Case Law Details
Shree Shyam Enterprises Vs Commissioner of Customs (Import) (CESTAT Delhi)
CESTAT Delhi held that re-determination of value resorting to valuation under Rule 7 of the Customs Valuation Rules justified on failure to advance any documents/ invoice to substantiate the value of goods.
Facts- A specific intelligence was gathered by the officers of Customs (SIB) ICD (Import) that goods contained under Bill of Entry No 4873621 dated 12.04.2016 (RUD-1) to be grossly undervalued Accordingly, an Alert No.04/2016-17 dated 12.04.2016 was issued against the Bill of Entry No 4873621 dated 12.04.2016 filed by CHA M/s. Abhinav Cargo Movers on behalf of importer, M/s. Shree Shyam Enterprises, 18/4, Phase-2. Mayapuri New Delhi having IEC No. 0514046007. The importer had declared the assessable value as Rs.23,20,035/- and duty payable as Rs. 6,13,145/- for 9400 pieces of Diaphragm Boost Pump of „E-Chen‟ brand shifted in 940 Cartons.
The goods of the said Bill or Entry were examined 100% by SIIB officers and the entire proceedings were recorded under Panchnama dated 13.04 2016 (RUD-2) drawn on the spot in presence of two independent witnesses, representative of importer and G-Card holder of CHA firm. However, the goods were detained for further investigations on a reasonable belief that the subject goods were undervalued with an intent to evade payment of customs duty. The container was again stuffed with the same goods and sealed with Custom Seal. On completion of examination proceedings, it was advised to ask the importer to get the goods stored in the Customs Bonded Warehouse u/s. 49 of the Customs Act, 1952, to avoid incurring demurrage and detention charges of the container.
The investigating officer showed him computer print outs of e-bay for the identical goods which showed selling price of @1799/- per piece, and at Alibaba, the retail sale website, the price shown was 15-16 USD (FOB) for a quantity of 100 pcs.
The assessable value was worked out on the basis of lowest rate available on the e-bay website and the differential duty payable on that basis and that the appellants accepted the re-determined value. The similar modus operandi was acknowledged for past consignments also. Thus, show cause notice was issued to the appellant rejecting the past value and re-determining past imports in terms of Rule 7 of the Customs Valuation Rules, 2007, read with Section 14 of the Customs Act, 1962.
The said proposals were confirmed vide the impugned order. Being aggrieved, the present appeal is filed.
Conclusion- Held that the Assessing Officer was having a valid and enough evidence for rejection of the transaction value as declared by the appellant in their bill of entry by resorting to Rule 3 (4) of the Customs Valuation Rules, 2007. Since the value of identical and similar goods at the contemporary import time was also could not be ascertained, we feel that the resorting the valuation under Rule 7 of the Customs Valuation Rules by the Department is legally sustainable.
FULL TEXT OF THE CESTAT DELHI ORDER
Brief facts of the present cases are as follows:
A specific intelligence was gathered by the officers of Customs (SIB) ICD (Import), Tughlakabad New Delhi that goods contained in container No BSIU2052206 covered under Bill of Entry No 4873621 dated 12.04.2016 (RUD-1) to be grossly undervalued Accordingly, an Alert No.04/2016-17 dated 12.04.2016 was issued against the Bill of Entry No 4873621 dated 12.04.2016 filed by CHA M/s. Abhinav Cargo Movers on behalf of importer, M/s. Shree Shyam Enterprises, 18/4, Phase-2. Mayapuri New Delhi having IEC No. 0514046007. The importer had declared the assessable value as Rs.23,20,035/- and duty payable as Rs. 6,13,145/- for 9400 pieces of Diaphragm Boost Pump of „E-Chen‟ brand shifted in 940 Cartons.
2. The goods of the said Bill or Entry were examined 100% by SIIB officers and the entire proceedings were recorded under Panchnama dated 13.04 2016 (RUD-2) drawn on the spot in presence of two independent witnesses, representative of importer and G-Card holder of CHA firm. There was no variation in quantity of goods vis-à-vis declared quantity. However, the goods were detained for further investigations on a reasonable belief that the subject goods were undervalued with an intent to evade payment of customs duty. Representative sample was drawn as per procedure. The container was again stuffed with the same goods and sealed with Custom Seal No. 324531. On completion of examination proceedings the F-Cardholder Sh. Tapasvi Singh, was advised to ask the importer to get the goods stored in the Customs Bonded Warehouse under Section 49 of the Customs Act, 1952 to avoid incurring of demurrage and detention charges of the container.
3. On the basis of authorization dated 21.04.2016 (RUD-3) issued by Sh. Sumit Aggarwal proprietor of M/s Shree Shyam Enterprises, Sh. Sanjeev Garg, Authorised Representative, R/o. 214, Arunodya Apts. F-Block, Vikas Puri, New Delhi-110018 appeared on 22.04.2016 (RUD-4) and rendered his statement of Shri Sanjeev Garg, Authorised Representative of appellant was recorded under section 108 of Customs Act 1962 wherein, he, inter-alia, stated that Shri Sumit Agarwal, his cousin who had obtained an IEC in the name of importing firm has allowed him to import Diaphragm Boost Pump from Shunde Light Industrial Products Imp. & Exp. Company Ltd. of Guangdong, China in the month of January 16, that he had imported another consignment in the month of March 16. Earlier two consignments and present consignment were all of 9400 pcs each of Diaphragm Boost Pump E-Chen (EC-103-75), with capacity of 75 GDP from the same supplier at the same rate of 3.58 USD CIF per piece; that the description E- Chen (EC-103-75) pertained to Booster Pump with a capacity of 75 GPD (Gallons Per Day); that the Manufacturer Company of the item under import was Shenzen Ecowell Purification Company Limited but he had obtained his goods from a Trading firm; namely, M/s. Shunde Light Industrial Products Import & Export Company Ltd. of Guangdong, China. The investigating officer showed him computer print outs of e-bay for the identical goods which showed selling price @Rs 1799/- per piece and at Alibaba, the retail sale website the price shown was @ 15-16 USD (FOB) for a quantity of 100 pcs.
4. The appellants endorsed no objection for ascertaining the value of the goods either on the basis of market enquiry or on the basis of value given in the computer print-outs shown to him. The assessable value got worked out on the basis of lowest rate available on the e-bay website and the differential duty payable on that basis and that the appellants accepted the re-determined value. The similar modus operandi was acknowledged for past consignments also. Based on statements recorded during further investigation of Shri Sanjeev Garg and the others concerned, the Show Cause Notice No. 18842 dated 05/10/2016 was served upon the appellants proposing for rejecting:
(i) the total declared value of Rs. 1,59,92,820/-(Rs. One Crore Fifty nine Lakhs ninety two thousand eight hundred and twenty only) for the goods covered under Bill of Entry No. 48,73,621/- dated 12.04.2016(Live Consignment) and covered under past Bills of Entry No. 4728925 dated 29/03/2016, 4495811 dated 8/03/2016, 4233475 dated 12/02/2016 & 3872308 dated 11/01/2016 under Rule 12 of the Customs Valuation (Determination of value of the Import goods) Rules, 2007 read with Section 14 of the Customs Act, 1962 and to be re-determined as Rs.74,59,370/- in case of Bill of Entry No. 4873621 dated 12.04.2016 (live Bill of entry) and value of Rs.4,37,24,283/- in case of past imports in terms of Rule 7 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act. 1962
(ii) The differential Customs duty amounting to Rs13,59.354/- in case of live Bill of Entry and differential duty of Rs.79,52,547/- in case of past imports was proposed to be confirmed and recovered with interest with appropriation of differential customs duty of Rs. 13,59,354/- deposited vide TR-6 Challan no 36653 dated 13/05/2016 deposited towards. Goods were proposed to be confiscated. Penalties were also proposed under Section 114A of the Customs Act 1962 on M/s Shree Shyam Enterprises.
Discharge of duty liabilities under Bill of Entry No. 4873621 dated 12/04/2016 should not be appropriated against the said duty demand.
5. The said proposal is confirmed vide Order-in-Original No.05/2018 dated 09.03.2018.
6. Being aggrieved the appellants are before this Tribunal.
7. We have heard Mr. L.B. Yadav and Mr. Mayank Sharma, ld. Counsels and Mr. Nagendra Yadav, Authorised Representative for the appellants.
8. Ld. Counsel for the appellants mentioned that on examination of goods quantity and description were found as per declaration. However, it appeared to department that goods were under-invoiced. Shri Sanjeev Garg was the authorized representative of Appellants, who stated that declared unit price @ 3.58 USD was correct, however, on being shown computer printouts of e-bay-website of the similar goods which showed selling price @ 1799/- per piece and of Alibaba website which showed price of 15-16 USD (FOB) for a quantity of 100 pcs, he under the pressure of increasing detention and demurrage charges, stated that he had no objection if the assessable value was ascertained on the basis of lowest value and requested the department to release goods at an early date. In his further statement, Shri Sanjeev Garg, under the assurance of officers that their goods will be released in a day or two, accepted the internet value @ 1799 per piece and paid the differential duty amount Rs. 13,59,354/ on 13.05.2016. But goods were still not released despite deposit of differential duty that Appellants, vide letter dated 17.05.2016, requested for provisional release of goods and issuance of Show Cause Notice. Again, vide their letter dated 10.11.2016, Appellants requested for provisional release, which was ultimately accepted and goods were released under Bank Guarantee and Bond. The impugned Show Cause Notice therefore should not have been issued.
9. The Adjudicating Authority without proper appreciation of the facts and without discussing the case law relied upon, by the appellants has wrongly confirmed the value of the goods and wrongly imposed penalty. The order is challenged on the ground that provisional assessment is in itself is an evidence that Appellants had not voluntarily accepted the value @Rs 1799/- per piece.
10. The decision in the matter of Ajex & Turner Wire Dies Co. – 2012 (279) ELT 394 (Tri. Del.) is relied where, it was held that when importer has cleared goods at enhanced value to save demurrage charges or otherwise, it does not mean that he has consented for enhancement of value. Similar view has been taken by Hon’ble Tribunal in the matter of Laxmi Colour Lab 1992 (62) ELT 613 (Tri.) and Digitech Photocopier Vs. Commissioner of Customs. Mumbai – 2009 (233) ELT 425 (Tri. – Del.).
11. The ld. Counsel further mentioned that it is settled proposition of law that in absence of any contemporaneous import, mere internet price is not reliable evidence to discard the transaction value. Decision in the matter of Aggarwal Distributors (P) Ltd. Vs. Commr of Customs. New Delhi-2000 (117) ELT 49 Tribunal) [confirmed by Hon’ble Supreme Court-2000 (122) ELT A121 (SC)] is relied. It is also submitted that it is well settled that the onus of proof relating to undervaluation is on the Revenue which has not been discharged. But no evidence of collusion, willful mis-statement or suppression of facts has been adduced by Department, levy of penalty under said section, can in no way be countenanced. No parallel invoice or other incriminating document was recovered.
12. Deductive Value of the goods as determined under Rule 7 of CVR, 2007 without following the provisions as laid therein has also been objected.
13. It is finally submitted that Shri Sanjeev Garg is only an Authorised Representative in the matter. He had rendered statements as per authorization given by proprietor of Appellant. Importer Exporter Code (IEC) was obtained by the proprietor himself. He had no role to play with foreign supplier in negotiation of the value of instant goods. There is no mention in the entire Notice or Order-in-Original that he had any prior knowledge or that he abetted in the alleged act of undervaluation. Order is accordingly prayed to be set aside.
14. To rebut these submissions ld. Departmental Representative has mentioned that Sanjeev Garg had admitted the re-determined value vide three separate statements dated 21.04.2016, 10.05.2016 & 13.05.2016. None of these statements is ever retracted. In view of said admission no further evidence was required to be produced by department. The appellants vide letter dated 24.04.2017 & 07.06.2017 have even requested for waiver of Show Cause Notice. They rather deposited the differential duty on 13.05.2018. Now the appellants cannot back out from the said admission. Ld. Departmental Representative has relied upon the following case laws:-
(i) Commissioner of C. Ex., Madras Versus Systems Components Pvt. Ltd. Reported As 2004 (165) ELT 136 (Sc).
(ii) Jai Shiv Trading Co. Versus Commissioner of Central Excise, New Delhi Reported As 2018 (359) ELT 208 (Tri. Del.)
(iii) Sodagar Knitwear V. Commissioner – Reported As 2018 12 (362) E.L.T. A213 (S.C.)]
(iv) Commissioner Of Customs Delhi Versus M/S. Hanuman Prasad & Sons Reported as 2020 (12) TMI 1092 CESTAT New Delhi
(v) M/s. Sukhdev Exports Overseas Versus Commissioner Of Customs (Preventive), New Delhi Reported As 2023 (2) Tmi 1038 – CESTAT New Delhi
15. Having heard the parties at length and perusing the entire record, foremost we need to know as to what „value‟ and „transaction value‟ mean:-
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 in relation to any goods 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 in respect of imported goods.
16. Section 14(1) is a deeming provision as it talks of „deemed value‟ of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4(1) of the Customs Valuation Rules. The authority is thus bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at or around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value.
17. In South India Television (P) Ltd., the Court explained as to how the value is derived from the price and under what circumstances the deemed value mentioned in Section 14(1) can be departed with. Discussion in the said judgment is quoted hereunder:
“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. Undervaluation has to be proved. If the charge of undervaluation 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 undervaluation, it must make detailed inquiries, collect material and also adequate evidence. When undervaluation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving undervaluation, 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 undervaluation. 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.”
18. To the same effect, are other judgments, reiterating the aforesaid principle, such as, Commissioner of Customs, Calcutta v. South India Television (P) Ltd., (2007) 6 SCC 373 = 2007(214) E.L.T. 3 (S.C.), Chaudhary Ship Breakers v. Commissioner of Customs, Ahmedabad, (2010) 10 SCC 576 =2010 (259) E.L.T. 161 (S.C.) and Commissioner of Customs, Vishakhapatnam v. Aggarwal Industries Ltd., (2012) 1 SCC 186 =2011 (272) E.L.T. 641(S.C.).
19. Revealing to the facts of present case, we observe that the appellants have imported 4 consignments of Diaphragm Boost Pump in the past and one live consignment was detained by the Department for investigation. It is a matter of record that the following facts have emerged in the course of investigation on the basis of which show cause notice was issued to the appellant importing firm:
(i) That the value of the identical goods for the contemporary import period on the e-bay and an Alibaba Web based trading firm is indicating the value of the imported goods @ U.S. $ 17 to 18 per piece while the declared value of the live consignment as well as of the previously imported consignment was declared U.S. $ 3.58 CIF per piece;
(ii) During the investigations the representative of the importing firm have also been confronted with the available price of the import consignment goods at E- bay and Alibaba and Shri Sanjeev Garg, Authorized Representative has voluntarily agreed for value of Rs. 1,799/- per piece (Rs. 794/- per piece as the assessable value after making necessary deductions, accordingly the assessable value has been raised to Rs. 794/- per piece by the Department applying the provisions of Rule 7 of Customs Valuation Rules, 2007;
(iii) Differential amount of the duty amounting to Rs. 13,59,354/-was deposited by the appellant for their live consignment under TR-6 challan No. 36653 dated 13 May, 2016;
(iv) The statements recorded under Section 108 of the Customs Act, 1962 have never been retracted by the Proprietor and the Authorized Representative of the appellant firm.
20. From the above facts, we find that the Assessing Officer was having a valid and enough evidence for rejection of the transaction value as declared by the appellant in their bill of entry by resorting to Rule 3 (4) of the Customs Valuation Rules, 2007. Since the value of identical and similar goods at the contemporary import time was also could not be ascertained, we feel that the resorting the valuation under Rule 7 of the Customs Valuation Rules by the Department is legally sustainable in the facts and circumstances of this case as narrated above. While holding the above view, we take shelter of the decision of this Tribunal in the case of Commissioner of Customs (Import), ICD, TKD, New Delhi versus Sodagar Knitwear reported in 2018 (362) E.L.T. 819 (Tri. Del.) which has also been confirmed by Hon’ble Apex Court in its decision reported under 2018 (362) E.L.T. A213 (S.C.). The relevant extract of the above decision is reproduced here below :-
“8. The second issue in the present appeal is regarding the value of the imported goods. The Customs Authorities redetermined the value of the imported goods in terms of Customs Valuation Rules, 2007. Since the importer had failed to advance any documents/invoice to substantiate the value of the goods, the transaction value stands rejected and the value of the goods have been redetermined as per Rule 7 of the Customs Valuation Rules, 2007. It is noteworthy that the representative of the importer has been specifically shown the basis for redetermination of the value and his statement recorded by the Customs Officers. It is on record that Sh. Eklovey Chug, Manager of the importer has specifically admitted in his statement dated 31-12-2016 that he agreed with the manner of calculating the assessable value and differential duty.
9. It is settled position of law that the facts which are admitted need not be proved. In the case of CCE, Madras v. Systems & Components Pvt. Ltd. 2004 (165) LT. 136 (S.C.), the Hon’ble Apex Court in para 5 of the order has observed as follows:
“…..Once it is an admitted position by the party itself, that these are parts of a Chilling Plant and the concerned party does not even dispute that they have no independent use, there is no need for the department to prove the same. It is a basic and settled law what is admitted need not be proved”.
10. Further, this Tribunal in the case of Jai Shiv Trading Company vide F. O., dated 20-7-2017 has observed as follows:
“The appellant has also challenged that valuation adopted by the customs authorities. From record, it is seen that such redetermination of value has been carried out in terms of Rule 7 of the Customs Valuation Rules which provides for determination of value on the basis of the price of identical or similar imported goods in India. It is further seen from records, that the proprietor of the appellant, Sh. Jayshiv, was shown the market enquiry report at the time of recording his statement on 8-7-2008. Further, in the statement he has voluntarily accepted the increased valuation of the imported goods. It is settled position of law that once, the importer has admitted the redetermination of value on record and has accepted the method of such valuation, he cannot subsequently challenge the same on the same ground. Consequently, we uphold the redetermination of the value carried out by the customs authorities”.
The ratio of the above judgment is squarely applicable to the instant case”.
21. We also observe that in the present case also there is sufficient admission of the authorized representative of the appellants for the value of contemporaneous import of similar goods shown by the department. We observe that thrice the statements of said representative were recorded where he corroborated the admission and there is no retraction. Law is clear that admissions need no further proof (52 of Indian Evidence Act). The appellants /importer has also not appeared to depose contrary to the said admission. The onus of proof in the given circumstances was of the appellant which has not been discharged. The only plea that the admission was to avoid the demurrage charges is not acceptable for want of any evidence about the place of price negotiations by the importer. Above all, admittedly the importer has not purchased from the manufacturer the possibility of getting the goods from trader at lower prices doesn’t arises.
22. In view of above discussion and the decision of this Tribunal, which has also been confirmed by Hon’ble Apex Court, we hold that there is no infirmity in the order-in-original under challenge. We do not find any requirement of interfering with the findings in the order-in-original. Therefore, we uphold the same.
23. Accordingly, the appeals are dismissed.
[Pronounced in the open Court on 14.11.2023]
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