Commissioner of Customs-Nhava Sheva-III Vs Granite India (CESTAT Mumbai)
Held that antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation.
Facts-
On the basis of information received, that the respondents have undervalued the imported goods, the officers of SIIB (I) Nhava Sheva examined the containers and initiated investigation; the premises of Granite India situated in New Delhi was searched and incriminating documents and 2 laptops were seized; the imported goods were ordered to be provisionally assessed on furnishing of bond and bank guarantee of 100 percent of differential duty; statements of Shri Suryaprakash Agarwal proprietor of the respondents, Shri Gopal Singh manager sales of M/s. Shri Ram Granite, Shri Vishal Vora a private person and others were recorded; on conclusion of the investigation it was alleged that the respondents have undervalued the imported diamonds segments and saw blanks; invoices showing lesser value were prepared by the supplier for submitting to the customs; difference in the value and the actual value was being limited to the overseas suppliers through illegal channels; M/s Shambhav Rocks, another importer also imported from the same overseas suppliers and the case of undervaluation was registered against the importer by DRI, Bangalore; M/s Shri Ram Granite and M/s Stones Shippers Ltd. have imported identical goods at higher price which can be used for re-determining the value of the goods imported by the respondents.
On completion of the investigation the respondents were issued a show cause notice dated 13.03.2019 seeking to confiscate the imported goods; re-determination of the declared value of the goods imported by the respondents from 261,71,24,488/- to 414,03,08,884/-; recovery of differential duty of Rs. 35,36,19,477/-along with interest; imposition of penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962. The proceedings initiated by the said show cause notice were drafted by Commissioner of Customs vide order dated 24.08.2020.
Conclusion-
Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation. Therefore, we hold that antecedents of an importer or their propensity to violations cannot be in itself an evidence prove a contravention in a completely different proceedings.
We fail to understand as to how the authorities have permitted to engage the services of a private person in the investigation leave alone permitting the same to be part of the evidence while issuing a Show Cause Notice. If a private person approaches the agencies as an informer giving information the same may be used following the standard operating procedures. Even then understandably, the sanctity and the secrecy of the informant become paramount. Be it so, using the service of a private person, engaging to have a chat with the supposedly with the supplier, is a dangerous trend. In the competitive market, there would be no dearth of such persons coming forth and the department would not find number of cases wanting. We are of the considered opinion that such an evidence, being totally unconnected and not relevant cannot be used to sustain a case of under valuation.
FULL TEXT OF THE CESTAT MUMBAI ORDER
The respondents M/s Granite India have imported segment and saw blank and filed various bills of entry over a period of time; the respondents imported segments vide bills of entry 5137834 and 5137862 both dated 09.02.2018; on the basis of information received, that the respondents have undervalued the imported goods, the officers of SIIB (I) Nhava Sheva examined the containers and initiated investigation; the premises of Granite India situated in New Delhi was searched and incriminating documents and 2 laptops were seized; the imported goods were ordered to be provisionally assessed on furnishing of bond and bank guarantee of 100 percent of differential duty; statements of Shri Suryaprakash Agarwal proprietor of the respondents, Shri Gopal Singh manager sales of M/s. Shri Ram Granite, Shri Vishal Vora a private person and others were recorded; on conclusion of the investigation it was alleged that the respondents have undervalued the imported diamonds segments and saw blanks; invoices showing lesser value were prepared by the supplier for submitting to the customs; difference in the value and the actual value was being limited to the overseas suppliers through illegal channels; M/s Shambhav Rocks, another importer also imported from the same overseas suppliers and the case of undervaluation was registered against the importer by DRI, Bangalore; M/s Shri Ram Granite and M/s Stones Shippers Ltd. have imported identical goods at higher price which can be used for re-determining the value of the goods imported by the respondents. On completion of the investigation the respondents were issued a show cause notice dated 13.03.2019 seeking to confiscate the imported goods; re-determination of the declared value of the goods imported by the respondents from 261,71,24,488/- to 414,03,08,884/-; recovery of differential duty of Rs. 35,36,19,477/-along with interest; imposition of penalty under Section 112(a) and Section 112(b) of the Customs Act, 1962. The proceedings initiated by the said show cause notice were drafted by Commissioner of Customs vide order dated 24.08.2020.
2. Committee of Chief Commissioners reviewed the above order under the provisions of Section 129D(1) of Customs Act, 1962 and passed the Review Order No. 04/2021 dated 30.12.2020 and accordingly, an appeal have been filed against the impugned order on the grounds of appeal mentioned therein. The grounds as summarized are that the adjudicating authority failed to appreciate/overlooked the provisions of Rules 12, 3 and 5 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and that the adjudicating authority
