Cus - Market enquiries showing that product can be sold at much higher price does not prove that goods have been undervalued: CESTAT
By TIOL News Service
MUMBAI, AUG 09, 2017: THIS case has an interesting background.
Kindly refer our news story -
One Member finding fault with another - avoid friction and unnecessary difference of opinion on trivial issues - Need for harmony, coordination and cooperation between Members: High Court
And the case law 2015-TIOL-644-HC-MUM-CUS.
Pursuant to the same, the matter was heard in March 2017 and an order was passed recently.
The appellant was engaged in the import of "Sartorius" brand of Electronic Balances. Prior April 2005, the appellant was importing the said goods from M/s. Sartorius A.G., Germany directly and after April 2005 they started importing said goods from M/s Ahmed Systems, LLC Dubai (authorized distributor).
Proceedings were initiated proposing confiscation of the seized goods and demanding differential duty on the goods imported during 5 years on the allegation of undervaluation.
After considering the elaborate submissions made by both sides and the plethora of case laws cited, the Bench perused the documents on record viz. -
(a) Zerox copies of two unsigned invoices bearing Nos. 3010101580 dt. 31.05.2005 and 3010194713 dt. 13.3.2006.
(b) Zerox copies of two invoices bearing No. 3010082044 dt. 16.3.2005 and 3010087902 dt. 14.4.2005.
(c) Manufacturer's price lists supplied by M/s. SIMPL, Bangalore.
(d) Print out of selective NIDB data and
(e) Market Enquiries,
and observed that while revenue's case is based on these documents, the appellants have challenged the authenticity of these very documents.
The CESTAT inter alia observed -
++ Entire value of the comparative price data hinges on the correctness of the data included in certain invoice/price lists supplied by SMIPL and relied by revenue. Incidentally all these documents have been supplied by SMIPL and they happen to be the appellant's competitor.
++ There is no evidence of the genuineness of the letter dated 3/3/08 submitted by SMIPL to Customs. The letter does not give actual invoices of the past imports. The letter is vague to say the least as it does not clearly say if the erring employee had just undercharged the appellants or just forged the invoices while charging full amount. All this needs to be seen in the backdrop of the fact that letter had been provided by SMIPL who is a competitor.
++ It is apparent from his [Shri N. Ramesh through whom documents were produced by SMIPL] cross examination that he does not know the real source of these documents. He has simply received the said documents from another person in his organization. While they have handed over photocopies of the said invoices they are not in possession of the originals. It is not in doubt that they are competitor of the appellants in the market. The cross examination shows the contradictions as at one point he says he does not know who handed over the invoices at another point he seems to be sure who gave it to him. His testimony does not inspire confidence.
++ The documents produced in these circumstances cannot be straight away relied upon as true and correct. If revenue wished to rely on these documents they needed to corroborate it from the source of the documents. They should have conducted suitable enquiries directly from the office of Sartorius Germany.
++ In these circumstances, we cannot place reliance on these documents relied upon by the revenue. Even though the difference in prices does give a reason to suspect the transaction, mere suspicion cannot replace the requirement of proof.
++ These unsigned and unauthenticated documents, which are not on the letterhead of foreign principal cannot be relied to sustain the charge of undervaluation. Moreover merely price lists of the foreign supplier/manufacturer cannot be considered as a proof of transaction value.
++ The appellants are undoubtedly traders and bulk importers and thus the two are not at same commercial level. Moreover their claim of importing goods without facility of after sales service and stock lots has not been disputed. While the price difference is very high and gives rise to suspicion, it cannot be said with reasonable certainty that the appellants have done undervaluation.
++ The market enquiries show that the appellants are selling the goods at higher prices and are recovering some amount in cash. The market enquiries just show that the product can be sold at much higher price as compared to the price at which it has been imported. It does not by any stretch of imagination prove that the goods have been undervalued at the time of import.
++ There is no evidence brought on record by the Revenue that appellant has paid any amount over and above invoice price shown at the time of clearance of the impugned goods.
Concluding that the revenue had failed to corroborate the charge of undervaluation with sufficient reliable evidence, the impugned order was set aside.
The appeals were allowed with consequential relief.
(See 2017-TIOL-2850-CESTAT-MUM)
