M/S. Shriyan Enterprises vs Commissioner Of Customs (E.P. Mumbai

(Arising out of Order-in-Original No. 16/2005/CAC/CC/KPM dated 13.4.2005 passed by the Commissioner of Customs (EP) Mumbai and OIA No. 300,301 & 302/2006/MCH/JC/E.P./06 dated 20.7.2006 passed by the Commissioner of Customs (Appeals) Mumbai )

For approval and signature: Honble Mr. P.S.Pruthi, Member (Technical)

Honble Mr. Ramesh Nair, Member (Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : No CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : Seen of the Order?

4. Whether Order is to be circulated to the Departmental : Yes authorities?

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M/s. Shriyan Enterprises : Appellant M/s. Shriyan Enterprises M/s. Shriyan Enterprises M/s. Chandra Shekhar Datta

VS

Commissioner of Customs (E.P. Mumbai : Respondent

Appearance

Shri A.K. Chatterjee, Advocate for Appellant

Shri A.K. Singh, Assistant Commissioner (A.R) for respondent

CORAM:

Mr. P.S.Pruthi, Member (Technical) Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 6/08/2015 Date of pronouncement : 7/9/2015

ORDER NO.

Per : P.S. Pruthi

These appeals are directed against the impugned Order-in-Appeal dt. 20.7.2006 passed by the Commissioner (Appeals) and the Order-in-Original dated 13.4.2005 passed by the Commissioner

2. The appellant had imported consignments of Watch Parts and Button Cells under Bills of Entry. After assessment on second check basis and payment of duty, Customs clearance was given. However, the consignments were intercepted by Customs (P) Officers working under Commissioner of Customs (P). Investigations revealed that the watch parts did not bear any brand name or any other mark on them or on the packing. The country of origin was mentioned at the foot of the invoice as China/Japan which was found to be misleading. In the case of button cells it was revealed that they bore the inscription Japan on them. In the case of button cells of CR3032 type, the same goods were declared of Chinese origin in one Bill of Entry and of Japan in another Bill of Entry. The authorized signatory of the appellant accepted the under valuation and willingness to pay differential duty as the market survey revealed that the goods were undervalued. The Proprietor of the appellant Shri C.D. Shriyan failed to appear before the Customs Officers during the investigations. No proper evidence was produced in the form of manufacturers invoice to substantiate declared value or the country of origin in respect of the watch parts. Shri Mohinderpal Singh authorized signatory also stated that the negotiations were done with the foreign supplier in Hongkong on telephone.

2.1. In the case of button cells of SR & CR type, the adjudicating authority considered the lowest transaction value amongst contemporaneous imports. As regards the button cells of LR type the adjudicating authority observed that the brand name of Maxell was appearing as in the other cells and therefore, the source point for procuring the cells must be the same. He arrived at the value basing the same on LR Cells sold by Timex Watches through their Franchise Shops. Further button cells being classifiable under Chapter Heading 8506, the additional duty is payable on basis of retail sale price in terms of Notification No. 13/2002 dt. 1.3.2002. The Commissioner determined that the declared RSP of Rs. 1/- per piece for all types of button cells is grossly under declared as against the retail price in the Range of Rs.25/- to Rs.45/- as revealed by the market survey. The Commissioner allowed a discount of 50% on the retail prices of the button cells sold by Timex Watches to arrive at the retail price of the goods in question taking into account the brand value of the Timex Watches, Franchise. In his order the adjudicating authorities revalued all the goods and demanded appropriate duty. Further confiscated the goods under Sections 111(d) and 111(m) read with provisions of Section 117 of Indian Trade and Merchandise Act, and imposed fine in lieu of confiscation. Also imposed penalties on the appellant, its Proprietor and Shri Mohinderpal Singh. In the first appeal, Commissioner (Appeals) upheld the order of the adjudicating authority.

3. The first contention of Ld. Advocate is that Customs Preventive Officers did not have jurisdiction in this case. We find in this case that the Customs (Preventive) officers have jurisdiction in the matter to initiate investigations on imported goods which are suspected to be undervalued. This is clear from Notification No. 15/2002-CUS(NT) dt. 7.3.2002 which designates the Commissioner of Customs (P) and the officers working under to him act as the officers of Customs in their appropriate level/designation. Therefore the preliminary objection of the Ld. Advocate is rejected. Even though the order of clearance on a Bill of Entry may be considered as an order of assessment, the department is not precluded from issuing a show cause notice for determining the correct value and demand duty in terms of Section 28 of the Customs Act, and for proposing confiscation under Section 111ibid. What is proposed in the show cause notice is not a review of the assessment order but a proposal to confiscate the goods for mis-declaration in terms of Section 111 and proposed revaluation under Section 14 and consequently demand duty in terms of Section 28 of the Customs Act. Therefore, the proceedings from issue of show cause notice to adjudication are perfectly legal. The reliance placed by the Ld. Advocate on the case of Arvind Exports (supra) is not correct because the facts were different. In that case the importer had contested that the order for home consumption clearance under Section 47 is an administrative order which was rejected by the Tribunal holding that the order under Section 47 is subject to review under Section 129D as it stood then.

4. The next argument of the Ld. Advocate that goods which are not available for confiscation cannot be confiscated and redemption fine imposed . We find in this case that the goods were released provisionally on execution of bond. In such cases it is the terms and conditions of the bond which will govern the issue of confiscation and redemption fine. In this case the appellant executed a bond binding themselves towards the full value of the goods, duty and redemption fine as condition for provisional release. Therefore the judgment cited by the Ld. Advocate do not come to his aid. However we do agree that penalties cannot be imposed on both the properietoryship and proprietor. This is the established legal position.

5. As regards the issue of undervaluation we find in this case that the appellant had provided contemporary prices of goods imported from the same supplier. This fact has not been considered by the authorities below before arriving at their decision. In these circumstances resorting to Rule 8 of the Valuation Rules without considering contemporaneous prices is not correct legally in terms of the Customs Valuation Rules. Under these Rules the process of re-determining value has to be followed sequentially Rule by Rule. On the other hand, we find that the adjudicating authority has referred to contemporaneous prices extracted from certain Bill of Entry. It is seen that the evidence in the form of Bills of Entry was not provided to the appellant thus, violating the principles of natural justice. The evidence of market enquiries was also not produced before the appellant in the case of watch cells nor were the market enquiries conducted in the presence of the appellant. In this view of the matter, we find that the matter requires fresh consideration after observing principles of natural justice in terms of the observations made above. As the matter is very old it would be in the interest of Revenue and the appellant that the matter is decided in de novo consideration within a period of 3 months from the date of issue of this order. The impugned order is set aside and the appeals are allowed by way of remand to the adjudicating authority only in respect of valuation issue discussed above and consequent demand/penalty if any.

6. Appeals disposed of in above terms.

(Pronounced in court on 7/9/2015)

(Ramesh Nair) Member (Judicial)

(P.S.Pruthi) Member (Technical)

SM.

5 Appeal No. C/842/2005-Mum & C/1075,1076,1077/2006-Mum