation nothing prevented them from challenging the above Order-in-Appeal before the Tribunal. We find that there cannot be two different set of findings in respect of the same imports.

Hence from this point of view also, the enhancement of the declared value cannot be supported.

6.7 The Principal Commissioner has placed heavy reliance on last statement of Shri Prakash Chand Garg Director of M/s NPT which was recorded on 8.8.2018. We have noted above that the three statements from Shri Garg were recorded which are dated 23.1.2015, 24.4.2018 and 8.8.2018. According to the Principal Commissioner it was his third statement dated 8.8.2018 wherein he accepted undervaluation on the part of M/s NPT. We have gone through the contents of said statement dated 8.8.2018. Nowhere in the said statement there is any acceptance of undervaluation. While recording the statement the investigating officer had confronted Shri Garg with four invoices of higher value and five export declarations and was asked to offer his comments regarding huge discrepancy in the per unit price. After going through the photocopies of said documents he stated that it was true that in the procured invoices the value of goods PMT was mentioned as US$ 605, 625, 630 and 646 but he stated that he did not exactly remember how that price was shown in the supplier invoice. He further stated that he would verify from his end and come back to DRI with proper explanation in ten days time. In answer to next question which was put to him he stated that as per invoices shown to him the goods were shipped to them at the higher rate of US$ 605 PMT to US$ 646 PMT but they showed to the Indian Customs US$ 400 to US$ 550 PMT as true and correct. We note that whatever comments were given by Shri Garg in answer to various queries put by the investigating officer were in response to the four invoices of higher value shown to him. Therefore, his answer should be seen in that context only. If M/s NPT would have indulged in undervaluation it was highly obligatory upon the investigating officers to put a pertinent query to Shri Garg as to how the extra amount was remitted to the supplier. Further this investigation centred around only four invoices when the fact remains that when his statement was recorded M/s NPT had already imported 43 consignments from M/s Korco AB, Sweden. Further we find that Shri Garg retracted from his statement by filing an affidavit before the DRI. Therefore the statement of Shri Garg cannot be seen in isolation but in the context of what was shown to him. If M/s NPT would have indulged in undervaluation Shri Garg would not have sought ten day time to verify the facts. It means his statement dated 8.8.2018 was not conclusive. The DRI should have called him again after ten days for further clarification if any but he was never summoned after 8.8.2018. It is well settled law that the admission is extremely important piece of evidence but it cannot be said that it is conclusive; it is open to the person who made the admission to show that it is incorrect. This proposition of law has been well laid down by Hon’ble Apex Court in the case of Pullangoda Rubber Produce Co Ltd vs. State of Kerala and others reported at (1972) 4 SCC 683. Further, we observe that the statement of Sh. Prakash Chand Garg dated 8.8.2018 was with regard to the procured documents. Once we have held that the said documents are not admissible in evidence any statement recorded on said procured documents will have no evidential value.

6.8 The Principal Commissioner in para 26.5 of his order has observed that nowhere it is inferred that the said retraction was received by the DRI so as to record a counter statement in context with the retraction. We observe that this finding has been rendered without finding the factual position from the DRI. In any event this retraction was filed by both M/s NPT and Shri Prakash Chand Garg before the Principal Commissioner in reply to the Show Cause Notice. Once said affidavit was filed before the Adjudicating Authority it was incumbent upon him to call Shri Prakash Chand Garg for cross examination with regard to statement made by him in his affidavit dated 9.8.2018. In this regard we rely upon the law laid down by Hon’ble Apex Court in the case of Mehta Parikh & Co. vs. Commissioner of Income Tax, Bombay reported 1956 SCR 626 wherein it has been held that when a party is not cross examined with respect to statement made by him in their affidavit it was not open to the revenue to challenge the correctness of the cash entries or the statement made by those deponents in their affidavits. Further we hold that the statement of Shri Prakash Chand Garg dated 8.8.2018 could not be admitted as evidence without complying with the provisions of Section 138B of the Customs Act, 1962. The Adjudicating Authority was first required to examine Shri Prakash Chand Garg and after conducting his examination-in-chief decide whether the said statement was voluntarily or not and could be admitted as evidence. Since this was not done the said statement cannot be relied upon. In this regard, we place reliance on the following judgments:-

(i) G-TECH INDUSTRIES VS. UNION OF INDIA, REPORTED AT 2016 (339) ELT (P&H)

(ii) HI TECH ABRASIVES LTD VS. COMMISSIONER OF CENTRAL EXCISE & CUSTOMS, RAIPUR, REPORTED AT 2018 (362) ELT 961 (CHHATTISGARH)

(iii) COMMISSIONER OF CENTRAL EXCISE, DELHI-1 VS. KUBER TOBACCO INDIA LTD, REpPORTED AT 2016 (338) ELT 113 (TRI.-DEL.)

6.09 We further find that the DRI has not brought any evidence on record to show that all the three importers had paid directly or indirectly any amount over and above the invoice value presented before the Indian Customs. As we have observed earlier that in his statement dated 8.8.2018 Shri Garg nowhere admitted that M/s NPT had paid any extra amount over and above the invoice price at which goods were cleared by the custom authorities. Further we have also observed that there were inquiries by the DRI from the supplier M/s Korco AB, Sweden who had categorically stated that all their transactions with three importers were through banking channels only. Once it is proved that there is no evidence of extra remittance transaction value cannot be discarded. In support of these findings, we place reliance on the following Judgments:

(i) BAYER INDIA LTD VS. COMMISSIONER OF CUSTOMS, MUMBAI 2006 (198) ELT 240 (TRI.-MUMBAI) which has been upheld by the Supreme Court as reported at- 2015(324)ELT17(SC).

(ii) TELEBRANDS (INDIA) PVT LTD VS. COMMISSIONER OF CUSTOMS(IMPORT), MUMBAI reported at-2016(336)ELT97(Tri.-Mum).

6.10 That on the issue of inter-relationship between the three importers and the fact that all the three have been treated as related persons on twin grounds. In the first place it has been observed by the Principal Commissioner that Shri Prakash Chand Garg was Director of M/s NPT whereas his sons Shri Vijay Garg and Shri Ashish Garg were Directors of M/s SPPL and M/s SIPPL. He further observed that all three are part of same family and reside at the same residential address. He noted that there had been fund transfers among the three importers during period the financial year 2017-18 and these fund transfers were duly reflected in their financial statements. He further relied upon a letter dated 29.8.2018 of Consulate General of India, Hong Kong wherein it was stated that M/s Affluent Enterprises Ltd. which was one of major supplier to M/s NPT was related to all three entities namely M/s NPT, M/s SPPL and M/s SIPPL. It has been held that Shri Prakash Chand Garg was one of the Directors in M/s Affluent Enterprises Ltd, Hong Kong and by virtue of that position all the three importers are related persons of M/s Affluent Enterprises Ltd. Further, M/s The Crown Commercial House, Hong Kong which was one of the suppliers to these importers was owned by one Shri Vikash Khatuwala who had a major shareholding in M/s Affluent Enterprises Ltd. Hence by virtue of that position, M/s The Crown Commercial House, Hong Kong was also a related person of these three importers.

6.11 We observe that merely because there were transfer of funds in India amongst three importers will not make them related persons in terms of Rule 2(2) of CVR,2007. The concept of related person under the Customs Act, 1962 is applicable only with regard to imported goods. The transfer of funds from one entity to another entity in India cannot have any bearing on the concept of related person with regard to the provisions of the Customs Act and Valuation Rules made there under. Further in this regard, even the Principal Commissioner in para 26.6 of his order has held that the provisions of Indian Income Tax Act have no bearing under the Customs Act. Having held so he could not have taken a contrary view in subsequent paragraphs of his order wherein he has taken note of the various inter party transactions in India to hold that there was a mutual interest or benefit in regular affairs of each of the three entities/importers. In any event, the said transactions happened only during period 01.4.2017 to 31.12.2018 whereas the majority of duty demand in respect of all three importers is prior to said period. Further we have gone through a chart presented at the time of personal hearing in which the purpose of each entry has been explained. The majority of these entries pertain to the sales of the material from one entity to another entity and some entries pertain to repayment of loan. Hence from this point of view all the three importers cannot be treated as related persons.

6.12 As regards treating all the three importers as related persons on the ground that Shri Prakash Chand Garg was Director in M/s Affluent Ltd, Hong Kong, it is true that Shri Garg was one of the Director of M/s Affluent Enterprises Ltd, but during the period in dispute there was no imports by M/s NPT from M/s Affluent Enterprises Ltd, Hong Kong. Further with regard to M/s SIPPL, no imports were made from M/s Affluent Enterprises Ltd, Hong Kong during the relevant period. Only M/s SPPL imported three consignments from M/s Affluent Enterprises Ltd, Hong Kong. We find that merely because sons of Shri Prakash Chand Garg were Directors in M/s SPPL they cannot be treated as related persons in terms of Rule 2(2) of CVR, 2007. In any event the prices at which M/s Affluent Enterprises Ltd sold the goods to M/s SPPL were at the same level as they sold to other buyers in India such as M/s Yashika Traders and M/s Shivam Enterprises. In this regards we have gone through invoices of these two firms where the price PMT has been shown in the range of US$ 400 to US$ 425 PMT. This evidence was placed before the Principal Commissioner but he has not rebutted or controverted on the same. Similarly in respect of M/s The Crown Commercial House, Hong Kong, M/s SPPL does not have any relation with the owner Shri Vikash Khatuwala. Merely because he held stake in the company where father of Directors of M/s SPPL was a Director cannot be ground to treat M/s SPPL to be a related person of M/s The Crown Commercial House, Hong Kong. Further we have also gone through invoices at which M/s The Crown Commercial House had sold the identical goods to various parties in India such as M/s Vinod Paper Co., M/s BKH Enterprises, M/s Garg Paper Mart, M/s RKS Paper Impex and M/s Jindal Papers at the price which ranged from US$ 395 PMT to US$ 425 PMT. It is well settled law that even if the foreign suppliers are related to indian importers the transaction value cannot be rejected on the grounds that a transaction is between the related person when identical or similar goods were sold at the same price to unrelated parties. In this regard we rely upon the following judgments:

(i) COMMISSIONER VS. CLARIANT (INDIA) LIMITED reported at 2007(210)E.L.T.481(S.C.),

(ii) ANIL KUMAR ANAND VS.COMMISSIONER OF CUSTOMS (PREV.) reported at 2019(366)E.L.T.601(S.C.)

(iii) R. MAURYA VS. COMMISSIONER OF CUSTOMS, BHOPAL reported at 2019 (370) E.L.T. 906 (Tri. -Del.)

6.13 We further find that it has been held by the Principal Commissioner that valuation of imported goods for the purpose of assessment in the present case is required to be done in terms of Section 14 of Customs Act read with CVR, 2007. However, he has held that value cannot be determined in present case under Rule 3, 4 and 5 of CVR, 2007. However, he has held that value shall be determined under Rule 7 and 8 of CVR, 2007. However, he has also ruled out the application of Rule 7 of CVR 2007 on the ground that the quality, model, brand of imported goods differ from time to time and piece to piece. He further held that even the Rule 8 of CVR, 2007 that is computed value cannot be adopted as the required data from overseas supplier was not available. He has therefore applied Rule 9 of CVR, 2007 i.e. Residual Method on the ground that M/s NPT, SPPL and SIPPL was resorting to undervaluation and fabrication of commercial invoices from overseas supplier M/s Korco AB, Sweden and from the supplies by M/s Affluent Enterprises Ltd. and M/s The Crown Commercial House, Hong Kong in the same manner as was done in the case of imports from European Union. Therefore, relying on the export documents received from foreign supplier through Belgium Customs he has redetermined the declared value based on Rule 9 of CVR, 2007.

6.14 We find that the above finding of the Principal Commissioner is wholly unsustainable, factually incorrect and contrary to the evidence on record. In the first place the finding of the Principal Commissioner that the export documents/invoices were procured from the supplier through Belgium Customs is factually incorrect as the supplier in his correspondence to the DRI Bangalore Zonal Unit had clarified that all payments from the three importers were made by bank transfer only. Further M/s NPT have also brought on record a letter from the supplier where they have stated that documents received from Belgium Customs were not issued by their office. This factual aspect has not been rebutted or controverted in the Show Cause Notice. Further we note that value has been redetermined on the basis of procured export declarations/invoices for which we have already rendered detailed findings that these are not admissible documents in terms of Section 139 (ii) of Customs Act. Further all three importers brought on record export declarations in respect of disputed consignments itself which show that the transaction value was correctly declared in all the cases. Further there is enough evidence on record that international price of identical goods was at the same commercial level at which three importers have imported the goods. It is to be appreciated that Rules 4 to 9 of CVR are subject to Rule 3 ibid. Rule 3(1) of CVR provides that subject to Rule 12, the value of imported goods shall be the transaction value adjusted in accordance with the provisions of Rule 10. Further Rule 3(4) of CVR provides that if the value cannot be determined under the provisions or Rule 3 (1), the value shall be determined by proceeding sequentially through Rule 4 to 9. We find that in the present case there was no need to redetermine the value as the transaction value under Rule 3(1) was available in view of our detailed findings hereinabove. Though Rule 3(1) is subject to Rule 12 but we find Rule 12 is not applicable to the facts of the present case as there is no credible evidence brought on record to reject the transaction value. We have already held that the documents procured from the Belgium Customs are not admissible in evidence. In this view of the matter, we hold that the transaction value declared by all the three importers were in accordance with Section 14(1) of Customs Act,1962 read with Rule 3(1) of CVR,2007. Further it was for the Principal Commissioner to have rebutted or displaced the detailed evidence which has been discussed by us in the preceding paragraphs which he has chosen to totally overlook and sidetrack.

6.15 Therefore, we hold that the transaction value was correctly declared in present case by all three importers. It is well settled law as per Section 14 of the Customs Act, 1962, read with Rule 3(1) of the Customs Valuation Rules, 2007, the price actually paid is to be considered as the transaction value. In support of these findings, we rely upon the following judgments:

(i) COMMISSIONER OF CUSTOMS,CALCUTTA SOUTHINDIATELEVISION (P)LTD reported at 2007(214)ELT3(SC)

(ii) EICHER TRACTORS LTD VS. COMMISSIONER OF CUSTOMS,MUMBAI reported at 2000 (122) ELT 321(SC) –

(iii) COMMISSIONER OF CUSTOMS, MUMBAI VS .J.D.ORGOCHEM LTD reported at 2008(226)ELT9(SC)

(iv) C.E & S.T, NOIDA VS. SANJIVANI NON-FERROUS TRADING PVT. LTD reported at 2019 (365) ELT 3 (SC) – C.C.E. & S.T

(v) DAHLER INDIA PVT LTD VS.COMMISSIONER OF CUSTOMS, PUNE reported at 2017(357)ELT1129(Tri.-Mum)

6.16 That the Ld Superintendent (AR) has placed reliance on the following judgments in support of his various submissions:

(i) TRANSWORLD POLYMERS P LTD CC, NHAVASHEVA 2018 (363) ELT 996 (Tri-Ahmd)

(ii) MARTWIN ELECTRONICS VS. CST, AHMEDABAD 2016(331) ELT 85 (Tri-Ahmd)

(iii) KONIA TRADING CO. CC, JAIPUR 2006(199) ELT 644 ( Tri-Del)

(iv) LAXMI ENTERPRISES CC, NEW DELHI 2018(361) ELT 1054 ( Tri-Del)

(v) LAXMI ENTERPRISES CC NEW DELHI 2020(372) ELT A33(SC)

(vi) SRI KRISHNA SALES CORPORATION CC, MUMBAI 2017-TIOL-3650-CESTAT-MUM-

(vii) NATIONAL LAMINATION INDUSTRIES CC(SEA), CHENNAI 2016(331) ELT 18 (SC)

(viii) UNIVERSAL ABRASIVES & MINERAL P LTD CC, CHENNAI 2010(258) ELT 382(Tri-Chennai)

(ix) TELESTAR TRAVELS P LTD VS. SPECIAL DIRECTOR OF ENFORCEMENT 2013(289) ELT 3 (SC)

In this regard, we find that these judgments have no applicability to the facts of the case at hand. In the first case of M/s Transworld Polymers Pvt Ltd, the documents were directly obtained from the supplier M/s Delphi Fibers Italy and there was a statement from the supplier accepting the authenticity of those documents. In the second case of M/s Martwin Electronics, the export declarations were obtained through official channels from Customs and Excise Department, Hong Kong under the proper signatures and seal of the concerned authorities. These documents were signed by the merchandiser and the exporter. In the third case of M/s Konia Trading Co., there was a report dated 24.7.1999 written by an officer of Customs and Excise Department, Hong Kong wherein they had brought evidence on record wherein the amounts pertaining to the false invoices settled were on D.P terms while the balance was paid by Cheque or Telephonic Transfer. In the fourth case of M/s Laxmi Enterprises, there was a statement from one Shri Sumit Chawla dated 19.1.2016 wherein he had admitted that the differential amount, over and above the declared in bill of entry, was remitted in indian currency to the representative of the supplier through unofficial channels. In the fifth case of M/s Sri Krishna Sales Corporation, the declared value was enhanced on the basis of market enquiry under Rule 7 of CVR,1988. In the sixth case of M/s National Lamination Industries, the Hon’ble Apex Court reversed the judgment of the Tribunal on the ground that there was statements of two partners of the assessee where there was an admission on their part that the prices/value declared by them for imports through Chennai port for similar items was much less compared to the values declared at Mumbai port. In the seventh case of M/s Universal Abrasives & Mineral P Ltd, the supplier at Sharjah and buyer at India were related as the Managing Director of the both supplier and buyer was the same person. Hence the declared value was not accepted in absence of contemporaneous imports of identical or similar goods. Hence the Tribunal upheld the valuation under Rule 8 of CVR and in view of statement of the Managing Director. In the eighth case of M/s Telestar Travels P Ltd where the Hon’ble Apex Court upheld the order of the Bombay High Court. In this case it was held that when the documents were produced by witness were disclosed and allowed to be inspected by the party and since these documents were in terms of Section 139 of the Evidence Act refusal to permit cross examination of such witness cannot be faulted on principles of Evidence Act and it does not cause any prejudice. In this regard, we have already held that even refusal of cross examination by the Principal Commissioner does not affect the fact that these documents are not admissible in evidence in terms of Section 139 (ii) of the Customs Act 1962.

6.17 That the Principal Commissioner has ordered confiscation of 548 MT (523 Rolls) of goods seized from the godown premises of M/s NPT at Chennai. Since the goods were provisionally released on execution of P.D Bond supported by Bank Guarantee of Rs 11,00,000 (Rupees Eleven Lacs) he has imposed Redemption Fine of Rs 11,00,000 (Rupees Eleven Lakh Only) in lieu of confiscation under Section 125 of the Customs Act, 1962 and ordered to enforce the Bonds and encash Bank Guarantees towards such Redemption Fine. Since we have already held that M/s NPT had correctly declared the transaction value there is no justification for confiscation of the seized goods. We therefore set aside the Redemption Fine.

6.18 That the Principal Commissioner has also imposed penalties on M/s NPT, M/s SPPL and M/s SIPPL under the Section 114A, 114AA as indicated in the chart in the opening paragraph of this order. Similarly, he also imposed penalties on Sh. Prakash Chand Garg Director of M/s NPT, Sh. Ashish Garg and Sh. Vijay Garg both Directors of M/s SPPL and M/s SIPPL under Section 112A, 114AA of the Customs Act,1962. Since we have held in detail that all three importers had correctly declared transactions value there is no justification for imposing penalties aforementioned upon above three importers and their Directors. We therefore set aside the penalties on all the six Appellants.

7. In view of our above findings, the differential duty demand on all three importers, imposition of penalties on all parties and Redemption Fine on M/s NPT are set aside. All the appeals are allowed with consequential relief, if any, in accordance with law.

(Pronounced in the open court on 12.11.2021)