Demand on past consignments based on examination report of live consignment unsustainable

Vivek Metals Vs Commissioner of Customs (CESTAT Bangalore)

CESTAT Bangalore held that without any such evidences based on the examination report of live consignment, one cannot extrapolate the same to the past consignments. Accordingly, demand for all the past consignments set aside.

Facts- The appellant is a proprietary concern engaged in the trading of imported and indigenously procured stainless steel products and filed a bill of entry for import of cold rolled stainless steel coils grade 430 of thickness 0.3mm /0.6mm /0.7mm x 1260mm width from Taiwan. This consignment was seized on the ground that the imported stainless-steel coils were ‘Mill Edged’ coils which attracted anti-dumping duty vide Notification No.14/2014 Cus; dated 20.2.2010, as amended by Notification No.86/2011 Cus; dated 6.9.2011. During the investigation the officers found that in 13 more consignments of same description that had been imported between 12.6.2013 to 6.10.2014 were also leviable to antidumping duty.

Based on these investigations notice was issued on 29.4.2015 demanding anti-dumping duty for all the consignments imported for the period 12.6.2013 to 6.10.2014 along with interest. The Commissioner confirmed the anti­dumping duty and imposed penalty u/s. 112 and 114AA. The goods were also confiscated u/s. 111(m) but were allowed to be redeemed u/s. 125 of the Customs act 1962.

Conclusion- Held that no incriminating documents were unearthed to prove the consignments cleared earlier were mill edged coils. Moreover, to say they are identical goods based on definition of Customs Valuation Rules, 2007 and to presume since the value is same for the live consignment where it has been held that it is mill edged only after examination cannot be the standard for deciding the classification of the goods earlier cleared. Any classification has to be decided either by examination/testing of the goods, by expert opinions or by producing incriminating documents such as invoices and letters or mails to prove that what they had imported was an item other than what is declared in these incriminating documents. Without any such evidences based on the examination report of live consignment, one cannot extrapolate the same to the past consignments.

FULL TEXT OF THE CESTAT BANGALORE ORDER

The appellant M/s. Vivek Metals is a proprietary concern engaged in the trading of imported and indigenously procured stainless steel products and filed a bill of entry no. 6966866 dated 6.10.2014 for import of cold rolled stainless steel coils grade 430 of thickness 0.3mm /0.6mm /0.7mm x 1260mm width from Taiwan. This consignment was seized on the ground that the imported stainless-steel coils were ‘Mill Edged’ coils which attracted anti-dumping duty vide Notification No.14/2014 Cus; dated 20.2.2010, as amended by Notification No.86/2011 Cus; dated 6.9.2011. During the investigation the officers found that in 13 more consignments of same description that had been imported between 12.6.2013 to 6.10.2014 were also leviable to antidumping duty. Based on these investigations notice was issued on 29.4.2015 demanding anti-dumping duty for all the consignments imported for the period 12.6.2013 to 6.10.2014 along with interest. The Commissioner confirmed the anti­dumping duty and imposed penalty under section 112 and 114AA. The goods were also confiscated under section 111(m) but were allowed to be redeemed under section 125 of the Customs act 1962.

2. The learned counsel on behalf of the appellant submitted that the 13 consignments which were imported earlier were physically examined and released on payment of assessed duty, which have attained finality and therefore, the question of reviewing the same without filing an appeal against the assessment order is not justifiable. He places reliance on the decision of the Supreme Court in the case of Flock India Pvt. Ltd.: 2000 (172) ELT 285 SC and Priya Blue Industries: 2004 (172) ELT 145 (SC). With regard to 8 Bills of Entry filed between 12.6.2013 and 8.4.2014 submits that the demand was barred by limitation prescribed under Section 28(1)(a), in as much as there is no evidence put forth by the Revenue to establish either suppression of facts or any evidence of collusion between the foreign supplier and the appellant. It is also submitted that the consignments cleared earlier, there was no evidence to prove that the coils were mill edged and during the period of dispute there was no onsite post clearance audit which was conducted as per Section 17(6) and therefore, the Revenue cannot assume that the goods were identical to the present consignment.

3. With regard to the live consignment which was seized, it is claimed that out of 31 coils seized by the Revenue, Chartered Engineers M/s. SGS India Pvt. Ltd. have examined one coil and based on this examination, the entire consignment is deemed to be mill edged coils. The imposition of penalty under Section 112 and 114AA has been disputed on the ground that there was no evidence of suppression or collusion by the importer. The appellant also claims that their business transactions were performed in the normal course of business and because he had knowledge of antidumping duty leviability, does not follow that he intended to evade the anti-dumping duty. He places reliance on the Larger Bench decision in the case of Shiv Krupa Ispat Pvt. Ltd.: 2009 (235) ELT 623 (Tri.-LB) to state that when the goods are not available for confiscation, they cannot be confiscated and hence, redemption fine cannot be imposed. He also relied on the decision in the case of RR Enterprises vs.CC & CE: 2014 (312) ELT 677 (Tri.-Bang) wherein it is held that:

“12. As regards past imports covered by Bills of Entry dated 12­5-2000 and 7-10-1999, we have found no case for the Revenue. It appears that the yardstick applied in relation to the live consignment has been mechanically extended to the past imports. We do not think that the view taken in respect of the live consignment can be extrapolated mindlessly to cover the past imports. We have not found any evidence in support of the findings of misdeclaration of description and value, entered by the Commissioner in relation to the past imports. …….. ”

3.1 The appellant also submits that the test reports of the live consignment cannot be applied to the past imports and relies on the following decisions of the Tribunal.

(i) CC (Prev) vs. Marks Marketing Pvt. Ltd.: 2017 (346) ELT (144) (Tri.-Del)

(ii) PK Exim vs. CC, Mundra, Final order No. A/12326/2021 dated 31.8.2021 (Tri.- Ahmedabad).

4. The Authorised Representative on behalf of the Revenue submitted that the present Bill of Entry filed by the appellant was examined by the Chartered Engineers and they certified that the goods were CR steel flat sheet coils of mill edged and this was also examined by M/s. SGS India Private Limited who had also confirmed that the coils were of mill edged and this was also accepted by the appellant vide his statement dated 30.10.2014. With regard to the earlier consignments, he submitted that the Bills of Entry had identical description and it is claimed that mill edged coils are rough edged coils which are further worked upon to produce slit edged coils and therefore, the slit edged coils are more expensive than the mill edged coils. Since the value of the earlier consignments was similar to the present ones it is evident that they were also mill edged coils. He further submitted that imports from other suppliers, the appellant had clearly instructed them to mention slit edged and the evidences recovered clearly show that the appellant had asked the suppliers to mention the specifications in the documents, while the consignments in dispute there is no such mention made by the supplier. He relied on the decision in the case of Venus Enterprises: 2006 (199) ELT 661 (Tri-Chennai) wherein it was held that demands under Section 28 were valid even after assessment if subsequent investigations revealed facts that were not declared and this decision was upheld by the High Court in 2006 (199) ELT(405) (Mad) and the Hon’ble High court held that :

“6. With regard to question No. l, the law is well settled that a show cause notice under the provisions of Section 28 of the Act for payment of customs duties not levied or short-levied or erroneously refunded can be issued only subsequent to the clearance of the goods under Section 47 of the Act vide Union of India v. Jain Shudh Vanaspati Ltd. [1996 (86) E.L.T. 460 (S.C.)]. Therefore, as rightly held by the Tribunal, if the contention of the appellant’s counsel that when the goods were already cleared, no demand notice can be issued under Section 28 of the Act is accepted, we will be rendering the words “where any duty has been short-levied” as found in Section 28(1) of the Act as unworkable and redundant, inasmuch as the jurisdiction of the authorities to issue notice under Section 28 of the Act with respect to the duty, which has been short-levied, would arise only in the case where the goods were already cleared. In view of the clear finding with regard to the mis-declaration and suppression of value, which led to the under-valuation and proposed short-levy of duty, we do not see any lack of jurisdiction on the part of the adjudicating authority to issue notice under Section 28(1) of the Act”. The above decision was sustained by the Supreme Court in 2007 (209) ELT A61 (SC). Reliance is also placed on the decision in the case of Interglobe Aviation Ltd. 2022 (379) ELT (235) (Tri-Bang).”

5. It is further submitted that since the facts that the goods were mill edged was deliberately suppressed by the appellant and therefore, the extended period of limitation is applicable in the instant case. To substantiate his claim, reliance is placed on the decision of the Supreme Court in the case of Pasupati Spinning and Weaving Mills: 2015 (318) ELT 623 (SC), where the apex Court held that:

“4. We have heard learned Senior Counsel on behalf of the appellant. He has argued before us that the extended period could not be availed on the facts of this case, but has fairly stated that if the notes to Heading No. 55.08 are to be read, considering the fact that there was no support to the sewing thread manufactured by the appellant, it would not be covered by the exemption Notification which would only apply if goods manufactured fall within the particular Heading mentioned. As it is clear that the sewing thread is not put up on a support, CESTAT is clearly right on merits. Equally, we do not think that there is any ground for interference on the extended period of limitation being applicable inasmuch as CESTAT is again correct in saying that as the declaration and RT-12 returns being vital documents submitted by the respondent (appellant herein) did not mention the vital word “hanks”, they suppressed a material fact which, to their knowledge, would not bring their sewing thread within the exemption Notification. For all these reasons, we find no merit in these appeals. The appeals are, accordingly, dismissed, without any order as to costs”.

6. Finally, it is claimed that the Commissioner was justified in imposing penalty in as much as the appellant had knowingly to avoid payment of anti-dumping duty had mislead the Department by not making the required declarations. In his statement having admitted the knowledge of antidumping duty and have deleted the relevant mails, therefore, the invocation of suppression is justified so also the penalty.

7. Heard both sides. The issues to be decided are:

(i) Whether the imported goods (live consignment) cleared by the appellant are mill edged or slit edged and whether they are liable to antidumping duty.

(ii) Whether the goods assessed and cleared out of charge can be reopened by issuance of a notice and duty be demanded.

(iii) Whether the earlier consignments which are not available for examination can also be said to be mill edged coils which attracted antidumping duty.

(iv) When goods are not available for confiscation, whether they can be confiscated and redemption fine and penalty can be imposed on them.

8 Anti-dumping duty was levied based on the notification extracted below:

Anti-dumping duty on Cold Rolled Flat Products of Stainless Steel, originating in, or exported from China, Korea, EU, South Africa, Taiwan, Thailand and USA

Whereas, in the matter of import of Cold Rolled Flat Products of Stainless Steel, (hereinafter referred to as the subject goods), falling under heading 7219 of the First Schedule to the Customs Tariff Act, 1975 (51 of 1975) and originating in, or exported from the People’s Republic of China (China PR), Korea, European Union, South Africa, Taiwan (Chinese Taipei), Japan, Thailand and United States of America (USA) ( hereinafter referred to as the subject countries), the designated authority, vide its preliminary findings vide notification No. 14/6/2008-DGAD dated 27th March, 2009, published in the Gazette of India, Extraordinary, Part I, Section 1, dated the 27th March, 2009, had come to the conclusion that –

(a) the subject goods had been exported to India from the subject countries below its normal value;

(b) the domestic industry had suffered material injury;

(c) the injury had been caused by the dumped imports from subject countries;

and had recommended imposition of provisional anti-dumping duty on all imports of the subject goods originating in, or exported from, the subject countries;

And whereas, on the basis of the aforesaid findings of the designated authority, the Central Government had imposed provisional anti­dumping duty on the subject goods vide notification No. 38/2009-Customs, dated the 22nd April, 2009, published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide number G.S.R. 276 (E), dated the 22nd April, 2009 as amended by notification No. 56/2009-Customs, dated the 30th May, 2009, published in Part II, Section 3, Sub-section (i) of the Gazette of India, Extraordinary, vide number G.S.R. 370(E), dated the 30th May, 2009;

And whereas, the designated authority, vide its final findings vide notification No. 14/6/2008-DGAD dated 24th November, 2009, published in the Gazette of India, Extraordinary, Part I, Section I, dated the 24th November, 2009, has come to the conclusion that –

(a) the subject goods have been exported to India from the subject countries below its normal value;

(b) the domestic industry has suffered material injury;

(c) the injury has been caused by the dumped imports from subject countries.

and has recommended to impose definitive anti-dumping duties on all imports of the subject goods, originating in, or exported from, the subject countries;

Now, therefore, in exercise of the powers conferred by sub-sections (1) and (5) of section 9A of the said Customs Tariff Act, 1975, and in pursuance of rules 18 and 20 of the Customs Tariff (Identification, Assessment and Collection of Anti-dumping Duty on Dumped Articles and for Determination of Injury) Rules, 1995, the Central Government, on the basis of the aforesaid final findings of the designated authority, hereby imposes on the goods, the description of which is specified in column (3) of the Table below, falling under the heading of the First Schedule to the said Customs Tariff Act as specified in the corresponding entry in column (2), the specification of which is specified in column (8) of the said table, originating in the countries as specified in the corresponding entry in column (4), and produced by the producers as specified in the corresponding entry in column (6), when exported from the countries as specified in the corresponding entry in column (5), by the exporters as specified in the corresponding entry in column (7), and imported into India, an anti-dumping duty which shall be equal to the amount specified in the corresponding entry in column(9), in the currency as specified in the corresponding entry in column (11) and per unit of measurement as specified in the corresponding .entry in column (10) of the said Table.

TABLE

*of the width of 600 mm up to 1250 mm of all series further worked than Cold rolled (cold reduced) with a thickness of up to 4 mm.

2. The anti-dumping duty imposed under this notification shall be levied with effect from the date of imposition of the provisional anti­dumping duty, and shall be payable in Indian currency.

[Notification No. 14/2010-Cus., dated 20-2-2010]

9. Let’s examine whether anti-dumping duty is leviable with regard to the live consignment which includes 31 coils imported vide Bill of Entry No.6966866 dated 6.10.2014. The SGS report extracted below clearly states that “we are of the opinion that all coils visually inspected were observed with rough edges and they are mill edge coils”.

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10. Based on this report, it is clear that the live consignment consisting of 31 coils was Mill edge and the allegation by the appellant that only one or two core coils have been inspected proved baseless in as much as the above report clearly shows that all coils were inspected and the report was submitted based on physical examination of the same. These goods are also tested by Shri R. Sreedhar, Chartered Engineer and his certificate is extracted below:

“as per the certificate the consignment comprised of three types of 31 coils and out of that one coil was taken for inspection and the insect inspection report stated as follows: the referred item is cold rolled stainless steel coil of great grade 430 BA of size 0.69mm wx 1267mm wx 53mm l weighing 391kgs. The width tolerance was mentioned as Mill edge is-0 / + 30mm and-0 / +5mm for slit edge. Based on various parameters the opinion given was that the product is Mill edge. Based on these reports the goods are Mill edge and liable to payment of anti-dumping duty is beyond doubt therefore the demand for 31 coils is upheld”.

11. The second issue is whether the Department was right in reopening the assessments for the past imports based on their investigations. We agree with the learned Authorised Representative that the Revenue can reopen the assessments after out of charge being given if investigations proved deliberate attempt to evade duty based on the incriminating documents if unearthed by the Revenue. The law laid down by the Hon’ble Court and maintained by the apex court in the case of Venus Enterprises (supra) relied by the learned Authorised Representative clearly allows the Revenue to reopen the assessments if on investigation and evidences surface subsequently to prove misdeclaration or undervaluation of already assessed and cleared goods.

12. Now the question arises whether these reports can be extrapolated to the consignments already cleared and assessed to duty by the customs authorities. The 13 consignments which were imported earlier were from the same supplier is not in dispute and the price quoted in the earlier consignments when compared to the present consignments are more or less the same. It is also not under dispute that the slit edge coils are more expensive when compared to the Mill edge coils because the Mill edge coils are trimmed and slit to size to arrive at a uniform width and contours. During investigations, many incrementing documents were seized one of the documents is a mail received by the appellant from Sam Liang as shown below:

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Appellants were aware of the fact that anti-dumping duty is to be paid if it is less than 1250 mm and the reply given by the appellant also suggest that they can buy coils of 1255 mm to avoid antidumping duty. This mail clearly suggests that the appellant was aware of the fact that if the coil was of 1260 mm they had to pay anti-dumping duty which is not under dispute. Some of the documents seized also show that the consignments received from other overseas suppliers, the appellant had clearly asked them to mention the coil edge condition and these invoices clearly mention slit edge, while the consignments under dispute nowhere the edge conditions are mentioned and according to the Revenue goes to prove that though the appellant was aware that anti-dumping duty was liable to be paid, they had failed to mention the specifications of the coils. The appellant cannot get away from paying the relevant duties by stating that though they had knowledge it was for the officers concerned to assess the duties in accordance with the laws. The amendments to Section 17 of the Customs act 1962 clearly places the onus of correct assessment and payment of appropriate duty on the importer as rightly argued by the Revenue. While recording the statement when the question was asked whether the goods imported earlier were identical to the present consignment, the answer was “no comments” and for another question, as to why they did not insist the supplier to mention the edge conditions, their reply was that “I have no answer nothing to state in this matter”. The only argument put forth by the appellant is that the supplier mentioned these were slit edge coils but however, there is no evidence to prove the same. For another question to the appellant to produce the correspondence between the supplier and the mails received from them, the reply was that “he has not preserved the mails to protect his business interests and there are no mails either in their inbox or outbox”.

13. The Commissioner in the impugned order at Para 20.2 states that the goods imported in 13 earlier consignments were from the same supplier with same description and around the same price. Further at Para 9.2.1 and 9.2.2, comparing the Tables extracted below goes to state that they are identical goods.

Going by the definition of “identical goods” as per the Customs Valuation Rules, 2007 holds that the previous consignments as identical goods. Further, he holds that since slit edged coils are more expensive and based on the NIDB data holds the value of the live consignment and the earlier consignments were of more or less the same value and concludes to be mill edged coils and not slit edge coils. Based on the statements and the mails as discussed above, the Revenue assumes that the earlier consignments are nothing but mill edged coils and therefore, they are liable to duty.

14. The Tribunal in the case of R.R. Enterprises Versus CC & CE, Hyderabad 2014 (312) E.L.T. 677 (Tri. – Bang.) dated 24-9-2010 held that:

“12. As regards past imports covered by Bills of Entry dated 12­5-2000 and 7-10-1999, we have found no case for the Revenue. It appears that the yardstick applied in relation to the live consignment has been mechanically extended to the past imports. We do not think that the view taken in respect of the live consignment can be extrapolated mindlessly to cover the past imports. We have not found any evidence in support of the findings of misdeclaration of description and value, entered by the Commissioner in relation to the past imports. The only document on the basis of which these findings were entered in relation to the goods covered by Bill of Entry dated 12-5-2000 is an invoice, copy of which is available at page 93 of paper book Volume-II. The Revenue has considered this document to be an ‘invoice’ issued by Isola Asia Pacific (Singapore) Inc. to R.R. Enterprises. There is no mention of the name of the consignee/buyer in this document, nor does this document bear any date, nor is it duly signed. The Revenue has heavily relied on this document (so-called ‘invoice’) which indicates the name of the goods as “Glass Epoxy Copper Clad Laminates” and the value of the goods as USD 71,125. Ld. SDR has only reiterated the observations of the Commissioner in relation to this document. But we have found substance in the submissions of the Counsel. This document, with all the said infirmities, can hardly be accepted as a manufacturer’s or trader’s invoice. The Revenue has no case that it is international practice to issue a commercial invoice without naming the buyer/consignee. The whole case of the Revenue in respect of the goods covered by Bill of Entry dated 12-5-2000 is based on this document. On the basis of this document, they alleged that, in the said Bill of Entry, the importer misdeclared the description and value of the goods”.

In the case of Commissioner of Customs (Prev.), New Delhi Versus Marks Marketing P. Ltd. 2017 (346) E.L.T. 144 (Tri. – Del.) dated 16-9-2016, it was held that:

“9. We find no merit in the above statement of the Revenue. Admittedly, the change in the classification of the present import of fabrics is based upon the test result by the chemical examiner whereas it is not disputed that no such test results were carried out in respect of previous imports. The law on the issue is well settled. The test reports of the samples drawn from a particular consignment cannot be applied to the previous consignments. Merely because the deponent of the statement has agreed before the Customs that the previous consignment may be of the same composition, by itself does not establish that the previous consignments were admittedly of the same composition. The expression used by the deponent is ‘may be’ and he himself was not sure of the same fact. The composition of the fabrics may vary or change from the consignment to consignment inasmuch as there is not much difference in the wool content of the fabrics. Revenue has not given us any reason as to why the ratio of Tribunal’s decision in the case of Shalimar Paints (supra) which stands upheld by the Hon’ble Supreme Court, is not applicable to the facts of the present case. Apart from the decision of Shalimar Paints, we note that there are number of other precedent decisions holding to the same effect”.

15. In the present case, investigations have only proved that the appellant was aware of the fact that anti-dumping was leviable on mill edged coils and he had imported some of the consignments from other suppliers with the specifications regarding mill edged or slit edged. However, no incriminating documents were unearthed to prove the consignments cleared earlier were mill edged coils. Moreover, to say they are identical goods based on definition of Customs Valuation Rules, 2007 and to presume since the value is same for the live consignment where it has been held that it is mill edged only after examination cannot be the standard for deciding the classification of the goods earlier cleared. Any classification has to be decided either by examination/testing of the goods, by expert opinions or by producing incriminating documents such as invoices and letters or mails to prove that what they had imported was an item other than what is declared in these incriminating documents. Without any such evidences based on the examination report of live consignment, one cannot extrapolate the same to the past consignments as is held by the decisions discussed supra.

16. For the reasons discussed above, the demand for all the past consignments is set aside and therefore, the order to the extent of confiscation and penalty also stands set aside. We uphold that the live consignment of 31 coils is mill edged and anti-dumping duty is liable to be paid on the same. The matter is remanded to the original authority to re-determine the demand only for the 31 coils for which the reports suggest they are mill edged coils. It is needless to say that a reasonable opportunity of hearing to be given to the appellant. All other issues regarding redemption fine and penalty on the importer and personal penalty on Shri Chandra Mohan Sarda, Authorised Signatory are kept open with regard to the live consignment.

17. The appeals are disposed of by way of remand in above terms.

(Order pronounced in Open Court on 20.10.2023.)