2023-TIOL-296-CESTAT-MUM

D R Soneta And Sons Vs CC

Cus - The Appellants herein are Customs brokers and overseas suppliers on whom penalties were imposed, vide Order-in-Original passed in relation to import of 'Measuring Tapes' against 8 bills of entry filed during the relevant period, for goods imported from China - These items attracted duties under Notfn No 147/03-Cus dated 7th October 2003, 50/08-Cus dated 21st April 2008 and 49/09- Cus dated 15th May 2009 for the relevant period in time - The case of Customs authorities, charging deliberate misdeclaration of origin as Malaysia with intent to evade the 'antidumping duty (ADD)', alludes to the complexity of the impugned transaction itself as cause for suspicion and to the sufficiency of discarding of certificate that, even if originating with the competent authority, does not purport to go beyond self-declaration - Investigators also took further initiative to send letters, by courier and Express Mail Service, to the purported supplier and return of these with endorsement of 'address not found' was adduced as further evidence of doubts about the transaction. The same importer had cleared consignments against bills of entry no. 325542/ 06.11.2007, no. 327344/31.01.2008, no. 33066/13.10.2008, no. 337219/08.06.2009, no. 337967/17.07.2009, no. 339776/ 05.10.2009 and 340637/18.11.2009 and in none of these, including the consignment under seizure, did the importer furnish country of origin certification issued by Malaysian authorities ostensibly, and as reported by the Dubai supplier, owing to there being no such requirement for shipment from Singapore - Investigations through officials channel with Companies Commission of Malaysia was also said to have established that such entity did not exist there - The value declared in the bills of entry were US$ 0.54 per dozen for '3 metre' tape, US$ 0.72 per dozen for '5 metre' tape, US$ 3.00 per dozen for '15 metre' tape and US$ 4.50 per dozen for '30 metre' tape and it was also reported that the importer raised local invoices on local purchasers merely for book adjustment - Based on investigations that was held to suffice for rejection of value declared in the bills of entry and from lack of wherewithal for recourse to rule 4, rule 5, rule 7, rule 8, rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was resorted to in conjunction with report of market inquiry of 7th January 2010, 11th April 2011 and 13th April 2011; thus, declared value of Rs. 67,12,897.78, in these eight bills of entry, was enhanced to Rs. 4,84,19,531 with consequent differential duty of Rs. 1,00,45,588 at the applicable rate of duty in addition to 'antidumping duty (ADD)' of Rs. 3,80,17,585 by application of US$ 4.19 per kg on 'steel tapes' and US$ 4.10 per kg on 'fiber glass tapes' as per notification no. 147/03- Cus dated 7th October 2003 that was to continue, under the authority of successor notifications, after review till 14th May 2015 - The recovery of this determination under section 28 of Customs Act, 1962, along with applicable interest under section 28AB of Customs Act, 1962, confiscation of imported goods under section 111(d) and section 111(m) of Customs Act, 1962 while allowing the goods under seizure valued at Rs. 72,44,940 to be redeemed on payment of fine of Rs. 10,00,000, and imposition of penalties under section 114A and section 114AA of Customs Act, 1962 on Mr Vishal K Agarwal and under section 112 on the 'customs broker', M/s DR Soneta & Sons, and on Mr Sunil Dutt Prem Prakash of M/s Reva Technology.

Held - the impugned order has erred in concluding that the impugned goods should be subjected to levy of differential duty and anti-dumping duty and the extrapolation thereto onto the past consignments is no less untenable; consequently, the confiscation of the goods lacks statutory sanctity as also the penalties imposed on the importer and the other two appellants connected with the intercepted consignment: CESTAT

+ The proceedings, culminating in recovery of differential duty and anti-dumping duty on 'measuring tapes made of steel' and 'measuring tapes made of fiber glass' from the principal noticee, has had a curious passage commencing, as it did, with alert issued by Directorate General of Valuation on the steep under-invoicing of such goods from several countries including Malaysia, on which, as yet, anti-dumping duty was not contemplated then before going on to render the finding that the impugned goods did not originate in Malaysia;

+ of Customs Tariff Act, 1975 is contingent upon price differential between landed cost in India and price at source and is specific to permutation and combination of country of manufacture/export/ manufacturer/ supplier; the essential difference between assessment to basic customs duty and subjecting goods to anti-dumping duty is that, in the former the presumption of transaction value may be disrupted while, in the latter, is the unvarying certainty of the declared value being the transaction value. Consequently, and in the light of this special deviation from the norms of assessment, anti-dumping duty is triggered by, and only by, the permutations and combinations set out in the notification issued in exercise of power under section 9A of Customs Tariff Act, 1975.

+ In the context of the notification resorted to in the adjudication order, it has to be clearly established that the impugned goods were produced in China. That is the test which the impugned order must overcome to exclude setting aside of the anti-dumping duty devolving on the importer. That the import is covered by invoice of M/s Reva Technologies, Dubai indicating the goods to be of Malaysian origin, backed by certification to that effect issued by Dubai Chamber of Commerce, is on record. That the bill of lading covers the shipment of the impugned goods from Singapore is also on record. It is also on record that importer has claimed that M/s Adikem Petangor SDN BHD Malaysia is the manufacturer. To discard all of these, and ironically stemming from a valuation alert that 'measuring tapes' originating from Malaysia were grossly underpriced, report of M/s Hero Ventures SDN BHD Malaysia, confirmed subsequently from Companies Commission of Malaysia, was relied upon to hold that such supplier did not exist in that country. The certificate of origin was discarded on the finding that the contents therein had not been verified by the issuing authority. While it could conceivably be inferred from these that the goods may not have originated in Malaysia, that does not suffice to bring the impugned goods within the ambit of the notification unless Chinese origin can be established.

+ The investigators, thereupon, placed reliance on the unearthing of pamphlet, cataloguing the brands of the imported goods and claiming these to have been sourced from China, at the premises of the importer and statements of three local sellers of these goods asserting the brands to be of Chinese origin besides citing the disproportionately high local prices and transactions in cash as evidence of the real origin of the impugned goods and concerted efforts to erase the possibility of tracing the source. We, however, find that the 'incriminating' pamphlet was not in the intercepted consignment and that, containing, as it does, the name of an allegedly non-existent entity in Malaysia, its evidentiary value for purpose intended by the adjudicating authority is suspect. Local traders can hardly be accepted as authoritative sources for establishing origin and the transaction allegedly entered into between these traders and the importer may have relevance for proceedings under some other statute without any bearing on conformity with the conditions for imposition of the definitive anti-dumping duty.

+ On the other hand, the appellant has produced 'container tracking report' evidencing shipment of the box from Malaysia. The bill of lading clearly evidences shipment from Singapore. It does not behove the legal status of the adjudicator, as well as the legality of the adjudication, to discard certificate of origin issued by a competent authority under relevant provisions of the statutory instrument permitting such certification. In the light of evidence supra, the deficiency in establishing the movement of the goods from China to Malaysia remains unfilled. There is, thus, no valid grounds for holding that the goods did originate from China and, thereby, liable to the anti-dumping duty.

- Appeals allowed: MUMBAI CESTAT

2023-TIOL-295-CESTAT-BANG

Dell International Services India Pvt Ltd Vs CCE & C

ST - Issue involved is as to whether group companies who have seconded their employees to assessee would result in "manpower recruitment or supply agency" services taxable at the hands of assessee under reverse charge mechanism placed under section 66A of Finance Act, 1994 - It would be seen from judgment of Supreme Court in M/s Northern Operating System Pvt. Ltd. 2022-TIOL-48-SC-ST-LB that while the control over performance of employees who were seconded and right to ask them to return was with assessee, but it was the overseas employer who, in relation to its business, deployed them to assessee; it was the overseas employer who paid them the salaries; terms of employment even during the secondment were in accord with policy of overseas company; and at the end of period of secondment employees returned to their original place to await deployment or extension of secondment - Thus, assessee would be a service recipient of overseas group company concerned, which provided 'manpower supply' service, which is a taxable service - The assessee, therefore, is required to discharge service tax on reverse charge mechanism - In so far as invocation of extended period of limitation in SCN, Supreme Court in said case did not agree with contention of Department that it was correctly invoked and it was held that Department was not justified in invoking extended period of limitation - It is only in respect of two appeals that issue of extended period of limitation arises - It can be seen from chart, entire demand has been confirmed for extended period of limitation, whereas in another appeal, part of demand has been confirmed for normal period and part of demand has been confirmed for extended period - In view of said decision of Supreme Court, it has to be held that demand confirmed for extended period cannot be sustained - It would be seen from decision of Supreme Court in Merino Panel Products 2022-TIOL-103-SC-CX that imposition of penalty had been set aside only for the reason that revenue appeared to be unclear on correct method to be adopted for valuation of goods - In terms of section 75 of Finance Act, payment of interest is mandatory on every person who fails to deposit service tax or any part thereof within prescribed period - It is, therefore, not possible to accept contention of assessee that imposition of interest under section 75 of Finance Act should be set aside - As the demand for extended period of limitation has been set aside, no interest would be payable on said amount: CESTAT

- Appeals partly allowed: BANGALORE CESTAT