INDOWIND ENERGY LTD. Vs. CC (SEA PORT-IMPORT)

JUDGEMENT

(1.) This appeal is directed against order in Original No. 1997/2004, dated 30 -3 -2004 passed by the Commissioner of Customs, (Sea -port Import) by which the Commissioner has rejected the value of Rs. 11,12,400/ - (FOB) and assessable value of Rs. 13,60,868/ - declared by the importer for the goods viz. 18 windmill blades imported by the appellants herein vide Hill of Entry No. 522475, dated 21 -08 -2003, and re -fixed the value of the said goods at Rs. 90,00,011/ - (FOB) and the assessable value at Rs. 1,02,10,924/ - under Rule 8 of the CVR. Consequently he has demanded differential duty of Rs. 26,55,017/ - under Section 28(1) of the Customs Act, 1962 and has ordered adjustment of Rs. 3,02,496/ - paid by the importer towards duty liability. The Commissioner has also confiscated the goods under Section 111(m) of the Act, ibid, with option to redeem the same on payment of fine of Rs. 10,22,000/ - in lieu of confiscation under Section 125 of the Act, besides imposition of penalty of Rs. 5,11,000/ - under Section 112(a) of the Act.

(2.) The brief facts of the case are that the appellants herein imported 18 Nos. of Windmills - Blades from M/s. Oak Creek Energy Systems Inc. USA vide Bill of Entry No. 522475, dated 21 -8 -2003 under Invoice No. 197, dated 12 -8 -2003 and declared the invoice value as USD 24,000 and the value was assessed at Rs. 13,60,868/ -. The importer had paid duty on merit @ 25% BCD and 4% SAD. After assessment the subject goods were examined and pass out orders were given by the Customs. Pursuant to the receipt of information by the Officers of the Directorate of Revenue Intelligence (DRI) that the importer -appellants undervalued the goods, they visited the office premises of the appellants on 25 -8 -2003. Perusal of the documents revealed that that an amount of Rs 10,08,565/ - was paid by the importer to the steamer agent towards freight charges and they had not declared the same to the Customs at the time of assessment of the Bill of entry. It was found that the M/s. Oak Creek Systems, USA from whom the goods were purchased, was not the manufacturer of the goods. The said documents were re -examined by the officers of DRI on 26 -8 -2003, in the presence of officers of Customs, the importer -appellants and the CHA. The consignment in three containers was found to contain 18 blades and 18 Vanes for windmill. The manufacturer of the goods was found to be M/s. Advanced Blade Manufacturing Inc. Pinconning, USA. As the goods appeared to be under -valued, they were detained for verification of value. As a follow up action, statements were recorded from one Shri Damodaran, Vice President (Projects) of the appellants wherein he has inter alia stated about the description of the blades and that the appellants had placed an order for 36 blades and made payments for 18 blades and the same were shipped to the company in three containers and it was the first import by their company. He has also stated that the Managing Director of the Company Shri K.V. Balakrishnan, was in liaison with the supplier regarding the purchase of the wind turbine blades and the inspection of the same was carried out by their group Company M/s. Subuthi Overseas Inc. representative in USA and that the manufacturer of the goods was M/s. American Wind Turbines (AWT), He has also stated that he was not aware of the original cost of the blades and that the price shown in the invoice was cheap compared to the prevailing market price. He has further stated that they being the first time importer, did not know whether freight charges were to be included in the assessable value. Shri R. Balajee, Vice President of the appellants Company, on 26 -8 -2004 gave a corroborative statement. Statement was also obtained from Shri K.V. Balakrishnan, Managing Director on 10 -9 -2004 wherein he corroborated the statements given by other two persons about the fact of not giving information to the department about the freight charges paid, because of ignorance. He has also stated that though they tried to get manufacturers' invoice, they could not get it. He has also stated that no insurance for the goods was taken and he did not know whether the shipping company had taken insurance or not. He has also presented a DD for Rs. 3,02,496/ - towards differential duty arising out of the non -inclusion of freight charges in the assessable value. It was in these circumstances, show cause notice was issued to the appellants which culminated in the order of adjudication passed by the Commissioner as noted above, which is challenged before us.

(3.) Shri AK Jayaraj, learned Counsel for the appellants at the outset submitted that the blades were manufactured in the year 1995 -96 and there was no takers for the same and the supplier had to sell the same at the price negotiated between them and the price mentioned in the invoice is the actual price paid by the appellants. He has pleaded that the department proceeded to enhance the value based on the Chartered Engineer's certificate. He has further pleaded that that even according to the Department, the goods imported in the present case are not second -hand goods. The goods involved are new. This fact has been noted in para 15(v)(b) of the impugned order. He has also submitted that even the terms of Public Notice No. 80/94 relied upon by the Commissioner, lays down that second hand machinery may be got appraised by Chartered Engineer. When the Public Notice enjoins that the second hand machinery may be appraised by Chartered Engineer, subjecting the goods involved in the present case, which are : not second hand goods even according to the Department, was not required, argued the learned Counsel for the appellants. Therefore, reference to the Chartered Engineer was not mandated by any rule or instructions issued by the Department. He has also submitted that even the Inspection report started with an observation "used goods" but the container wise inspection report mentioned the goods as "new". There was therefore, contradiction in the report of the Chartered Engineer itself. Therefore, no credence can be given to the said certificate which was the sole basis for enhancement of the value. He has also submitted that the Managing Director or any other officers from whom statements have been recorded have not admitted that there was any mis -declaration with regard to the value of the goods. What they have not declared was freight charges which were not included in the assessable value, because of ignorance as this was the first occasion they had imported the goods and as soon as it was pointed out that freight charges have to be included for the purpose of assessment, the differential duty arising out of the inclusion of freight charges were paid before the issue of show cause notice. He has submitted that the Department has not let in any evidence that the commercial invoice is not genuine or that any amount in excess of the transaction value has been remitted by the appellants or that there was any mutuality of interest between the buyer and the seller. He has therefore, submitted that there was no reason to reject the transaction value. In support of his plea, he pressed into service the judgement of the Tribunal in the case of Spice Communications Ltd. v. CC, New Delhi reported in 2004 (170) E.L.T. 249 wherein it was held that in order to reject the transaction value, has to be shown that the transaction value between parties were influenced by any consideration other than commercial. The Bench in the said judgement has also relied upon the judgement of the Hon'ble Apex Court in the case of Eicher Tractors Ltd. v. CC, Mumbai, reported 2000 (122) E.L.T. 321 (S.C.) wherein it was held that unless warranted by the exceptions provided in Rule 4 of the Customs Valuation Rules, transaction value should be accepted as assessable value. He has also invited our attention to the judgement of the Hon'ble Apex Court in the case of Sounds -N -Images v. CC, reported in 2000 (117) E.L.T. 538 (S.C.) wherein it was held that "it is always for the Customs authorities to establish by methods known to law and in a satisfactory manner that the value of imported goods is not what the importer says it is and what that value actually is". He submitted that in this case the burden was cast on the department that the transaction value declared by the appellants was not correct and this burden has not been discharged and hence, the transaction value has to be accepted as the correct value. He has also submitted that in terms of Customs Notification No. 21/2002, dated 1 -3 -2002 as amended by Notification No. 26/2003, dated 1 -3 -2003 the appellants were entitled to concessional rate of customs duty at 5% BCD. But the appellants could not get the required certificate from the Ministry of Non -conventional Energy, recommending the grant of exemption in time, and hence had to pay duty at 25% BCD and 4% SAD. He submitted that this factor should have been taken into consideration by the Commissioner, the, therefore, prayed for setting aside the impugned order and allowing the appeal.