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2005 (68) RLT 384 (CESTAT-Ban.)
(In the Customs, Excise & Service Tax Appellate Tribunal, Bangalore)
(Circuit Bench at Hyderabad)
Present : Ms. Jyoti Balasundaram, Vice President
Shri Moheb Ali M., Member (Technical)
ATLAS CASTING & METAL IMPREGRATION
(Final Order No. 1832/SZB/2004 dt.12.10.2004 certified on 24.11.2004 in Appeal No. C/492/2000)
Confiscation – Section 111(d) of Customs Act, 1962- Misdeclaration – weight of imported copper scrap found to be more than quantity declared and shown in invoice- confiscation upheld.
(Paras 4 & 6)
Assessable value-Section 14 of Customs Act, 1962-Rule 8 of Customs Valuation (DPIG) Rules, 1988 – LME Prices – quantity of imported copper scrap mis-declared – no two scrap consignments can be of identical/similar nature but once transaction value rejected any reasonable method of arriving at value cannot be called arbitrary – determination of value on the basis of LME prices upheld.
(Paras 4 & 5)
Assessable value – Section 14 of Customs Act, 1962 – Rule 8 of Customs Valuation (DPIG) Rules 1988 – LME price – though bill of entry for clearance of lead scrap not filed appellant was in possession of two invoices, one showing lesser weight and value and other in possession of bank showing higher value and quantity – quantity in invoice in possession of appellant not tallied with weight of consignment – value determined on the basis of LME prices upheld.
Confiscation – Section 111(d) of Customs Act, - 1962 – weight of lead scrap not tallied with quantity shown in invoice in possession of appellant – confiscation upheld.
Penalty – Section 112 (a) of Customs Act, - appellant not put to notice for penalty under Section 112(a) – show cause notice speaks of penalty under section 114A ibid – there is marked difference between two sections – penalty set aside – appeal partly allowed.
Appearances : Shri T. Jagapathi Rao, Consultant for Appellant
Smt. Shoba L. Chary JCDR for Respondent
Per Moheb Ali M. :The appellant imported a consignment of copper scrap. He filed a bill of entry declaring the weight to be 20MTs and assessable value of 900 US$ PMT. This bill of entry was assessed to duty. On specific intelligence that the appellant was resorting the mis-declaration of quantity and value relating to copper scrap, the DRI officers weighed the consignment which is assessed by the customs and found that the actual weight of the Cargo is 25.050 MTs instead of 20 MTs declared by the appellant. The consignment was there upon seized but was released provisionally on execution of a bond. At the time of clearance the appellant paid the differential duty involved on the 5MTs. It should be mentioned that the value as declared was also enhanced by the department while re-assessing the good on the basis of actual weight found during investigation. Thus in so far as the copper scrap is concerned the Commissioner enhanced the value of the consignment and confiscated it for misdeclaration.
2. The appellant also imported a consignment of lead scrap and ingots from the same overseas suppliers. No bill of entry was however filed in respect of this consignment but the goods were lying in the customs control only. The officers of DRI recovered from the Bank through which the documents were being negotiated. When the actual weighment of the goods contained in the consignment of lead scrap was done it was revealed that the weight of the consignment was 27,300 MTs whereas the invoice had shown only 20MTs. The scrap consisted of Cut pieces of Uniform size of compressed lead pipes, lead ingots and lead ingots with luster. The samples of the consignment were tested and the consignment turned out to be the one that could be imported under a specific licence. What was allowed to be imported without a licence was lead scrap with ISRI code specifications. Since the consignment was out site such specifications they were held to be imported without an import licence. The Commissioner while adjudicating the case enhanced the value to LME prices, confiscated the goods on the ground that the appellant failed to produce a valid import licence. He also imposed a penalty of Rs. 2,00,000/- on the appellant company under section 112(a) of the Customs Act, 1962. The present appeal is filed against this order of the Commissioner.
3. Heard both sides.
4. The regard to copper scrap, we observe that the appellant filed a bill of entry mis-declaring the quantity of the goods. The department could find out the actual weight only after weighment was done the invoice produce in support of the value declared is for 20MTs. On actual weighment it was found that the quantity is more by 5.050 MTs. In a case where the material particulars given in the invoice and bill of entry do not tally with the Cargo under import (in this case the weight does not tally) invoice value can be rejected. The Commissioner therefore rejected the declared value and sought to arrive at the value by adopting the prices prescribed in LME. Normally, declared value cannot be rejected without a valid ground stated in Rule4(2) of the Valuation Rules. But in this case we find that the goods are mis-declared. Once that happens the declared value can be rejected and the value could be arrived at in accordance with the Valuation Rules. The Commissioner adopted Rule 8 (The residuary method) to arrive at the value because Rules 5, 6 & 7 are not helpful in arriving at the value of scrap for the reason that no two-scrap consignment can be identical/similar nature. Any reasonable method of arriving at the value of consignment once transaction value is rejected cannot be called arbitrary. We see considerable force in the argument of the Commissioner that since the quantity is mis-declared the invoice supporting the consignment should be rejected and value should be arrived at in accordance with the Valuation Rules.
5. Thus, we don’t see any infirmity in the order of the Commissioner in so far as determining the value in accordance with LME prices for copper scrap.
6. In so far as the confiscation of the goods is concerned we see no reason to interfere as the appellant clearly mis-declared the quantity in the bill of entry. It is not a co-incidence that as much as 5 tons were found in excess of the declared weight. We uphold the confiscation under Section 111(m) of the Customs Act.
7. In so far as lead scrap is concerned we observe that no bill of entry was filed in this case. So the question of mis-declaration of the quantity or the value of the goods does not arise. However, the fact remains that the appellant was in possession of two invoices one showing a lesser weight and value and the other in the possession of the bank showing a higher value and higher quantity. The Commissioner took into consideration the fact that the lead scrap under import consisted of 27 and odd MTs whereas the invoice showed only 20MTs. While determining the value of the consignment the Commissioner rejected the value shown in the dubious invoice and determined the value as per LME prices. When the import is made in contravention of import policy they are liable to confiscation. The Value of such consignment has to be done. The Commissioner rejected the value shown in the invoice possession of the importer because the quantity shown in the invoice does not tally with the weight of the consignment. He, therefore, determined the value of the consignment under Rule 8 of the Valuation Rules. We uphold this finding in view of the peculiar circumstances of this case.
8. The Commissioner also confiscated the consignment on the ground that the importers did not have a specific licence to import the impugned goods.
The contention of the appellant that the test result was not correct is not based on any factual data. This contention seems to have been raised only to contest the test results without any basis. We, therefore, upheld the finding of the Commissioner that the goods imported without a valid licence are liable to confiscation under Section 111(d) of the Customs Act. Thus both in respect of confiscation and valuation, we uphold the findings of the Commissioner.
9. In both the cases, that is copper scrap and lead scrap the appellant paid the differential duty while seeking provisional release goods by executing a B-II Bond. The Commissioner while confiscating the goods enforced the terms of the bond as the appellant failed to produce goods before him as agreed to in the bond executed. We uphold this part of the order as well.
10. The Commissioner imposed a penalty of Rs. 2 lakhs on the appellant under Section 112 (a) of the Customs Act. Even though, the appellant was not put to notice on the liability to penalty under Section 112(2) of the Customs Act. The appellant strongly contested imposition of penalty under this Section when the show cause notice does not speak of it at all. We have perused the show cause notice. It only speaks of liability to penalty under Section 114 A of the Customs Act. Even through, both the sections speak of penalty there is a market difference between the two. The Appellant should have been put on notice as to why a penalty under Section 112(a) should not be imposed on him. This has not been done. We, therefore, cannot uphold the impugned order of the Commissioner in so far as penalty is concerned.
11. The appeal is partly allowed in the following terms:
Operative part pronounced in Court.