Case Law Details
Himalaya Tractor Co. Vs Commissioner of Customs (CESTAT Kolkata)
CESTAT Kolkata held that rejection of declared value based on NIDB data on similar goods unsustainable. Accordingly, differential duty demand and imposition of penalty thereon is unsustainable.
Facts- The Appellant is a registered partnership firm, imported tractor parts in lots from China. The Appellant filed nine Bills of Entry for home consumption which were assessed to duty and the proper officer of Customs has passed orders for the clearance of goods. After release of the goods, the Appellant moved the goods to Delhi at their godown for the purpose of trading. On 10th October 2012, the Appellant imported another consignment of Tractor parts under Bill of Entry No.8177874. The appellant paid the custom duty thereon. But the Bill of Entry was not released and taken up for investigation by DRI, Kolkata.
A show cause notice was issued to the Appellant u/s. 28 r.w.s. 124 of the Customs Act, alleging that the goods declared by the Appellant were unbranded which need to be treated as branded because of embossing of SORL on the parts. The Notice proposed to re-determine the assessable value of the goods imported.
The Commissioner of Customs rejected the assessed value and re-determined the value as per Rule 4 of the Customs Valuation Rules 2007. He has confirmed the demand of customs duty along with interest and imposed equal amount of duty as penalty.
Being aggrieved, the present appeal is filed.
Conclusion- Held that the Appellant sell the goods in wholesale in bulk, without any printed package. The goods sold by them do not have any replacement warranty. The part number and the embossing of SORL mentioned for identification purpose cannot be considered as sale of branded goods. There were contemporaneous imports with lesser value than the value declared by the Appellant, which was not taken into consideration by the adjudicating authority while re-determing the value.
Held that the rejection of the value declared by the Appellant based on NIDB data on similar goods is not sustainable. Accordingly, we hold that in respect of the import made by the Appellant under Bill of Entry No 8177874 dated 10.10.2012, there is no evidence available on record to reject the transaction value declared by them and hence the differential duty arrived at by the adjudicating authority based on the value available on contemporaneous import of similar goods is not sustainable. Since the demand is not sustainable, the penalty imposed on the Appellant on this count is not sustainable.
FULL TEXT OF THE CESTAT KOLKATA ORDER
The Appellant is a registered partnership firm, imported tractor parts in lots from China. The Appellant filed nine Bills of Entry for home consumption which were assessed to duty and the proper officer of Customs has passed orders for the clearance of goods. After release of the goods, the Appellant moved the goods to Delhi at their godown for the purpose of trading. On 10th October 2012, the Appellant imported another consignment of Tractor parts under Bill of Entry No.8177874. The appellant paid the custom duty thereon. But the Bill of Entry was not released and taken up for investigation by DRI, Kolkata.
2. On 18th October, 2012, the officers of DRI, Kolkata searched the Appellant’s premises at Delhi and seized the unsold stock lying at their godown on the ground that there was a valuation dispute in respect of the goods imported under the 9 Bills of Entry. From the computer, a sheet containing FOB price in respect of local sale of imported goods was retrieved. It was alleged by DRI that the said FOB price was the actual transaction value.
3. On 19th October, 2012, the goods imported under Bill of Entry No.8177874 were seized. A statement was recorded from Shri. Puneet Samalia, Partner of the Appellant Firm on 26.10.2012, wherein he stated that the actual value of the spare parts for tractor of SORL brand was the FOB price of the said goods shown in the list printed from his computer in his presence on 18.10.2012. Later, on 01.11.2012, Shri. Puneet Samalia retracted his statement and claimed that it was not given voluntarily. On 01.11. 2012, the appellant filed an application for provisional release of the seized goods imported vide Bill of Entry no.8177874,dated 10.10.2012 and the goods were provisionally released to them on execution of Bank Guarantee of Rs.45 lacs and P D Bond for a sum of Rs.90 lacs.
4. A show cause notice dated 29.07.2013 was issued to the Appellant under Section 28 read with Section 124 of the Customs Act, alleging that the goods declared by the Appellant were unbranded which need to be treated as branded because of embossing of SORL on the parts. The Notice proposed to re-determine the assessable value of the goods imported vide Bill of Entry no.8177874 dated 10.10.2012 along with the goods imported vide 9 Bills of Entry, which were already cleared on payment of customs duties. The Notice was adjudicated vide Order-in Original dated 22.03.2016 , wherein the Commissioner of Customs has rejected the assessed value of Rs.90,15,955.15 in respect of the goods imported vide 9 Bills of Entry earlier and re-determined the value as 2,59,33,709.26, as per Rule 4 of the Customs Valuation Rules 2007. He has confirmed the demand of customs duty of Rs.58,42,994.94 along with interest and imposed equal amount of duty as penalty. He also confiscated the goods seized in the godown at Delhi and allowed the same to be redeemed on payment of Fine of Rs.6,00,000/-. In respect of the goods imported vide Bill of Entry No.8177874 dated 10.10.2012, he rejected the declared value of Rs.16,37,507.16/- and re-determined the value as 50,20,047.36. He confirmed the duty of Rs.11,60,092.93/-along with interest and imposed equal amount of duty as penalty on the Company. The goods imported under this Bill of Entry were confiscated and allowed to be redeemed on payment of Fine of Rs.10,00,000/- . A personal penalty of Rs. 7,00,000/- was also imposed on Shri. Puneet Samalia, partner. Aggrieved against the impugned order, the Appellant Firm and the Partner Puneet samalia have filed the present appeals.
5. In their grounds of appeal, the Appellant has made the following submissions:
(i) The transaction values declared by the Appellant in respect of the goods already cleared as well as the goods imported through the Bill of Entry 8177874, were rejected by the adjudicating authority in the impugned order, on the basis of a sheet containing price of local sale of goods recovered from their computer in Delhi. It was alleged by DRI that the said FOB price was the actual transaction value, whereas the alleged price list was not a price list at all. Hence, adoption of this price for re-determining the value of imported goods is erroneous.
(ii) The Commissioner has relied upon the value of contemporaneous imports available in NIDB data for re-determining the declared value. It is a settled proposition of law that the transaction value cannot be rejected only on the basis of the NIDB data because NIDB data do not show the import of comparable goods. They have cited several instances of import of goods at a lower value than the value declared by them, which were not considered by the adjudicating authority. The adjudication authority relied only upon the dossier given by the DRI and has abdicated his adjudicatory function. If NIDB data is to be relied upon, then it has to be continuous data and in the absence of continuity in data, selective data cannot be taken.
(iii) There is no discussion in the impugned order on the parts which was sought to be compared and the part imported by the Appellant. Without discussion, the transaction value has been rejected and the value has been loaded on the basis of show cause notice without looking into their reply.
(iv) The adjudicating authority has erred in holding that the goods imported in bulk could be treated as branded goods where only part No. and logo were mentioned for identification purpose. Such goods cannot be treated as branded merely because logo is mentioned.
(v) Extended period of limitation could not have been invoked in this case as there was no suppression of fact involved. All the 9 Bills of entry were cleared upon assessment and payment of duty by the proper officer. They have not suppressed any information before the assessing officer. Hence the demands confirmed in respect of the 9 Bills of Entry are barred by limitation and liable to be set aside.
(vi) The Appellant is Partnership Firm and penalty has been imposed on the Firm. Hence, no penalty imposable on the Partner separately.
(vii) In view of the above submissions, the Appellants prayed for setting aside the impugned order on merits as well as on limitation.
6. The Ld. A.R. submitted that the goods imported vide Bill of Entry No.8177874 dated 10.10.2012,were branded goods. The SORL logo available on the goods indicate that they were branded goods. The goods imported vide the 9 Bills of Entry were also branded goods as evident from the goods seized from the godown. He contended that the assessable value has been rightly re-determined in the impugned order and accordingly prayed for rejecting the party’s appeal.
7. Heard both sides and perused the appeal documents.
8. We observe that the Appellant filed nine Bills of Entry for home consumption which were assessed by the proper officer and cleared on payment of appropriate customs duties. The Appellant has moved the goods to Delhi to their godown for the purpose of trading. At the time of examination or assessment, there was no allegation that the goods were branded goods. The value declared by the Appellant was not disputed and accordingly, the Appellant paid customs duties as assessed by the proper officer. On 10th October, 2012, the Appellant imported another consignment of Tractor parts under Bill of Entry No.8177874. But the Bill of Entry was not released and taken up for investigation by DRI, Kolkata. During the course of investigation, DRI officers searched the Appellant’s premises at Delhi and seized the unsold stock lying there. From the computer available in Appellant’s office, the officers recovered a sheet containing price of local sale of goods. It was alleged by the DRI officers that the said FOB price available in the sheet recovered from their computer was the actual transaction value.
9. Regarding the goods imported through the 9 Bills of entry, we observe that there is no evidence available on record to establish that they were branded goods. The examination report or the assessing officer has not indicated that the goods were branded goods. Hence, the department cannot claim later that those goods cleared were branded goods without any corroborating evidence. The appellant stated that the mentioning of ‘SORL’ and part number on the gods would not make them as branded goods. The goods were sold in bulk without packaging. Part numbers and embossing of SORL were mentioned only for identification purposes. We observe that the adjudicating authority has not given any finding contrary to the claim made by the Appellant.
10. We observe that the adjudicating authority has adopted the value of comparable goods available in NIDB data to demand duty on the goods cleared under the 9 Bills of Entry. We agree with the contention of the Appellant that the transaction value cannot be rejected only on the basis of the NIDB data because NIDB data do not show the import of comparable goods. The Appellant stated that they have cited several instances of import of goods at a lower value than the value declared by them, which were not considered by the adjudicating authority. The adjudication authority relied only upon the dossier given by the DRI and re-determined the assessable value. Since the appellant is engaged in the business of wholesale and imports goods in wholesale and sells it to the wholesale dealers. Thus, the goods imported in small quantities and its value cannot be compared with the goods imported in loose condition in huge quantity and the transaction value declared cannot be rejected based on the basis of the price of similar goods available in NIDB data. As there is no evidence available on record to reject the transaction value declared by the Appellant in respect of the goods imported under the 9 Bills of Entry, we hold that the demand of differential duty confirmed in the impugned order in respect of those 9 Bills of Entry are not sustainable. Accordingly, we set aside the same. As the demand itself is not sustainable, no penalty imposable on this count and accordingly we set aside the penalty imposed.
11. The Appellant contended that in respect of the demand made against the goods imported vide 9 Bills of Entry, extended period of limitation could not have been invoked as there was no suppression of fact involved. We observe that all the 9 Bills of entry were cleared upon assessment and payment of duty by the proper officer. The Appellant has not suppressed any information before the assessing officer. Hence, we hold that the demands confirmed in respect of the 9 Bills of Entry are barred by limitation and liable to be set aside on the ground of limitation also.
12. In respect of the goods imported under Bill of Entry No.8177874, the Appellant made a preliminary objection that the demand made by invoking the provisions of Section 28 of Customs Act, 1962 is not sustainable since Bill of Entry has been assessed provisionally. We find that this objection is not sustainable, because the Bill of Entry No.8177874 was not assessed provisionally. The goods imported under the said Bill of Entry was released on provisional basis on execution of bond and bank guarantee. Accordingly, we hold that there is no infirmity in the proceedings initiated under Section 28 of the Customs Act, 1962.
13. In respect of the goods imported under Bill of Entry No.8177874, we find that the appellant themselves had declared part of the goods which were packaged as ‘branded goods’ and the rest which were in bulk and without any packaging, but had embossing of SORL logo for identification, as unbranded goods. In respect of these goods also, the department has adopted comparable goods available in NIDB data and re-determined the assessable value. We observe that the appellant imported the goods in huge quantity on lot basis which are sought to be compared with imports of 100 pcs. made by Pratap Singh & Sons under Bill of Entry No.771158 dated 19.11.2009. This sort of comparison cannot be said to be contemporaneous when import by the appellant was in the month of December, 2009 and the quantity was hugely different.
13. We observe that the adjudicating authority has treated the sheet containing FOB price retrieved from Appellant’s Delhi premises as price list and used the same for rejection of transaction value. However, this price has not been used for re-determining the assessable value. For the purpose of demanding duty, MRP is calculated on the basis of the import price of others by multiplying two and half times after providing abatement of 30%. The Appellant submitted that the business of Motor parts and Tractor parts in wholesale does not attract the amount of margin by which DRI could multiply the value of the goods by two and half times to redetermine the value of the goods. They contended that even if the authorities reject the MRP declared by them, the department has to apply the Valuation Rules under Section 4A of the Central Excise Act, for the purpose of determination of value of the goods . They cannot arbitrarily multiply the declared value by two and half times and give 30% abatement. Such method of valuation is not available in any of the Valuation Rules. Hence, the method of valuation adopted by the department is arbitrary and not sustainable.
14. Another observation made by the investigation for rejecting the declared value by the Appellant was that many big Companies namely VE Commercial Ltd., Tata Motors, Automotive Coaches and Components, JCB Ltd have imported parts bearing SORL brand at a value higher than the value declared by the Appellant. We observe that for the purpose of challenging the value declared by the Appellant and loading the value of the goods imported, there is no Bill of Entry of VE Commercial Ltd. and Tata Motors brought on record. The other evidences relied upon by the Revenue regarding imports by M/s. Pratap Singh & Sons, M/s. Pahwa Distributors are found to be in small quantities of packaged goods, which cannot be considered as comparable goods for the purpose of rejecting the value declared by the Appellant. The Appellant cited evidences of the dealers who import goods in lot and sell the goods in wholesale at a much lesser value than what was declared by them. Such instances given by the Appellant were not considered by the adjudicating authority. Such non-consideration of evidences in support of the Appellant by the adjudicating would vitiate the order.
14. We observe that the Appellant sell the goods in wholesale in bulk, without any printed package. The goods sold by them do not have any replacement warranty. The part number and the embossing of SORL mentioned for identification purpose cannot be considered as sale of branded goods. There were contemporaneous imports with lesser value than the value declared by the Appellant, which was not taken into consideration by the adjudicating authority while re-determing the value. As the details of the Bills of Entry are not available, the value relied upon by the revenue on contemporaneous imports cannot be considered as value of similar goods.
15. The value available on NIDB data cannot be relied upon to reject the declared value. This view has been held by the Tribunal in the case of Agarwal Foundries (P) Ltd. reported in 2020(371)ELT.859(Tri-Hyd). The relevant part of the decision is reproduced below:
“2. The appellant imported pig iron from various overseas traders for use in manufacture of billets. The declared value of pig iron varied from USD 229 per MT to USD 300 per MT. These values were rejected by the assessing officer who enhanced the value to USD 500 per MT based on the data available with the NIDB. NIDB is the data of the Customs Department which gives values of various commodities based on various transaction values of different goods. The question which falls for consideration is whether the invoice value can be rejected and the duty can be charged as per NIDB data without any specific evidence that the invoice values do not reflect actual transaction value. This issue was decided in respect of the same assessee vide Final Order No. A/3014330156/2018, dated 29-1-2018. It has been held that the NIDB data can be a guideline for the customs to arrive at the value of the goods but the NIDB data cannot be applied directly unless the value given therein falls within the parameters of identical goods or similar goods. Relying on the decisions in the cases of Topsia Estates Pvt Ltd v. CC (Import-Seaport) Chennai [2015 (330) E.L.T. 799 (Tri. – Chennai)], CC New Delhi v. Nath International [2013 (289) E.L.T. 305 (Tri. – Del.), Impex Steel & Bearing Co. v. CC Delhi-IV [2014 (302) E.L.T. 464 (Tri. – Del.)] and Eicher Tractors Ltd v. CC Mumbai [2000 (122) E.L.T. 321 (S.C.)] it has been decided that the department cannot reject the declared value and assess the goods as per the NIDB data.”
15. In view of the above discussions and by following the decision cited above, we hold that the rejection of the value declared by the Appellant based on NIDB data on similar goods is not sustainable. Accordingly, we hold that in respect of the import made by the Appellant under Bill of Entry No 8177874 dated 10.10.2012, there is no evidence available on record to reject the transaction value declared by them and hence the differential duty arrived at by the adjudicating authority based on the value available on contemporaneous import of similar goods is not sustainable. Since the demand is not sustainable, the penalty imposed on the Appellant on this count is not sustainable.
15. The adjudicating authority has imposed a penalty of Rs.7,00,000/-on the Partner Shri. Puneet Samalia under Section 112(a) and 112(b) of the Customs Act, 1962.We observe that the impugned order has not brought in any evidence against the partner in the alleged offence. As the allegation of suppression of value is not established, the penalty imposed on the partner is liable to be set aside. Accordingly, we set aside the penalty imposed on the Partner Shri. Puneet Samalia.
16. In view of the above findings, we set aside the impugned order and allow the appeal filed by the Appellants.
(Pronounced in the open court on…12.10.2023…)
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