2001(07)LCX0091

IN THE CEGAT, COURT NO. II, NEW DELHI

S/Shri V.K. Agrawal, Member (T) and Krishna Kumar, Member (J)

PAWAN GOEL

Versus

COMMISSIONER OF CUSTOMS, NEW DELHI

Final Order Nos. 349-354/2001-B, dated 13-7-2001 in Appeal Nos. C/59-64/2001-B

Cases Quoted

Adani Exports v. Commissioner — 1999(11)LCX0126 Eq 2000 (116) ELT 0715 (Tribunal) — Referred .............. [Para 4]

Eicher Tractors Ltd. v. Commissioner — 2000(11)LCX0436 Eq 2000 (122) ELT 0321 (S.C.) — Referred ............. [Para 4]

Northern Plastics v. Collector — 1998(07)LCX0097 Eq 1998 (101) ELT 0549 (S.C.) — Referred ................... [Paras 3, 10]

Ruchi Associates v. Collector — 1991(05)LCX0027 Eq 1992 (059) ELT 0155 (Tribunal) — Relied on ............ [Paras 4, 12]

Ruchi Associates v. Collector — 1992(01)LCX0062 Eq 1992 (061) ELT A134 (S.C.) — Relied on ...................... [Para 12]

Advocated By :   Shri L.P. Asthana, Advocate, for the Appellant.

Shri Ashok Kumar, JDR, for the Respondent.

[Order per : V.K. Agrawal, Member (T)]. - These six appeals have been filed against the common Order-in-Original No. 67/Adj/S-Kak/2000, dated 23-10-2000 passed by the Commr. of Customs (General), New Delhi.

2. Briefly stated the facts are that M/s. Ankur Metal Bhandar imported 4 consignments M/s. Venus Metal Bhandar imported one consignment which were described on the Bill of Entry as Aluminium Scrap “Throb” and Trump falling under Heading No. 76.02 of the First Schedule to the Customs Tariff Act and these were cleared on payment of Customs duty; that on the basis of information, two containers were intercepted subsequently on roads and three containers (one container belonged to Venus Metal Bhandar) were found in the premises of M/s. Kunal Metal (P) Ltd.; that out of 4 containers imported by Ankur Metal, two were found to contain aluminium scrap “Throb”, one was found to contain aluminium ingots and fourth one was found to contain aluminium plates; that the container imported by Venus Metal, was found to contain, in addition to aluminium scrap, copper scrap also. The Commissioner of Customs, under the impugned Order, confiscated the goods with an option to redeem the same by Ankur Metal and Venus Metal on payment of redemption fine of Rs. 15 lakhs and Rs. 5 lakhs respectively; confirmed the demand of duty invoking extended period of limitation and imposed penalty of Rs. 10 lakh on M/s. Manju Khandelwal, Proprietor of Ankur Metal Bhandar, Rs. 10 lakh on Shri Mukesh Kumar Khandelwal who managed the affairs of Ankur Metal; Rs. 5 lakh on Shri Rajendra Kumar, Proprietor of Venus Metal Bhandar; Rs. 5 lakh on Shri Pawan Goel and Shri Anil Kumar Goel, Director of M/s. Kunal Metal (P) Ltd. in whose godowns the three containers were found and seized; Rs. 5 lakh each on Shri Gautam Chatterji and M/s. SCC, CHA.

3. Shri L.P. Asthana, learned Advocate, mentioned that the goods were examined by the Customs Authorities and thereafter these were cleared on payment of duty as assessed. The learned Advocate, however, at the outset admitted that the classification of the product under Heading No. 76.01 of the Customs Tariff is correct and differential duty, if any, is payable by M/s. Ankur Metal in respect of consignments No. 1 and 4 at Page 78 of Appeal No. C/64/2001-B (Bill of Entry No. 304975, dated 4-1-1999 and 304987, dated 5-1-1999). He, further, mentioned that in respect of Serial Nos. 2 and 3 (Bills of Entry No. 305200 and 304970 both dated 4-1-1999), there is no allegation of misdeclaration of goods as both were found to contain scrap and the disputes with regard to valuation only; that in consignment at Sl. No. 2, besides aluminium scrap some quantity of aluminium rims were also found which were in the nature of scrap only; that the description of the goods was governed by the Trade Nomenclature; that ISRI specifications are well recognised all over the world in relation to scrap that ITC (HS) classification itself specifies the various kinds of aluminium scrap on the basis of ISRI code, and, therefore, the invoice correctly described the goods in accordance with ISRI code; that ISRI code defines term “Throb” as aluminium scrap which has been sweated or melted and has thereby acquired some shape; that this term ‘Throb’ would cover even plates and ingots obtained as a result of remelting of scrap; that as such there is no misdeclaration of description of goods; that only Tariff heading was wrongly mentioned in the bill of entry; that mentioning of wrong heading does not amount to misdeclaration; that further in ITS (HS) classification which is also based on HSN classification, Throb was classified under Heading 76.02 at the relevant time and accordingly their claim for classification under Heading 76.02 cannot be considered as misdeclaration in the eyes of law. He also submitted that the word “trump” specifically covers auto castings and they believed that rims which were not usable and were in the nature of scrap would fall in the category of “trump”; that in any case, the description “Aluminium Scrap” was correct for the goods because the rims were not second hand usable goods but were in the nature of scrap and waste. He relied upon the decision in the case of Northern Plastics v. Collector of Customs, 1998(07)LCX0097 Eq 1998 (101) ELT 0549 (S.C.) wherein it was held that once the description of goods is found to be correct, the claim made by the importer for classification or exemption cannot be considered as misdeclaration warranting confiscation under Section 111(m) of the Customs Act. The learned Advocate contended that in view of this no penalty is imposable on the Appellants.

4. He further mentioned that the value has been enhanced in the impugned Order on the basis of LME prices; that LME prices are only indicative prices which cannot form the basis for determining the assessable value. Reliance was placed on the decision in the case of Ruchi Associates v. Collector of Customs, 1991(05)LCX0027 Eq 1992 (059) ELT 0155 (T) which has been confirmed by the Supreme Court as reported in 1992(01)LCX0062 Eq 1992 (061) ELT A134 (S.C.). He also contended that there were no contemporary imports of identical goods made by other importers; that LME bulletin only gives the average price and does not indicate the actual prices; that moreover the appellants is not able to find out from LME on what basis the value of aluminium scrap of comparable quantity has been taken as US $ 750 PMT; that in January 1999 the LME prices were US $ 510-540 PMT. The learned Advocate, further, mentioned that there was no justification for rejecting the transaction value of the goods as none of the factors in proviso to Rule 4(2) of the Customs Valuation Rules are present in this case; that it was held by the Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, 2000(11)LCX0436 Eq 2000 (122) ELT 0321 (S.C.) that “unless the price actually paid for the particular transaction falls within the exceptions, the Customs Authorities are bound to assess the duty on the transaction value”. Reliance was also placed on the decision in Adani Exports v. Commissioner of Customs, 1999(11)LCX0126 Eq 2000 (116) ELT 0715 (T). Regarding Valuation, the learned Counsel finally referred to the findings of the Adjudicating Authority to the effect that “it is not denied or claimed otherwise by the importers that all the contemporaneous imports of the items actually found, viz. Aluminium Plates, ingots, copper scrap etc. were being valued as per LME” and contended that the burden of proving is on the Department to prove that other imports had taken place on the basis of LME prices and the onus of proof is not on the Appellants to prove that contemporaneous imports had not taken place on the basis of LME.

5. He also submitted that confiscation cannot be ordered under Section 111(m) as description given by them was not wrong and value was also not misdeclared by them; that Section 111(d) can be applied only in respect of rims and it is wrong to confiscate all the goods under Section 111(d); that further since rims are not usable, they also fall in the category of scrap, the import of which was not restricted; that no reasons have been given for confiscation under Section 111(e) and 111(l) of the Customs Act since no concealment was resorted by M/s. Ankur Metal Bhandar nor was there any charge to that effect alleged in the Notice; that Section 111(l) will not apply as there was no excess goods found in the consignments; that accordingly no penalty can be imposed under Section 112 of the Customs Act.

6. He submitted that no penalty under Section 112 is imposable on Pawan Goel and Anil Goel as there is no evidence on record that they were aware of the fact that the impugned goods were misdeclared or under valued and are liable for confiscation; that they are not in any way concerned with the importation of the impugned goods as the same were not imported at their instance nor had they played any role with regard to the importation or clearance of the goods; that mere allowing the goods inside the premises of Kunal Metal cannot be a ground for imposing penalty under Section 112 of the Customs Act; that even if an employee of Kunal Metal had accompanied the driver of the trailer; that by itself could not be a ground for imposing penalty unless there is proof to show that they were aware of any irregularities with regard to the import; that there is no iota of evidence in respect of findings contained in Paragraph 10.1 of the impugned Order. He also submitted that no penalty is imposable on Gautam Chatterjee merely for the reason that he was present at the time of initial examination of the goods; that he was not aware of any discrepancies with regard to goods nor he had any personal knowledge about the valuation of the goods. He also mentioned that no penalty is imposable on Ms. Manju Khandelwal as she has done nothing in relation to goods as even according to Department, Mukesh was managing all the affairs of Ankur Metal; that there is no justification in imposing penalty of Rs. 10 lakh each on both Manju and Mukesh; that in any case penalty is highly excessive considering the amount of duty involved in the matter.

7. Arguing on behalf of M/s. Venus Metal Bhandar, the learned Advocate submitted that in addition to aluminium scrap, copper scrap was also found in the consignment imported by them; that this happened due to a mistake in the shipment of the goods by the foreign supplier; that this has been confirmed by the supplier in his Fax dated 21-1-1999 wherein he had mentioned that by inadvertent mistake, container meant for Pakistan had been sent to India; that the Appellant in his statement dated 1-2-1999 had also deposed that the supplier had mistakenly sent the container meant for Pakistan; that the Adjudicating Authority erroneously held that this was an after thought. The learned Advocate requested that they may be allowed to re-export the goods. Finally he submitted that penalty on Rajendra Kumar is very high.

8. Countering the arguments, Shri Ashok Kumar, learned DR reiterates the findings as contained in the impugned Order. He, further, emphasised that in the container imported by Venus Metal, copper is 15 MT out of a consignment of 17 MT and it cannot be said to be a mistake; that one of the containers was intercepted on 16-1-1999 and driver deposed that the delivery of the container was taken from the employees of Kunal Metals and the goods were to be delivered as per their direction only for which driver was given an approval memo; that this clearly shows the involvement of Pawan Goel and Anil Goel; that prices quoted on LME are the prevailing prices of the goods imported and can form the basis for determination of the assessable value.

9. We have considered the submissions of both the sides. In respect of consignment covered by Bills of Entry No. 304975 and 304987, the learned Advocate for the Appellants, has conceded that differential duty is payable by M/s. Ankur Metal Bhandar on account of change of Tariff Heading from 76.02 to 7601.20 of the Customs Tariff. Accordingly, we hold that M/s. Ankur Metal Bhandar are liable to pay differential duty in respect of these two consignments. There was no discrepancy noticed in respect of contents of consignment under Bill of Entry No. 304970 as only Aluminium Scrap was found in the container. As far as Bill of Entry No. 305200 is concerned, the container was found to contain aluminium rims in addition to Aluminium Scrap. The learned Advocate’s submissions that these rims were not usable and as such were scrap has not been controverted by the Revenue. Further as per Institute of Scrap Recycling Industries, Inc. Trump is defined as under :-

“TRUMP - Aluminium Auto Castings shall consist of all clear automobile Aluminium Castings of sufficient size to be readily identified and to be free from iron, dirt, brass, babbitt bushings, brass bushings and any other foreign materials”.

The Appellants had clearly averred, in their reply dated 2-8-2000 to the show-cause notice, that the rims found were old and second hand as mentioned in the Panchnama itself and are to be described as aluminium scrap-Trump. In absence of any rebuttal, we hold that there was no misdeclaration in respect of this Bill of Entry.

10. Though the Appellants have not disputed about the classification of the product in respect of Bills of Entry No. 304975 and 304987, they have contended that there is no misdeclaration as they had made the declaration as per invoice which described the product as “Aluminium Scrap-THROB”. They have contended that according to ISRI Code, THROB is defined as “Sweated Aluminium shall consist of aluminium scrap which has been sweated or melted into a form or shape such as an ingot, pig or slab for convenience in shipping; that it is thus clear that THROB comes in the shape of ingots/plates/slabs etc. and as such the goods duly corresponds to the description. The Adjudicating Authority has recorded his findings, in this regard in the impugned Order, by observing that the importers cannot express innocence by quoting a highly technical information from source other than validated by law and the Customs Tariff Act lays down the basis for interpretation and classification. We generally agree with the learned Adjudicating Authority that classification of the goods imported has to be resorted to as per the Customs Tariff. However, the fact remains that they had declared the goods as per description mentioned in the Invoice and at first examination the Customs Authorities had also allowed the clearance of goods. The ld. Advocate has also relied upon the decision in Northern Plastics Ltd. v. CCE, 1998(07)LCX0097 Eq 1998 (101) ELT 0549 (S.C.) wherein the Apex Court held that “whether the appellant was entitled to the benefit of exemption under the said notification or not was a matter of belief of the appellant and not a matter of ‘any other particular’ with respect to the goods.” The Supreme Court held that it cannot be said to be a misdeclaration as contemplated under Section 111(m) of the Customs Act. Taking into consideration all these facts we extend the benefit of doubt to the importers as far as charge of misdeclaration is concerned.

11. As far as goods imported by M/s. Venus Metals Bhandar is concerned, it is not disputed by them that the copper scrap was found in addition to Aluminium Scrap. They have tried to explain the same by submitting a Fax Message from the foreign supplier according to which the container meant for Pakistan had been sent to India by mistake. We observe that the mistake was pointed out only after the detection made by the Customs official and not by the foreign supplier on his own. We, therefore, find no reason to interfere with the findings of the learned Adjudicating Authority that the description of goods was misdeclared by M/s. Venus Metals Bhandar.

12. The assessable value has been enhanced on the basis of price quoted in LME. The learned Advocate has relied upon the decision in the case of M/s. Ruchi Associates v. CC, 1991(05)LCX0027 Eq 1992 (059) ELT 0155 (T) wherein it was held that the prices in LME Bulletin represent the current market value in U.K. and the higher prices in the price range typifies higher consumers’ buying levels. The Tribunal held therein that “the theoretical prices worked out based on the LME Bulletin cannot be accepted as the basis in the absence of any corroborative evidence of the import at the prices indicated”. This decision has been confirmed by the Supreme Court as reported in 1992(01)LCX0062 Eq 1992 (061) ELT A134. It is well settled law that onus of proving that the transaction value does not represent the value for assessment and it has to be loaded is on the Department. It has been held by the Apex Court in Eicher Tractors Ltd., supra, that subject to three conditions laid down in Section 14(1) of time, place and absence of special circumstances the price of imported goods is to be determined under Section 14(1A) in accordance with the Customs Valuation Rules. “Reading Rule 3(i) and Rule 4(1) together, it is clear that a mandate has been cast on the authorities to accept the price actually paid or payable for the goods as the transaction value” and “unless the price actually paid for the particular transaction fall within the exceptions,” [specified in Rule 4(2) of the Customs Valuation Rules] “the Customs Authorities are bound to assess the duty on the transaction value. It is not the case of the Revenue that any of these exceptions apply in the present matter and as such the transaction value has to be accepted in respect of Aluminium Scrap imported by Venus Metals and Ankur Metals. As far as Copper scrap is concerned, the value adopted by the Department is upheld in absence of any transaction value. In respect of other goods, the enhancement of value is not upheld.

13. We now come to the question of Confiscation and Penalty. As far as imports made by Ankur Metals Bhandar is concerned, in view of our findings in the preceding paragraphs, the impugned goods are not liable for confiscation and accordingly no penalty is imposable on Ms Manju Khandelwal and Shri Mukesh Khandelwal. No evidence has been brought on record to prove that Shri Pawan Goel and Anil Goel have anything to do with the procurement, sale and disposition of the impugned goods and about their knowledge about the goods being liable for confiscation. Same holds good in respect of Shri Gautam Chatterjee and we set aside the penalty imposed on these three Appellants. The goods imported by M/s. Venus Metal Bhandar are liable for confiscation. However, considering all the facts and circumstances of the case and duty involved, the redemption fine and penalty in respect of Venus Metal Bhandar are on the higher side. The interest of justice will be met if they are asked to pay redemption fine of Rs. 70,000/- and penalty of Rs. 30,000/-. We order accordingly.

All the appeals are disposed of in above terms.

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Equivalent 2001 (135) ELT 1425 (Tri. - Del.)

Equivalent 2001 (047) RLT 0166