By TIOL News Service

MUMBAI, SEPT 10, 2013: THE appellant imported aluminium scrap during the period July 2004 to June 2006 through various ports located at Nhava Sheva, Nagpur, Hyderabad, Kandla and Chennai. The DRI, which investigated the imports, came to the conclusion that the appellant had mis-declared the value of imports and the actual value of imports amounted to Rs.28,40,85,648/- instead of the declared value of Rs.23,84,81,992/-.

Accordingly, a SCN was issued demanding differential duty of Rs.1,40,76,571/-. This demand of duty was based on the evidence unearthed from the indenting agent's premises, contemporaneous value of imports and on the basis of LME prices minus permissible discount. The break-up of the demand is as follows - evidence unearthed from the indenting agent's premises involving differential duty of Rs.48,80,774/-; contemporaneous value of imports involving duty of Rs.42,06,213/- and on the basis of LME prices involving a duty of Rs.49,89,584/-.

The Commissioner of Customs (Imports), JNCH, Nhava Sheva confirmed the duty demand along with interest, imposed equivalent penalty on the importer u/s 114A of the Customs Act and imposed penalties of Rs.1,00,00,000/- each on Shri Bharat Bhushan Agarwal, Partner of the importing firm and on Shri Purshottam Parolia, one of the indenting agents and a penalty of Rs.5,00,000/- on Shri Ehsaan Gadawala, another indenting agent. After all, it is a case booked by the premier investigating agency.

All of them are in appeal before the CESTAT.

It is submitted -

+ that the demands towards differential duty based on computer printouts recovered from the premises of the indenting agent (Shri Purshottam Parolia) cannot be relied upon as per Section 138C of the Customs Act, 1962. Reliance is placed upon the decision of Premier Instruments and Controls Ltd. - (2005-TIOL-61-CESTAT-MAD).

+ It is also submitted that during the course of investigation, panchnama was drawn. Panchnama was typed and thereafter item no. 103 added in hand writing, which shows the description that four computer units without any mouse, key board, monitor and other accessories i.e. peripherals is mentioned but the report of Directorate of Forensic Science, Gujarat State mentions that there were 5 CPUs. Therefore, the contents of panchnama were also doubtful. Accordingly, printouts cannot be relied upon and demand is not sustainable.

+ that for the demand based on contemporaneous import, the value of imports which were found in the computer printouts and value of imports declared in the bills of entry are much higher than the value of the contemporaneous imports. As per provision of Customs Valuation Rules, lowest value has to be taken for arriving at the transaction value and if that is taken there is no undervaluation.

+ as regards the differential duty demanded on the LME price for prime metal, it is also submitted that the valuation cannot be resorted to the same as it pertains to the prime metal and in the instant case the appellants have imported the scrap only.

+ the statement taken during the course of investigation cannot be relied as same has been retracted by the indenter and the retracted statement was shown to the director of Shri Bharat Bhushan Agarwal without bringing to his notice that this statement shown has been retracted. Therefore, it cannot be relied as it is not a true statement.

The Bench after hearing the submissions agreed that the veracity of the panchanama was doubtful. In the matter of computer printouts, whether they can be relied as evidence, the Bench noted that condition 4C of the said section has not been complied with and, therefore, the printout generated from the PC seized cannot be admitted into evidence for non-fulfillment of statutory condition of Section 138C of the Customs Act, 1962.

As for the statement recorded during the course of investigation and immediately retracted by Shri Purshottam Parolia, the Bench observed that as retraction was not shown to Shri Bharat Bhushan Agarwal, the partner of the importer and since Shri Bharat Bhushan Agarwal admitted that what is stated by Shri Purshottam Parolia is correct, it is to be presumed that Shri. Bharat Bhushan Agarwal admitted the retracted statement and, therefore, demand is not sustainable on this account.

With regard to the demand confirmed on account of contemporaneous imports, the Bench observed that the adjudicating authority considered the evidence retrieved from computer printout and which has been held as not admissible as per Section 138C of the Customs Act, 1962. The Bench further observed that that part of the demand has also been confirmed on the basis of a publication of mineral and metal review and the comparative chart prepared by the appellant indicating the values of contemporaneous imports of aluminium scrap at various ports has not been considered by the adjudicating authority and hence demand on account of contemporaneous imports is not sustainable. In the matter of adoption of LME price, the Bench held that LME price is the price of prime metal and admittedly the appellant had imported the scrap and hence demand on the basis of LME price is also not sustainable.

However, the Bench remanded the matter to the adjudicating authority on the following short ground -

"19. We find that there is allegation against the appellant during the course of investigation they have paid over and above the transaction value to their foreign supplier and the same has not been considered by the adjudicating authority by way of independent evidence apart from the computer printout. Therefore, matter needs examination at the end of the adjudicating authority to examine the issue whether the appellant has paid any amount over and above the transaction value to their foreign supplier with independent evidence apart from computer print outs…."

The appeals were disposed of.

(See 2013-TIOL-1332-CESTAT-MUM)