P.V. Subba Rao, Member (T)
1. Revenue has filed this appeal to assail the order-in-appeal dated 11.05.2020 Impugned order passed by the Commissioner of Customs (Appeals) whereby he set aside the order in original OIO dated 31.03.2018 passed by the Joint Commissioner. M/s Arihant Enterprises respondent imported electric motors of various capacities under five Bills of entry dated between 23.06.2010 and 19.01.2011 and cleared them on payment of appropriate duty. The Special Investigation of Intelligence Branch SIIB of the Commissioner of Customs, ICD, Tughlakabad received intelligence that some importers were undervaluing electric motors and thereby evading payment of duty. Acting on this information the officers of SIIB scrutinized the five bills of entry filed by the respondent and compared the values of the electric motors declared in these bills of entry with the values of electric motors in the National Import Data Base NIDB . This comparison was done based on values of similar goods cleared at Nhava Sheva port by other importers during the same period and the goods were of the same country of origin. The officers summoned Shri Rakesh Kumar Jain, proprietor, recorded his statements, visited his premises and after completing the investigation, issued a Show Cause Notice SCN dated 09.05.2014 proposing to reject the declared assessable value of Rs. 33,99,653/- in the five bills of entry under Rule 12 of Customs Valuation Rules and re-determine it as Rs. 1,33,85,898/- and recover differential duty of Rs. 23,86,213/- under Section 28(4) of the Customs Act, 1962 invoking the extended period of limitation. It was also proposed to demand interest and impose penalties upon the respondent. Adjudicating upon the SCN, the Joint Commissioner passed the OIO, the operative part of which is as follows:
“(i) I hereby reject the declared value of Rs. 33,99,653/- vide aforesaid Bills of Entry as per Rule 12 of the Customs Valuation (determination of the value of imported goods) Rules 2007 and order re-determination of the same to Rs. 1,33,85,898/- in terms of the Rule 5 of the aforesaid customs valuation rules 2007 as discussed hereinbefore.
(ii) I confirm the demand of differential duty amounting to Rs. 23,86,213/- (Rupees Twenty three lakhs eighty six thousand two hundred and thirteen only) under section 28(1) of the Customs Act, 1962 by invoking the extended period of limitations. The amount of Rs. 1,00,000/- (Rupees One lakhs only) already deposited by the importer at the time of investigation is ordered to be appropriated and the rest of differential duty is ordered to be recovered from the importer along with interest as per the section 28AB (up to 7.4.2011) and Section 28 AA (w.e.f. 8.4.2011) of the Customs Act, 1962.
(iii) I hold the goods covered under aforesaid 5 Bills of Entry imported by M/s Arihant Enterprises under consideration, but not seized due to their non-availability, as liable for confiscation under 111(m) of the Customs Act, 1962 but refrain from confiscating them as the goods are not available so the redemption fine cannot be imposed for the same.
(iv) I impose a penalty equivalent to the duty evaded by the importer amounting to 23,86,213/- (Rupees Twenty three lakhs eighty six thousand two hundred and thirteen only) under section 114A of the act. As per penalty under Section 114A has been imposed the penalty under section 112 cannot be imposed as per section 114A of the Act.
(v) I impose a penalty on the importer amounting to 5,00,000/- (Five lakhs rupees only) under Section 114AA of the act 114AA for the aforesaid contravention of the Customs Act, 1962.”
2. Aggrieved, the respondent appealed to the Commissioner (Appeals) who passed the impugned order setting aside the OIO with consequential relief. In the impugned order, Commissioner (Appeals) identified the two issues to be decided as follows:
(a) Whether there was under valuation of imported goods and whether the declared value needs to be rejected and re-determined and
(b) Whether the ingredients for invoking extended period of limitation were present to enable the department to confirm the demand beyond the normal period of limitation.
3. With respect to the first question, he observed that the declared value has to be first rejected under Rule 12 before it could be re-determined under Rules 4 to 9 of Customs Valuation Rules. He noted that the five bills of entry were assessed and the goods were cleared on payment of duty. In the OIO the declared and assessed values have been rejected on the basis of NIDB data of contemporaneous imports of similar goods as shown in the Annexure-A to the show cause notice. He observed that Annexure-A did not contain crucial detail such as quantity, quality, manufacturer details, technical specifications etc. to establish that the goods were similar to those imported by the respondent. Further, he found that on perusal of Annexure-B to the show cause notice there was a difference between the description of the goods and the description of the goods in contemporaneous bills of entry. He observed that the adjudicating authority relied strongly on the confession of the appellant proprietor to conclude that there was undervaluation and value needs to be re-determined as admission in the confessional statement. However, he observed that the NIDB data itself is not enough to reject the transaction value under Rule 12 and re-determine the value under Rule 5 of the Customs Valuation Rules. Therefore, he observed that re-determination of value on the basis of NIDB data was not proper and legal. He, therefore, set aside the OIO.
4. Revenue filed this appeal asserting that the Commissioner (Appeals) has committed an error as he did not appreciate the evidence in the form of NIDB data was duly corroborated by the confessional statement of the importer. Statement of the proprietor of the importer made on 29.01.2012 is as follows:
“On being asked I state that I had already tendered a statement dated 17.05.2012 wherein I had accepted the under valuation in import of electric motors and had also submitted a Cheque for Rs.1,00,000/- towards partial discharge of our duty liabilities which had bounced and then I submitted a Draft for Rs. 1,00,000/- I state that I am aware that I have to deposit the entire customs duty on the electrical motors imported by M/s Arihant Enterprises as per NIDB data”
“On being asked I state that I admit my guilt and I have seen the differential duty calculation chart prepared for the imports made in the name of M/s Arihant Enterprises on the basis of NIDB data i.e. the prevalent import prices during that time and the differential duty comes to Rs. 23,86,218/- I state that I have already deposited an amount of Rs. 1,00,000/- and the same may be adjusted towards this differential Customs duty and I agree with the same and I intend to deposit the entire duty amount.”
5. The second assertion of the Revenue is that the capacity of the electric motors mentioned in the NIDB data and those in the bills of entry were the same and both were unbranded and were manufactured in China. The quantity of goods and commercial levels were also comparable as the importer had imported 525, 575, 597, 671 and 642 electric motors in the five bills of entry and the comparable data in the NIDB was for between the one and 185 motors. It is asserted that since data was obtained from the NIDB it is a reliable source.
6. It is further asserted that in his statement the proprietor of the respondent had agreed to pay the differential duty which shows that he had managed to mis-declare the value and had conscious guilty mind and he is concealing vital facts during the investigation.
7. Reliance is placed by the Revenue in the case of Customs Vs. Systems & Components Pvt. Ltd. 2004 (165) ELT 136 (SC) to assert that an admitted fact need not be proved and since the proprietor has admitted to the differential duty liability which need not be proved. Reliance is placed on Naresh J. Sukhanami Vs. Union of India 1996 (83) ELT 258 to assert that the statement made before the officer of Customs is admissible as evidence because the Customs officer are not police officers. Reliance is placed on Commissioner of Customs Vs. M/s Hanuman Prasad & Sons decided by this Tribunal in Final Order No. 51584-51619/2020 to assert that if the importer had accepted the assessable value and requested that no show cause notice may be issued or personal hearing granted to them, it cannot, thereafter, contest the re-determination of value. It is, therefore, prayed that the impugned order may be set aside.
8. Learned counsel for the respondent supports the findings in the impugned order and deserves it calls for no interference.
9. We have considered the submissions on both sides and perused the records.
10. We find that the goods were initially imported under five bills of entry between 23.06.2010 and 19.01.2011. They were assessed by the proper officer and the goods were cleared after payment of duty. During hearing, learned counsel for the respondent submits that in respect of the three of the bills of entry the assessing officer had actually enhanced the value which enhancement they had accepted and paid duty accordingly. Therefore, it is a matter of record that the appellant declared the transaction values which were accepted in two cases and enhanced in three cases by the proper officer at the time of clearance of the goods. Long after the clearance of the goods, the officers from the SIIB compared the values in these bills of entry with the values of similar goods cleared and found that the values were different. For this reason, they initiated investigation and recorded the statement of the proprietor. In his statement, the proprietor said that what he declared was the transaction value and that he was not aware of the values in the NIDB. This contention must be accepted because the NIDB is data base of the Customs department and it is not open for public to see. All that is required from the importer in the bill of entry is to declare his transaction value truly and accurately. If there is any relationship between the buyer and the seller or if there is any additional consideration for sale they also have to be declared. In this case, there is no allegation that there was any additional consideration for sale or that the buyer and seller were related. Therefore, we find that there was no lapse on the part of the respondent in his declaration. Rule 12 of the Customs Valuation Rules provides for proper officer to reject the transaction value and it requires two steps. First, if he has reason to doubt the truth and accuracy of the transaction value, he can call for additional information. On receiving additional information or if no such information is provided by the importer, the proper officer still has reasonable doubt regarding the truth and accuracy of the transaction value, he can reject it under Rule 12 and re-determine the value under Rules 4 to 9 in that order. Rule 4 deals with transaction values of identical goods and Rule 5 deals with transaction value of similar goods. In this case, the assessment was done under Rule 5. Needless to say that the power of rejecting transaction value under Rule 12 is given only to “the proper officer” and not to the importer. Although the importer is required to self-assess duty he has no power to reject the transaction value. In fact, the importer has no means of knowing at what prices others were importing goods which are identical or similar and at various customs locations across the country. Only Customs officers have access to this information.
11. Shri Rakesh Kumar Jain, proprietor of the respondent had correctly stated that he has no means of knowing the NIDB values. It needs to be pointed out that the transaction value can be rejected only if there is a reasonable doubt regarding its truth and accuracy. There is nothing in the rule which mandates that the transaction value has to be the same as the transaction values of other importers at various locations. While Rule 12 allows the officers to use the vast difference in prices as the starting point for raising the doubts, nothing in this rule or in Section 14 mandates that the transaction value has to be as per the prices at which others imported goods during the relevant period. Shri Rakesh Kumar Jain further said that if any differential duty is payable, that he would pay. It does not amount to saying that he had not declared the transaction value truthfully or accurately. Therefore, the undue reliance placed by the adjudicating authority on the statement of Shri Rakesh Kumar Jain is not correct as correctly observed by the Commissioner (Appeals) in the impugned order.
12. We now advert to the other grounds of appeal. It has been asserted by the Revenue that electric motors mentioned in the NIDB data and those imported by the respondent are of similar capacities, were unbranded and were manufactured in China. We find that though this may be true this, by itself, is not sufficient to say that the goods are similar. Unbranded goods could be of various qualities and sold at various prices.
13. The quantity of the goods imported by the appellant varied between 525 and 671 electric motors in each of the five bills of entry and in the imports whose values were taken from comparison, the quantities ranged between 1 and 185 motors. The quantities imported by the respondent were three times to 500 times the quantities in the bills of entry with which the values have been compared. We do not agree with the Revenue that the variation between three and 500 times is insignificant.
14. The case law of Systems & Components Pvt. Ltd. does not carry the case of Revenue any further as Shri Rakesh Kumar Jain had accepted to pay differential duty liability, if any, but has not accepted that he has not declared the transaction value truthfully or accurately. His statement was based on the NIDB data presented before him while recording the statement by the authorities. He was right in saying that he had no means of access to NIDB. The differential duty liability is a consequence of this comparison after following Rule 5 of the Customs Valuation Rules read with Rule 12. Unless the first stage of rejection of transaction value under Rule 12 is upheld, Rule 5 cannot be followed. For rejection of transaction value, under Rule 12 it must be established that there was a reasonable doubt regarding truth and accuracy of the transaction value which we do not find in this case. The statements made before customs officers are admissible as evidence as held in Naresh Sukhanami. However, the statement does not by itself establish that there was any mis-declaration of the transaction value. The case law of M/s Hanuman Prasad & sons is on a different footing altogether. In that case the officer doubted the transaction value and the importer accepted the value proposed by the officer and waived the show cause notice and adjudication order. Accordingly, no adjudication order was issued. Thereafter, the importer appealed on the ground that no speaking order was issued. Since the importer had waived its show cause notice and order as per the provisions of Section 17(5) of the Customs Act, it was held that the importer cannot renege on his submission waiver of SCN and the order after the goods have been cleared.
15. To sum up, we find that the only thing established during the investigation is that other importers imported goods through Nhava Sheva port at different prices and the difference in quantities was between 3 times to 500 times. This does not in any way prove that the declared transaction value was not true or not accurate.
16. In view of the above and the factual matrix of this case, we fully agree with the findings of the impugned order and find no reason to interfere with it. The impugned order is upheld and appeal is rejected.
