Rakesh Kumar Aggarwal Versus Commissioner of Customs, Tuticorin>2008(07)LCX0420

2008(07)LCX0420

IN THE CESTAT, SOUTH ZONAL BENCH, CHENNAI

S/Shri P.G. Chacko, Member (J) and P. Karthikeyan, Member (T)

Rakesh Kumar Aggarwal

Versus

Commissioner of Customs, Tuticorin

Final Order Nos. 812-813/2008 and Stay Order No. 688/2008, dated 30-7-2008 in Application No. C/PD/187/2008 in Appeal Nos. C/235 & 206/2008

Cases Quoted -

Commissioner v. Gujarat Small Industries Corporation Ltd. - 2006(05)LCX0270 Eq 2007 (207) ELT 0703 (Tribunal) - Referred [Para 4]

Puja International v. Collector - 1994(01)LCX0010 Eq 1995 (076) ELT 0069 (Tribunal) - Referred [Para 4]

Shri Shiv Shakti Corporation Ltd. v. Commissioner - 2007(03)LCX0124 Eq 2007 (213) ELT 0673 (Tribunal) - Referred [Para 4]

Siddhartha Polymer Ltd. v. Commissioner - 2007(06)LCX0028 Eq 2007 (216) ELT 0604 (Tribunal) - Referred [Para 4]

Vijay Leather Stores v. Commissioner - 2007(02)LCX0363 Eq 2007 (215) ELT 0304 (Tribunal) - Referred [Para 4]

Advocated By -

Shri N. Viswanathan, Advocate, for the Appellant.
Shri M.K.A.K. Mohiddin, JDR for the Respondent.

[Order per: P.G. Chacko, Member (J)]. -

As both the appeals are against a common order, Appeal No. C/235/2008 is also being taken up for final disposal (after dispensing with predeposit) along with Appeal No. C/206/2008 figuring in the regular hearing list.

2. In the impugned order, the learned Commissioner of Customs reclassified the goods imported by M/s. M.M. & Sons Proprietor Shri M. Sahul Hameed, under CTH 2712 20 90 and demanded duty of over Rs. 36 lakhs thereon after rejecting its declared value (US $ 700 CF per MT) and determining assessable value @ of US $ 1400 CF per MT under Rule 5 of the Customs Valuation Rules, 2007. He also confiscated the goods on the ground of misdeclaration of description and value, with option for redemption against payment of a fine of Rs. 3 lakhs. He also imposed a penalty of Rs. 2 lakhs on Shri M. Sahul Hameed. Appeal No. C/206/2008 is against this decision of the Commissioner. The other appeal of Shri Rakesh Kumar Agarwal is against a penalty of Rs. 3 lakhs imposed on him by the Commissioner.

3. M/s. M.M. & Sons imported 200 MTs of what was declared as 'semifinished paraffin wax with 3-5% oil content' and filed a Bill of Entry on 16-5-2008 for its clearance. The declared value of the goods was Rs. 57, 91,125.38 @ US $ 700 CF per MT. From the carton labels, it appeared to the Customs authorities that the paraffin wax was fully refined. Therefore, samples of the goods were got tested in the Department's chemical laboratory. The Chemical Examiner reported oil content as 0.7 % and also observed that fully refined paraffin wax could have maximum oil content up to 1.5 to 2%. On the basis of this report, the Customs authorities framed against the importer a case of misdeclaration of description and value of the goods and accordingly issued a show-cause notice to them. Before the adjudicating authority, the party cited certain instances of import of semi-refined/fully refined paraffin wax through various ports in India in February 2008, which were said to have been assessed in the range of US $ 700-775 per MT. The party prayed for assessment of the subject goods in the same way as these 'contemporaneous imports' were assessed to duty. The adjudicating authority rejected this prayer and determined the value of the goods at over Rs. 1.15 crores Ž US $ 1400 CF per MT under Rule 5 of the Customs Valuation Rules, 2007, after reclassifying the goods under CTH 2712 20 90. Penalties were also imposed on the appellants, apart from redemption fine imposed in lieu of confiscation.

4. It has been submitted by the counsel for the assessee that there were contemporaneous imports of paraffin wax with oil content of 0.5% in February 2008 and the same were allowed to be cleared at Chennai Port on the basis of declared value in the range of US $ 700-775 per MT. Therefore, according to the counsel, the goods in question viz. paraffin wax with oil content of 0.7% should also be assessed in the same manner. It has been submitted that the Commissioner rejected the declared value of 200 MTs of paraffin wax imported from Egypt by erroneously comparing the same with the price of wax imported in much smaller quantities from another country, which, according to the counsel, was not in keeping with the provisions of the Valuation Rules. It has also been pointed out that the details of NIDB data relating to the contemporaneous imports from other countries, relied on in the show-cause notice and the impugned order, were not supplied to the assessee. It is his further submission that the adjudicating authority has travelled beyond the scope of the show-cause notice to hold that the price of fully refined paraffin wax had been steeply increasing over the last few months on account of international crude oil price hike. Finally, the learned counsel has relied on the following decisions of the Tribunal:-

(i) Puja International v. Collector of Customs, New Delhi - 1994(01)LCX0010 Eq 1995 (076) ELT 0069 (Tribunal)

(ii) Commissioner of Customs, Kandla v. Gujarat Small Indus. Covpn. Lld-2006(05)LCX0270 Eq 2007 (207) ELT 0703 (Tri. - Mumbai)

(iii) Vijay Leather Stores v. Commissioner of Customs, Visakhapatnam - 2007(02)LCX0363 Eq 2007 (215) ELT 0304 (Tri. - Bang.)

(iv) Shri Shiv Shakti Corporation Ltd. v. Commissioner of Customs, Ahmedabad - 2007(03)LCX0124 Eq 2007 (213) ELT 0673 (Tri. - Ahmd.)

(v) Siddhartha Polymer Limited v. Commissioner of Customs, New Delhi -2007(06)LCX0028 Eq 2007 (216) ELT 0604 (Tri. - Del.)

We have also heard the learned JDR, who has reiterated the findings of the Commissioner.

5. After considering the submissions, we observe that the Chemical Examiner's test report has not been contested by the assessee. The Chemical Examiner certified the sample to be paraffin wax with 0.7% by weight of mineral hydrocarbon oil. He also opined that fully refined paraffin waxes could contain mineral oil to the extent of 2%. This report is binding on the assessee, who did not ask for retest of sample by the Central Revenue Control Laboratory. Based on this report, the learned Commissioner rightly classified the subject goods under CTH 2712 20 as "paraffin wax containing by weight less than 0.75% of oil". The item was obviously misdeclared as "semi-refined paraffin wax with oil content of 3-5%" (CTH 2712 90). The value declared by the party was in relation to semi-refined paraffin wax with 3-5% oil and the same might not be applicable to fully refined paraffin wax with 0.7% oil content. Hence, in our view, the finding of misdeclaration of value also cannot be faulted. It would follow that the confiscation of the goods under Section 111(m) of the Customs Act is justifiable and consequently the penal provisions of Section 112 of the Act must also be held to have been correctly invoked against the importer.

6. The question remains as to whether the enhancement of value of the goods was correctly done by the Commissioner. We find that it is not in dispute that the enhancement of unit price of the goods from US $ 700 CF per MT to US $ 1400 CF per MT was made on the basis of data from NIDB for the month of April 2008. It appears, these data covered imports of fully refined paraffin wax in different quantities from different countries in April 2008. 20 MTs of wax imported from China were covered by Bill of Entry dated 9-4-2008 which indicated unit price of US $ 1412.34 per MT. Equal quantity of wax imported from the same country was covered by Bill of Entry dated 18-4-2008 which indicated unit price of US $ 1467.74 per MT. Again, equal quantity of wax imported from the same country was covered by Bill of Entry dated 19-4-2008 which indicated unit price of US $ 1432.42 per MT. 200 MTs of wax imported from Denmark were covered by Bill of Entry dated 21-4-2008 which indicated unit price of US $ 1596.44 per MT. The wax in question was imported from Egypt in the quantity of 200 MTs. The appellants have questioned the reliance placed by the adjudicating authority on the values of the goods imported from China and Denmark. In this connection, they have pointed out the quantity difference between their own import from Egypt and the above imports from China. They have also contended that their import of wax from Egypt cannot be compared with imports of identical goods from other countries. Yet another objection raised by the assessee is that the details of NIDB data were not supplied to them by the Commissioner and, to this extent, natural justice was denied to them. It is their further grievance that certain instances of imports of identical goods from Egypt at lower prices, pointed out by them, were not considered by the adjudicating authority. We have found substance in these submissions and therefore the learned Commissioner has got to determine the correct value of the goods afresh, in which exercise he shall not travel beyond the scope of the show-cause notice. Accordingly, we set aside the Commissioner's order except in respect of classification and confiscation of the goods and direct him to redetermine the amount of duty to be paid by the assessee. It would follow that the redemption fine will also have to be re-quantified in accordance with law. The penalty-related issue shall also be addressed afresh.

7. Both the appeals are disposed of in the above terms.

(Operative portion of the order was pronounced in open court on 30-7-2008)

Equivalent 2009 (234) ELT 0132 (Tri. - Chennai)