Combine Trading Company Vs Principal Commissioner of Customs (CESTAT Delhi)
Two separate appeals filed by M/s. Combine Trading Co. and Shri Jaspreet Singh challenging an order confirming the rejection of self-assessed transaction values, re-determination of customs duty, and imposition of penalties have been dismissed. The case involves allegations of mis-declaration and undervaluation of imported “Automotive Safety Glass” windshields and PU Sealant, leading to significant evasion of customs duty.
Background of the Case
The investigation was initiated by SIIB-Import ICD, TKD, following intelligence about potential mis-declaration and undervaluation in the import of “Automotive Safety Glass” windshields and PU Sealant. On October 12, 2018, searches conducted at the office premises of M/s Combine Trading Company led to the recovery of incriminating documents, including actual commercial invoices for past imports. These documents revealed that the declared values for “Automotive Safety Glass” windshields were significantly lower than their actual transaction values. Further examination of parallel invoices, also recovered during the search, indicated a consistent pattern of suppressing actual transaction values for past import consignments.
The investigation specifically focused on 27 bills of entry for “Automotive Safety Glass” windshields imported between June 9, 2015, and April 26, 2018, and 11 bills of entry for “PU Sealant” imported from May 30, 2016, to March 13, 2018.
Key Admissions and Evidence
Statements were recorded under Section 108 of the Customs Act, 1962, from key individuals involved. Shri Ranbir Singh, Import-Export Manager of M/s Combine Trading Company, confirmed the authenticity of documents retrieved from company email accounts.
Crucially, Shri Jagmohan Kaushal, Proprietor of M/s Combine Trading Company, admitted to an arrangement with M/s. Chandok Glass House. He stated that M/s. Chandok Glass House handled all correspondence with the foreign supplier, M/s. Xinyi Automobile Glass, China, and that imported goods were subsequently sold entirely to them. He also admitted to the use of two parallel invoices for the same consignment: one reflecting the actual, higher value (USD 22137.43) and another, lower value (USD 11154.72), presented to customs for assessment purposes.
Shri Jaspreet Singh, authorized signatory of M/s. Chandok Glass House, corroborated Shri Kaushal’s statement. He admitted to handling all import-related work for automobile glass and confirmed the undervaluation evidenced by the parallel invoices, agreeing to pay the differential duty.
Documents and emails retrieved from the appellants’ premises and email accounts consistently showed that fabricated invoices with lower values were presented for customs clearance to evade duty.
Valuation and Duty Re-determination
For two specific bills of entry, the actual values found from the recovered parallel invoices were used for re-assessment. For the remaining 25 consignments of automotive windshields, the re-determination of value relied on imports made by M/s. Gupta Glass Enterprises from the same foreign supplier, M/s. Xinyi Automobile Glass (Shenzhen) Co. Ltd., China, during the same period. Similarly, for the 11 consignments of PU Sealant, the valuation was based on similar import cases involving M/s. Burberry International and M/s. Juneja Marketing Company, where the importers had admitted to actual prices being higher than declared. The assessable value was re-determined in accordance with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
A show cause notice was issued on September 17, 2020, demanding a differential duty of Rs. 1,41,80,369/-. This figure was derived from rejecting the self-assessed value of Rs. 4,38,37,565/- and re-determining it to Rs. 9,01,60,898/-. The notice also proposed confiscation under Section 111(m) and penalties under Sections 114A and 114AA of the Customs Act, 1962, on the importer, and penalties under Sections 112(a)(ii)/112(b)(ii) and 114AA on Shri Jaspreet Singh. The adjudicating authority subsequently confirmed the show cause notice.
Arguments by the Appellants
The appellants argued that no pre-show cause notice consultation was provided, which they claimed was mandatory. They also contended that neither Shri Ranbir Singh nor Shri Jagmohan Kaushal admitted to undervaluation or presenting fabricated documents. Shri Jaspreet Singh claimed the goods imported were of “second quality” and therefore could not be compared with goods imported by M/s. Gupta Glass Enterprises, though no documentary proof was submitted. The appellants also argued that the two recovered invoices could not be relied upon without a certificate under Section 138C of the Act, and that they were not provided with the bills of entry from M/s. Gupta Glass Enterprises to verify quality and description. They asserted that re-determination should have followed Rules 4 to 9 of CVR, 2007 sequentially, and that the revenue failed to prove remittances beyond the declared transaction value.
Department’s Rebuttal and Judicial Precedents
The authorized representative for the Department cited the Section 108 statements and retrieved documents, asserting that the appellants suppressed actual invoices and presented fabricated ones, violating Sections 17(1) and 46 of the Act. The declared value was therefore rightly rejected under Rule 12 and re-determined under Rule 9 of CVR, 2007, based on import prices for the same goods from the same supplier.
Pre-Show Cause Notice Consultation: The preliminary contention regarding lack of pre-show cause notice consultation was rejected. The authorities found that the appellant had consistently evaded investigation despite multiple summons. The notification providing for such consultation allows for proceeding with a notice if no response is received within the specified period. The Madras High Court’s decision in Hitachi Power Europe GMBH vs. CBIC [2019(27)G.S.T.L. 12(Mad.)] was deemed distinguishable.
Admissibility of Statements (Section 108): The tribunal emphasized the well-settled law that statements made to customs officers under Section 108 are admissible evidence and not hit by Section 24 of the Evidence Act, as customs officers are not police officers. Reference was made to Naresh J. Sukhwani vs. Union of India [1996(83) ELT 258(S.C.)], K.I. Pavunny vs. Assistant Collector [1997(3) SCC 721], and Surjeet Singh Chhabra vs. Union of India [1997(89) ELT 646 (S.C.)]. The unretracted admissions by Shri Ranbir Singh, Shri Jagmohan Kaushal, and Shri Jaspreet Singh were considered authentic and binding. The admission of parallel invoices by all three, along with Shri Jaspreet Singh’s admission of error and liability to pay duty, formed a strong basis for the judgment, invoking the principle, “what is admitted needs not be proved,” as seen in Commissioner of Central Excise, Madras V Systems & Components Private Ltd [2004 (165) ELT 136 (SC)].
Rejection of Declared Value and Re-determination: The tribunal found no error in rejecting the declared value under Rule 12 of CVR, 2007, given the manipulation of invoices and fraudulent suppression of actual transaction values. The re-determination under Rule 9, utilizing the actual prices from the recovered invoices, was deemed appropriate, as there could be no better evidence of the correct transaction value. For other consignments, the comparison with imports by M/s. Gupta Glass Enterprises (for windshields) and M/s. Burberry International and M/s. Juneja Marketing Company (for PU Sealant) from the same suppliers was upheld as reasonable.
Burden of Proof: The tribunal affirmed that the revenue had discharged its initial burden of proof beyond doubt, shifting the burden to the appellant to prove otherwise. Shri Jaspreet Singh’s uncorroborated claim of “second quality” goods was rejected. The decision cited CC. V. D Bhoormull [1983(13) ELT 1546 (SC)], which states that the department is not required to prove its case with “mathematical precision,” but rather establish a “degree of probability that a prudent man may on its basis, believe in the existence of facts.” The ruling in Carpanter Classic Exim Pvt Ltd, Vs. Commissioner of Customs, Bangalore [2006(200) ELT 593 (Tri.-Beng.), affirmed by 2009 (235) ELT 201 (SC)] was also referenced, emphasizing that in undervaluation cases, “mathematical precision” is difficult and “pre-ponderance of probability” is the standard.
Admissibility of Electronic Evidence (Section 138C): The appellant’s contention that recovered invoices without a Section 138C certificate were inadmissible was rejected. The tribunal referred to its own decision in Shri T.N.Malhotra and M/s. S.R.Bristle Products Pvt. Ltd. vs. Principal Commissioner of Customs, New Delhi [2024(6)TMI 202-CESTAT New Delhi] and the Gujarat High Court’s ruling in Principal Commissioner of Customs vs. Kishan Manjibhai Gadesriya [2022(4)TMI 316 (Guj.)]. These precedents hold that when the truth or relevance of electronic documents is admitted by the respondents in their Section 108 statements, a certificate under Section 138C is not strictly necessary.
Extended Period of Limitation: The invocation of the extended period of limitation under Section 28(4) of the Act was upheld. The tribunal found deliberate evasion of investigation by the appellant and intentional suppression of actual invoices to evade duty. This, coupled with the failure to make correct declarations in the Bills of Entry, established a clear case of suppression of facts, justifying the issuance of the show cause notice within the extended period of five years. The Bombay High Court’s decision in Rizwan Travels v. Commissioner of Central Excise, Raigad [2013 (290) ELT 416 (Bom.)] was cited to support this.
FULL TEXT OF THE CESTAT DELHI ORDER
