2023-TIOL-09-CESTAT-DEL
D M Marketing INC Vs Pr.CC
Cus - The appellant-company imported various food supplements and filed Bill of Entry - The goods were examined by the officers - Upon examination, it appeared to the officers that the declared value of the goods was lower than the values in the contemporaneous data of the similar goods imported and a query was raised on 10.06.2019 on the customs EDI system - The importer neither responded to the query nor produced any document to substantiate its claim and, therefore, a personal hearing was fixed on 09.07.2019 and 10.07.2019 - The appellant's representative attended personal hearing and submitted a letter supporting the declared values - After considering the submissions made and holding personal hearing, the Deputy Commissioner compared the value of the goods with other contemporaneous data of imports - Based on the contemporaneous data of imports, the Deputy Commissioner rejected the declared value and re-determined the value of the imported goods - The Deputy Commissioner rejected the declared transaction value under rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 the Rules and re-determined the same under Rule 5 on the basis of the contemporaneous data of similar goods and confirmed demand of the differential duty - On appeal, the Commissioner Appeals sustained the duty demand raised and upheld the O-i-O. Held - Rejection of the transaction value by the Deputy Commissioner is not in accordance with law - Consequently, its re-determination under Rule 5 cannot also sustain - The Commissioner (Appeals) did not discuss any issue related to rejection of transaction value and re-determination of the values & was solely impressed by the fact that the O-i-O was 11 pages long - Apart from this, there was no reason given by the Commr.(A) for upholding rejection of transaction value & redetermination of value under Rule 5: CESTAT
+ Goods imported into India are chargeable to duty under section 12 of the Customs Act - This duty can be based on the quantity (specific rate of duty) or value (ad-valorem rate of duty) - If the duty has to be determined based on the value, the valuation has to be done in terms of section 14 of the Customs Act, which provides that such value shall be the price actually paid or payable for the goods for delivery at the time and place of importation subject to the following conditions, namely (a) Buyer and seller are not related, (b) Price is a sole consideration of sale, (c) Other conditions specified in the Rules made in this behalf; (Para 11)
+ The rules made in this behalf are the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Rule 3 states that valuation of imported goods shall be the transaction value adjusted in accordance with the provisions of Rule 10 - Rule 10 indicates some costs and services whose value has to be added to the transaction value - Rule 3 further states that if the value cannot be determined as per sub-rule (1) of Rule 3, transaction value shall be determined by proceeding sequentially through rules 4 to 9 - Rule 4 states that the transaction value of identical goods sold for export to India and imported about the same time as goods being valued shall be the value. Rule 5 states that the transaction value of similar goods for export to India imported at or about the same time as the goods being valued shall be the value - Rule 7 provides for calculating the value through deductive methods and rule 8 provides for determining the value through computation. Rule 9 is a residual method to be applied if none of the value cannot be determined by other Rules - Rule 11 requires the appellant to provide accurate details relating to the imported goods; (Para 12)
+ If the transaction value is rejected under rule 12 then the value of identical goods must be considered and if it is not available and the value of similar goods must be considered and if the value of identical or similar goods were both not available then the value can be deducted by considering the price at which such goods are sold in wholesale and after certain deductions - If such prices are also not available then the value can be computed by considering the cost of raw-material and fabrication cost plus other expenses - If none of these methods are possible then the residual method can be followed based on the above principles; (Para 14)
+ In this case all the four Bills of Entry based on which the declared values were rejected were imported or the Bills of Entry were filed more than a month after the disputed Bill of Entry. From the Table we cannot make out as to which Customs House the goods in these Bills of Entry were imported from and in what quantities and from which country - Further, we find that the assessable value in these Bills of Entry were given in Rupees whereas the declared values in the Bill of Entry are in US dollars - It is not clear of what rate of exchange is applied to convert rupees into dollars to re-determine the assessable value under Rule 5; (Para 16)
+ We find that in the impugned order the Commissioner (Appeals) did not discuss any issue related to rejection of transaction value and re-determination of the values - It appears that he was only impressed by the fact that the order of the Deputy Commissioner was of 11 pages - Apart from that there is no finding whatsoever of the Commissioner (Appeals) as to why he was upholding the rejection of the transaction value and redetermination under Rule 5; (Para 17)
- Appeal allowed: DELHI CESTAT
2023-TIOL-08-CESTAT-AHM
Indian Farmers Fertilizers Cooperative Ltd Vs CC
Cus - The appellant (M/s IFFCO) and one M/s KRIBHCO are a Multistate Co-operative Society primarily engaged in manufacturing of Fertilizers and distribution of fertilizers - On the basis of intelligence gathered by the Department of Revenue Intelligence (DRI), the imports of Urea by M/s IFFCO and M/s KRIBHCO were taken up for analysis and it was revealed that while the prevailing import price of Urea is around USD 410 Per MT, both the appellants are importing Urea from M/s Oman India Fertiliser Company, Oman (in short OMIFCO) at about USD 160 per MT, whereas the study of the imports from OMIFCO revealed that the said company was a Joint Venture between the Oman Oil Company (50%), M/s IFFCO (25%) and M/s. KRIBHCO (25%) - Further, the import of Urea and Ammonia from the said company was on the basis of a long term Urea Off- take Agreement (UOTA for short) and an Ammonia Off-take agreement (AOTA for short) between the Government of India and OMIFCO - The Urea and Ammonia was being purchased by the department of Fertilizer from OMIFCO and the imports were being made by M/s IFFCO and M/s KRIBHCO on the basis of an agreement for Handling and Marketing signed between the Department of Fertilizer and M/s IFFCO and M/s KRIBHCO - The DRI initiated investigation into the imports made by the both assessee during the course of which, it recorded statements of some employees of the assessee - After completing the investigation show cause notices were issued to proposing to reject the declared value of imported goods and also to re-determine the same in terms of Section 14 of the Customs Act, 1962 read with Rule 4 of the Valuation Rules, 2007; that the imported goods should be liable for confiscation under Section 111(m) ibid; it was also proposed to demand the differential customs duty in terms of Section 28 (1) ibid apart from interest under Section 28AA and proposing penalty under Section 112 (a) & 114A ibid - The SCNs were adjudicated vide respective adjudication orders as mentioned in above table. In impugned orders the demand of customs duty relates to imports of Urea and Ammonia confirmed alongwith interest and imposing penalty on the Appellants, on grounds that there is huge difference between the prices of the same goods imported in terms of UOTA and AOTA and international price of said goods. Therefore, the price at which urea and ammonia imported into India was not representing the true and correct value of said goods; that the Government of India (GOI) is obligated to buy the entire production of Urea and M/s IFFCO is obliged to buy entire production of ammonia at a predetermined price from the supplier, OMIFCO; that the Appellants/ Government of India are related to OMIFCO in terms of Rule 2(2)(i), (ii) and (vi) of the Customs Valuation Rules, 2007 read with Explanation II thereof; and the prices at which urea and ammonia are imported from OMIFCO appears clearly influenced by the relationship between GOI, OMIFCO and the Appellants and hence the transaction value is liable to be rejected in terms of Rule 12 of the Customs Valuation Rules, 2007 read with Section 14 of Customs Act, 1962. Held - It is clear that even if it is assumed that the buyer and seller are related in terms of Rule 2 (2) of valuation Rules, 2007 read with explanation II of said Rule, the price at which the goods were purchased from OMIFCO is the true transaction value and not influenced by their relationship - In the present matter Department has also not produced any evidence to show that the relationship between the parties has influenced the price - Therefore, we find that the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside - Since the charges of misdeclaration & undervaluation are not sustainable in law, the differential duty demand along with interest and penalties imposed is liable to be set aside: CESTAT
+ it is seen that in sub-clauses (i) to (viii) of Rule 2 (2) of CVR, 2007 indicates that each of these sub-clause deals with different means of establishing deemed relationship between two persons. In terms of Rule 2(2)(i) persons can be deemed to be related only if they are officers or directors of one another's business. In terms of Rule 2(2)(ii) persons can be deemed to be related only if they are legally recognized partner in business and in terms of rule 2(2)(iv) persons can be deemed to be related only if both of them are directly or indirectly controlled by the third person. In the present matter we find that department has failed to prove that as to how the Appellants on one hand and DOF, GOI on the other hand were officers or directors of one another's businesses. Thus, the condition prescribed in sub-rule 2(2)(i) is not satisfied in the instant case; (Para 11)
+ Further, Rule 2 (2)(vi) of CVR, 2007 states that person shall be deemed to be related only if both of them are directly or indirectly controlled by a third person. In the present matter revenue failed to show that who is the third person who controls Appellants. From the facts of the case it is also clear that none of the party involved in the present transactions controlled each other. Accordingly, based on the undisputed facts of this case the appellants and the GOI and OMIFCO are not related persons in terms of Rule 2 (2)(i), (iii) and (vi) of Customs Valuation Rules 2007; (Para 13)
+ It is a settled principle of law that the authority making the allegations has to prove with sufficient evidence. In the instant case, leaving alone the evidence, even reasons to entertain such a belief have not been properly brought forth or established. Therefore, we find that the impugned orders do not stand the scrutiny of law. We find that declared prices cannot be reviewed without any evidence to the effect that the relation between the appellants and sellers has influenced the declared price or to the effect that there was a flow back of money from the importer to the related supplier. Therefore, we don't find any substance to sustain the impugned orders; (Para 14)
+ alleged relationship between the Appellants/ GOI and OMIFCO has not influenced the price of the imported goods. Urea- Off –Take agreement and Ammonia- off – Take agreement both are long term international contract finalized between two sovereign countries. From the MOUs and agreements it is also clear that rates were finalized for 15 years. Further it is evident that GOI had agreed to purchase 100% of rated production on the basis of fixed Long Term Pricing (LTP) for 15 years. These facts would evidence that there was a long term agreement as regards production and sale of goods by OMIFCO and purchase of the same by GOI/ Appellants. Further LTP for 15 years has been worked out in such a manner that the LTP was substantially higher than the projected import prices (as per Chem- System) in the initial years of the projects. From the para 7.2 and 7.3 of the records notes of discussion in the meeting of Public Investment Board (PIB) it is clear that contemporaneous international market price trends have been taken into account while negotiating the LTP with OMIFCO. Market price has been defined in the agreement (UOTA) as the average of low and high end of FOB Middle East prices as quoted in the specified international journals. We also find that Government has issued Notification No. 4/2015 dated 16.02.2015 exempting Urea when imported into India from OMIFCO under the UOTA agreement dated 29.05.2002 from the customs duty and additional customs duty leviable under sub-section 1 of Section 3 of the Customs Tariff Act subject to condition that the importer produce the certificate to effect that the declared value is in the terms of agreed price under UOTA. The important aspect is not the exemption but the acceptance by the Government about the correctness of the price under UOTA. The goods imported in this matter have followed the said LTP price only. In the present matter impugned orders and department had not established that the price of the goods imported by the Appellants was influenced by the relationship between OMIFCO; (Pata 15.1)
- Appeal allowed: AHMEDABAD CESTAT
2023-TIOL-07-CESTAT-MUM
B G Shirke Construction Technology Pvt Ltd Vs CCE
CX - Appellants are engaged in manufacture of silos and are classifying the same under the chapter sub-heading 84379090 of the Central Excise Tariff Act, 1985 at Nil rate of Central Excise duty – It is the case of the DGCEI that the Silos are correctly classifiable under Chapter Sub-heading 9406 0099 of the Central Excise Tariff Act, 1985 and attracting normal rate of Central Excise Duty – Show cause notice dated 03.11.2015 was issued for the period October 2010 to March 2015 invoking the extended period of limitation - Demand notices dated 05.04.2016 and 25.10.2018 were issued for the subsequent period demanding the duty for the periods April 2015 to December 2016 and January 2016 to June 2017 – Duties were confirmed and hence appeals before CESTAT. Held: From the perusal of the purchase orders it is quite evident that the findings recorded in the impugned order that the appellant was supplying only silo per-se cannot be sustained - It is silo system which is capable of performing the assigned function that is being manufactured and cleared by the appellant along with the associated accessories - It is settled position in law as per the Rule 2 (a) of the General Rules of Interpretation and clearly specified as per Section Note 3, 4 & 5 to Section XVI of the First Schedule to the Central excise Tariff Act, 1985 that essential character determines or the prime function of the machines, equipment interconnected or working in tandem will determine the classification of the said group of machines and equipment - Further the finding recorded in the impugned order to effect of classification of Silos under Chapter Heading 9406, is contrary the classification opinion rendered by the HSN Committee in 59th Session -Office of Chief Commissioner has agreed with the view as canvassed by the appellant while classifying the said goods under Heading 8437 -This view has been expressed by the Chief Commissioner, under the scheme of eight digit classification code introduced by the Central excise Tariff Amendment Act, 2004 - Shipping Bills filed by the appellant classifying the same goods under CTH 84379090 were assessed by the Custom Authorities at Nhava Sheva under the said heading -No merits in the impugned order classifying the impugned goods cleared by the appellant under CETH 94060099 and demanding the duty accordingly: CESTAT [para 4.15, 4.16, 4.17] Limitation: When the issue was taken up and decided upto tribunal in 1995, all the facts were in the knowledge of the revenue since then - The amendment scheme of classification from 6 digit to 8 digit was introduced in 1995 and the Office of Chief Commissioner has rendered the opinion after examination of the issue on 9th January 2013, then it is not understood just for the change of opinion how can appellant be charged for suppression with intent to evade payment of duty subsequently for invoking extended period of limitation and for imposition of penalty under Section 11AC -Since Bench is unable to sustain the order of demand of duty, the order for demand of interest too can't be sustained -Appeals are allowed. [para 4.20, 4.21, 5.1]
- Appeals allowed: MUMBAI CESTAT
2023-TIOL-06-CESTAT-MAD
CMR Toyotsu Aluminium India Pvt Ltd Vs CGST & CE
ST - The only issue to be decided is, whether denial of CENVAT Credit to the extent it is appealed against, is correct in law - Appellant did make the payment of Service Tax, payable under RCM - First Appellate Authority agrees with contentions of appellant that there are no prescribed records for taking CENVAT Credit availed on inputs and that Department gets the knowledge about same only from ST-3 returns - While referring to Rule 9(5) of Cenvat Credit Rules, 2004, First Appellate Authority has observed that appellant has not produced any evidence like Tally, excel sheet to establish the fact that it had availed credit in their ledger within one year - But as against this, appellant has categorically canvassed in its reply to SCN itself that it has availed CENVAT Credit after paying Service Tax; but however, there is an issue as regards this factual aspect, which is required to be settled by Adjudicating Officer - Further, appellant has also seriously contended that sufficient and reasonable opportunity was not given by Adjudicating Authority before passing adjudication order, but however, Deputy Commissioner for Revenue would rebut by contending that a letter was issued by posting personal hearing, which was not availed by appellant and consequently, adjudication order came to be issued - Impugned order to the extent it is appealed before this forum, is set aside and matter is restored to the file of Adjudicating Authority who shall afford reasonable opportunity to appellant and then pass a de novo order after verifying relevant documents that may be furnished by appellant: CESTAT
- Matter remanded: CHENNAI CESTAT
2023-TIOL-05-CESTAT-MAD
Fuso Glass India Pvt Ltd Vs CC
Cus - Appellant an exporter of "Double Layered Laminated Glass", filed an application requesting for Scheme Code change from "00-Free Shipping Bill" to "03-Advance Authorization Shipping Bill" in respect of four shipping bills - Issue arises for consideration is, whether Revenue is justified in rejecting request of appellant for conversion of free shipping bills into Advance Authorization shipping bills for the reasons of limitation as well as non-fulfilment of conditions of paragraph 3(b)(c)(d) of Board Circular No. 36/2010 ibid - From a perusal of Form ARE-1 with PART-A and PART-B, Tribunal views that both the Central Excise Officer as well as Customs Officer have certified having opened and examined the relevant packages /consignment under those very shipping bills which are under dispute - Hence, there is no such violation as flagged in impugned order - Appellant also seriously contended that period of limitation for filing an application seeking conversion within meaning of Section 149 ibid. has not been provided under Section 149, but same has only been provided in Board Circular No. 36/2010 ibid. and jurisdictional High Court in M/s. Global Calcium Pvt. Ltd. as well as M/s. Parayil Food Products Pvt. Ltd. have considered the issue of above time-limit stipulated in Board Circular and held that stipulation of period of limitation was in utter violation of statutory provision of Section 149 ibid. and that request for conversion could not be denied as time-barred by resorting to Board Circular - Therefore, denial of conversion on the ground of limitation is clearly unsustainable - Denial of conversion from free shipping bills to Advance Authorization shipping bills by lower authority and impugned order, being bad in law, are set aside: CESTAT
- Appeal allowed: CHENNAI CESTAT
2023-TIOL-04-CESTAT-MUM
Hindalco Industries Ltd Vs CCE
CX - The issue arises is, whether 'aluminium dross and skimming' arising in course of manufacture is excisable after 10th May 2008 - Appellant submits that same issue had come up before a Larger Bench of Tribunal and taxability decided therein was overruled by High Court of Bombay in Hindalco Industries Ltd 2014-TIOL-2266-HC-MUM-CX - In the light of said decision of High Court in their own matter on very same impugned goods, which was affirmed by Supreme Court, the impugned orders do not survive and accordingly are set aside: CESTAT
- Appeals allowed: MUMBAI CESTAT |
