Chartered Accountant
Bookmark and Share
click here to subscribe our newsletter
 
 
Corporate News *  Dept. Can’t Classify Product as Zarda Scented Tobacco After Repeatedly Approving It As Chewing Tobacco: CESTAT *  Mere Uploading Of GST Order On Portal Is Not “Valid” Service: Tripura HC *  CGST Can Proceed Even If SGST Closed Similar Case Earlier: Delhi HC *  SC upholds 28% GST on online gaming with retrospective effect. *  West Bengal Govt cuts E-way Bill Threshold limit to Rs. 50,000 for intra-state goods movement. *  Criminal Prosecution Under Central Excise Act Can’t Continue After CESTAT Sets Aside Duty Demand on Merits: Punjab & Haryana High Court. *  Madras High Court Quashes GST Assessment Orders for Denial of Personal Hearing; Remands Matter Subject to 10% Deposit *  Ex Parte GST Order: Madras High Court Directs Immediate Removal of Bank/ITC Attachment Upon 25% Deposit *  J.K. Cement Receives GST Demand Order of Rs 8,02,113/- from Ahmedabad Tax Authority *  Delhi Police EOW Busts Alleged Rs. 128 Crore GST Fake Invoice Network. *  REPLY TO SCN CAN’T BE TREATED AS “EMPTY FORMALITY”: ORISSA HIGH COURT QUASHES GST DEMAND OF RS. 57.30 LAKH *  Challenge to CGST Provisions restricting ITC to Bonafide Purchasers : Allahabad HC issues notice *  CBIC Notifies Revised Customs Tariff Values for Edible Oils, Gold, Silver, Brass Scrap and Areca Nuts *  Delhi HC Orders Removal of GST Attachment After Statutory 1 Year Period Expired *  GSTAT Extends Relaxed Appeal Filing Guidelines till December 31, 2026 *  AO fails to Provide Import - Export Data from DGFT to Taxpayer for Reconciliation *  Gold, Silver Imports To Get Costlier As Govt Raises Customs Duty To 10%  *  GSTAT Enables Pre-Payment Access to Document Upload and Checklist for GST Appeal Filing *  GST Portal Restrictions Can’t Override Statute: Gujarat HC Allows Cross-State Transfer Of CGST ITC After Amalgamation *  Centre Revises HS Codes for Large Diameter Steel Pipes Used in Oil & Gas Pipelines *  Customs Duty Liability Arises On Warehouse Clearance Date: Supreme Court *  Government lifts export ban on de-oiled rice bran *  CESTAT Grants 12% Interest on Pre-Deposit for Investigation from Date of Deposit till Refund and Denies Interest on Interest. *  Government Overhauls GST Classification Framework for Non-Alcoholic Beverages; Fruit Juice Drinks, Milk-Based Beverages and Caffeinated Drinks to Attract Revised 5% and 40% GST Rates from May 1, 2026 *  India’s gross GST collections hit a record Rs 2.42 lakh crore in April, up 8.7% *  Customs clearance stalled, revenue hit over MRP dispute *  Shipping Corporation explores Middle East routes as Hormuz tensions disrupt cargo movement *  India, Kenya signs MoU for exchange of pre-arrival customs information *  No demand of Taxes under Reverse Charge if Tax Already Discharged by Service Provider under forward charge *  The India-New Zealand Free Trade Agreement, signed "once-in-a-generation" deal that eliminates tariffs on 100% of Indian exports to New Zealand
Subject News *  Consignment Sales Can’t Be Reclassified as Inter-State Sales Based on Pre-Agreement Evidence: CESTAT *  Exporter Can’t Be Denied Advance Authorization Benefit Due To ICEGATE Technical Glitch: Delhi High Court *  No GST Demand For Mere Wrong Set-Off Of IGST Credit Under CGST And SGST Heads: Kerala HC. *  Cenvat Credit Can’t Be Denied on Input Services Having Nexus With Manufacturing Activities: CESTAT *  Pending Proceedings Can’t Survive Without Saving Clause: Calcutta High Court Quashes GST Demand of Rs. 6.28 Crore After Omission of Rule 96(10) *  Madras HC Quashes GST Demands on TASMAC (Tamil Nadu State Marketing Corporation) Bar Licence Fee *  GST Proceedings Cannot Survive Omitted Rule Without Saving Clause: Calcutta HC *  Provisional Release Can’t Be Denied Solely On Dept. Suspicion Of Misclassification And Undervaluation Of Imported Goods: CESTAT *  Businesses Should Not Be Kept Outside GST Regime Without Due Process: Gauhati High Court *  Punjab & Haryana HC Directs Reconsideration of Contractors’ Claim for Additional GST Payment After Tax Rate Hike From 12% to 18% *  S. 108 Statements Can’t Be Sole Basis Without Following Section 138B Procedure: CESTAT *  Bombay High Court Frames Key Questions on Mandatory Distribution of ITC U/s 20 CGST Act *  Filing of Annexure-B for Refund Applications involving Accumulated ITC using the offline utility in GST portal: GSTN *  No Service Tax on Parent Company’s Un-Invoiced Cost Allocations Without Actual Service or Consideration: CESTAT  *  Calcutta High Court Upholds GST Classification of Polypropylene Leno Bags as Plastic Products *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  GSTAT Issues Major Bench Allocation Framework; All Appeals to First Go Before Division Bench *  ITC Blocking Without Reasoned Order Violates Rule 86A; Punjab & Haryana HC Directs Release of Credit *  Allahabad HC Refuses Bail to CGST Superintendent In Rs. 70 Lakh Bribery Case *  S.130 Can’t Be Invoked Without Prior Tax Determination U/s 73/74: Allahabad High Court Quashes GST Confiscation Proceedings *  SC grants Bail to Rs 54cr GST case  *  Karnataka HC Sets Aside Duplicate GST Orders, Orders Fresh Hearing on GSTIN Cancellation *  DRC-01 Summary Can’t Replace Mandatory SCN: Gauhati High Court *  Transfer Of Unutilized ITC After Amalgamation - Supreme Court Issues Notice *  PUNJAB & HARYANA HC QUASHES GST CANCELLATION NOTICE FOR FAILURE TO PROVIDE CBIC ENQUIRY REPORT *  LICENSE FEE, TECHNICAL ASSISTANCE CHARGES NOT INCLUDIBLE IN CUSTOMS VALUE UNLESS THEY ARE A CONDITION OF SALE: CESTAT *  DELHI HC ORDERS REMOVAL OF GST ATTACHMENT AFTER STATUTORY 1 YEAR PERIOD EXPIRED *  CUSTOMS BROKER CAN’T BE FAULTED JUST BECAUSE EXPORTER’S GST REGISTRATION WAS PREVIOUSLY CANCELLED: CESTAT   *  Supreme Court Dismisses Review Plea Against Delhi HC Ruling Holding Real Operator Behind Fake GST Firms Liable As ‘Taxable Person  *  GST Appeal Can’t Be Rejected Merely Because DRC-07 Was Not Uploaded On Portal: Bombay High Court  

Comments

Print   |    |  Comment

PJ/Case laws/2012-13/1066

Import of Goods - valuation by Department on value of non-contemporaneous imports-sustainable?

Case:- RAJASTHAN WATCH MANUFACTURERS Versus COMMR. OF C. EX., JAIPUR-I
 
Citation: - 2012 (275) E.L.T. 250 (Tn. - Del.)
 
Issue: - Valuation of Imported goods – undervaluation alleged and value fixed on the basis of documents and value not contemporaneous imports – prima facie strong case made out – stay granted.
 
Brief Facts:- The Applicant imported in total 889 consignment of watch parts. Out of which 889 consignments, 517 consignments were imported at foreign post office, Jaipur. All the parcels were subjected to 100% examination. The same were accordingly cleared by the concerned officer. The period covered in the appeals is June, 2002 to July, 2006 and majority of the imports are from M/s. Legend Watch Manufacturers Ltd., Hong Kong.
 
Department alleged that there was undervaluation of the import of parts of wrist watches by adopting calculative method on the ground that average undervaluation is to the extent of 60%
 
Therefore, show cause notice was raised for demanding total duty of Rs. 14.49 crores. Out of which a sum of Rs. 5.12 crores approximately has been confirmed.
 
Applicant has filed appeal against the impugned order before the Tribunal and application for stay is filed.
                                                                                                                                                                                                                          Appellant’s Contention: - Applicants strongly contested the methodology adopted by the Commissioner for confirming undervaluation against them. It clarified that 60% average undervaluation arrived at by the Adjudicating Authority is based on the alleged evidence in respect of items which are not formed part of the serial nos. 1 and 10 of Annexure - "A". The same, if at all available is in respect of other items. The allegation is that the lowest extent of undervaluation of 21% and highest is 99% in respect of various items, the finding of the Adjudicating Authority by taking an average under valuation to 60% is against the settled principle of law. There is no provision either in the Section 14 of Customs Act or in Customs Valuation Rules, 1988 to adopt undervaluation on the basis of average price of one item which may be less and for another item which may be highest. They contend that watch movement imported by them were AL 35 and not AL 35 EHC, as referred in the documents relied upon by Revenue. These two models are entirely different and distinct and they have imported AL 35 @ Hong Kong $ 3.44. According to the Association letter dated 12- 6-2006, the minimum value of watch movement is around Hong Kong $ 2.75. As such, the applicants imported watch movements of Model AL 35 at a higher price and further enhancement was not justified.
 
Respondent’s Contention: - Revenue submits that as per records, the said invoice was retrieved from the computer brought by the Appellant to the DRI, Jaipur office. They submit that the copy of the summon issued to Shri Raj Kumar, who allegedly brought the computer to DRI do not show that he was asked to bring computer. The Panchanama only relates to retrieval of the alleged data from the computer, wherein it is recorded that the panchas were informed that Raj kumar brought the computer to the DRI office so as to retrieve the said invoice in question.
 
Reasoning of Judgment: - The Tribunal noted that there is no independent evidence of Panchas or people seeing Rajkumar carrying computer to the office of DRI office. As such, genuineness or authenticate source of the said document is doubtful. The appellants have  also strongly contested that Shri G.S. Purewal was not member of the association at the time of writing letter as shown by the information retrieved by them under RTI application.
 
The Tribunal noted that the Adjudicating Authority has not referred any evidence in respect of the goods in question detailed against item Nos. 1 to 10 of Annexure "A". The said methodology adopted by the Commissioner is neither proper nor justified. Even the minimum price and maximum price taken into consideration by the Adjudicating Authority are not in respect of the same items but in respect of different items. The reliance of applicant on the decision of the Tribunal in case of R.V. Fashion v. C.C. - 2009 (246) E.L.T. 535 vide which re-determination of the price based on average international price of raw material, without making any reference to contemporaneous imports was set aside, is apt.. As such, the Tribunal found that at this prima facie stage, that the Appellants have good case in their favour so as to dispense with pre-deposit of duty on the above count.
 
It was further noted that the demand of around Rs. 5.23 crores was confirmed on the basis of invoice issued by Golden Wheel Impex Ltd. in favour of PA Time Industries, showing price of model No. AL 35EHC as Hong Kong $ 5 and letter dated 12-6- 2006 written of All India Electronic Watch & Clock Manufacturers Association stating minimum price of watch movements and calibre PC 21S as Hong Kong $ 4.20. Reliance has also been placed on another letter dated 13-7-2006 written by the Association stating minimum price of any watch movement with battery as Hong Kong $ 4. As regards caliber PC 21S, it is seen that the same is based upon the letter of Association dated 15-5-2007 written by Shri GS. Purewal.
 
The Tribunal concluded that the said letter is without any documentary evidence of actual contemporaneous imports and does not even disclose basis for stating so. Further, there is contradiction of the price in the two letters of the Association, one showing the price HK $4 whereas in the second letter it is shown as HK 4.20. At this prima-facie stage, the Tribunal found enhancement of the assessable value based upon the price disclosed in the letter of association may not be justified. The Appellants accordingly earn their stay in this respect. 
 
The Tribunal also concluded that reference and reliance to the said alleged retrieval of the data from the computer without any corroborative evidence and without making any verification from the person who generated invoice may not be justifiable at this prima facie stage. As regards duty demand in respect of watch dials, it is found that the Adjudicating Authority has relied upon the bill of entry dated 15-1-2005, letter of Association dated 12-6-2006 and local sales invoices. As rightly contended by the applicants that the said bill of entry is dated 15-1-2006, whereas the applicants had imported watch dials throughout the period 2002 onwards.
 
Further, the Tribunal found that there are number of varieties, qualities, grades, etc. in the type of watch dials, and without physical comparison, the price of one consignment of watch dials cannot be the basis for determining the price of all the watch dials imported by the applicants during the period 2002 to June, 2006. As rightly contended by the applicants, watch dials are not standard items, and vastly vary based on number of factors like brand, size, finishing, quality etc. The price of one solitary consignment cannot be adopted to reject the transaction value of all the consignments imported by the applicants.  Further some small duty of Rs. 20.53 lakhs stands confirmed on leather strap. The Tribunal are not going into the details of the Commissioner (Appeals) for confirming the demand on the above ground as It is found that the applicant have already given a bank guarantee of Rs. 2 crores during the period of investigation. In addition, their factory premises valued at Rs. 80 lakhs to Rs. one crores stands mortgaged with the Revenue. In view of the above facts as also prima facie finding arrived at by Tribunal as regard merits of the case, the Tribunal is of the view that any further direction to deposit would cause undue hardship to the Appellants. As such, it is directed that the applicants to keep the bank guarantee alive during the pendency of the appeals. Subject to that, pre-deposit of balance amount of duty interest and entire penalty imposed on the applicants shall stand waived and its recovery stayed till disposal of the appeals. 
 
Decision:-Application disposed off.

Department News


Query

 
PRADEEP JAIN, F.C.A.

Head Office : -

Address :
"SUGYAN", H - 29, SHASTRI NAGAR, JODHPUR (RAJ.) - 342003

Phone No. :
0291 - 2439496, 0291 - 3258496

Mobile No. :
09314722236

Fax No. :0291 - 2439496


Branch Office : -

Address:
1008, 10th FLOOR, SUKH SAGAR COMPLEX,
NEAR FORTUNE LANDMARK HOTEL, USMANPURA,
ASHRAM ROAD, AHMEDABAD-380013

Phone No. :
079-32999496, 27560043

Mobile No. :
093777659496, 09377649496

E-mail :pradeep@capradeepjain.com