1. The appellants filed two Bills of Entry No. 5151556, dated 9-4-2014 and No. 5151645, dated 9-4-2014, at ICD, Patparganj, New Delhi for import of "Mix Stock Lot of Alcoholic Beverages". The imports were from Dubai. Based on some alleged intelligence that the goods were grossly undervalued, the two consignments were first detained and later seized by the Department. During the investigations, statements of Shri Vi-jay Gupta, MD, of the appellant-company, and of Shri Kumar Sheel, Customs Appraiser, were also recorded. The seized goods were provisionally released on 7-7-2014 for into bond warehousing on execution of bond and bank guarantee. At the time of periodical ex-bonding of the goods the department compelled the appellants to pay the differential duty. The Department relied on bills of entry of contemporaneous imports and issued show cause notice dated 17-10-2014 demanding differential duty of Rs. 1,08,54,152/-. The seized goods, having enhanced value of Rs. 99,92,992/- were proposed to be confiscated. Penalties were proposed on the company as well as on Shri Vijay Gupta, the Managing Director. Shri Kumar Sheel, t
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he Customs Appraiser who had assessed the two bills of entry, was also made a noticee to the show cause notice and penalty was proposed against him.
2. The Principal Commissioner, Customs (Prev.) passed order dated 30-3-2016 confirming the full demand of duty along with interest, confiscating the seized goods and imposing a redemption fine of Rs. 15 lakhs. A penalty of Rs. 20 lakhs was imposed on the appellant-company and Rs. 5 lakhs on Shri Vijay Gupta, the MD. Further, penalty of Rs. 5 lakhs was imposed on Shri Kumar Sheel, Appraiser.
3. Aggrieved by the said order the present appeals have been filed by the importer, Shri Vijay Gupta, MD as well as Shri Kumar Sheel, Appraiser.
4. With the above background, we have heard Shri A.K. Prasad, Ms. Priyanka Goel and Shri Piyush Kumar, Advocate for the appellants and Shri R.K. Manjhi, DR for the respondent.
5. The Ld. Counsel for the appellants summarized the grounds of appeal as follows:
(i) The SCN has proposed enhancement of the value of goods imported vide the two bills of entry on the basis of 21 bills of entry in which comparable goods were imported. However, only 15 out of the 21 bills of entry were supplied to the appellants. Hence the appellant was not in a position to put up a proper defence before the adjudicating authority.
(ii) The declared value has been rejected only on the basis of suspicion. The transaction value can be rejected only if the conditions mentioned in Rule 12 of the Customs Valuation Rules, 2007 are satisfied. In the present case no valid reasons have been given for rejection of transaction value.
(iii) The imported goods have been declared as "Mix Stock lot of alcoholic beverages". These goods were in small quantities of different assorted brands, labels were damaged, belonging to old stock, etc. Hence values of such stock lot goods cannot be compared with normal imports. These goods were meant for sale in UAE, but have been diverted to India as "parallel imports" at discounted prices.
(iv) The Customs Appraiser Shri Kumar Sheel, in his statement has admitted that he assessed the value of the two consignments correctly after checking the NIDB data of stock lot goods, after loading the values wherever necessary. Hence further loading of the value through the impugned order is not permissible as held in the following cases:
(a) CC (Prev.), Mumbai v. Paras Electronics - 2009 (246) E.L.T. 231 (Tri.-Mum.),
(b) CC v. Lord Shiva Overseas : 2005 (181) E.L.T. 213,
(c) Shimnit Machine Tools Equipment Ltd. v. CC: 2006 (204) E.L.T. 630 (Tri.),
(d) Malhotra Impex v. CC : 2006 (203) E.L.T. 561 (Tri.)
(e) Tele Brands (India) Pvt. Ltd. v. CC (Imports), Mumbai : 2016 (336) E.L.T. 97 (Tri.-Mum.).
(v) Out of the 15 bills of entry supplied by the Department, 11 Bills of entry are ex-bond bills of entry. Such prices are not import prices in the course of international trade and hence cannot be adopted. The other four bills of entry relate to imports by duty free shops. Such imports cannot be considered as comparable goods as they are sold only at international airports.
6. Accordingly he submitted that the impugned order was not sustainable.
7. It has been submitted on behalf of the Appraiser, Shri Kumar Sheel, that he had performed his duty in accordance with the prevalent practice in the Customs House. He had verified the value of mix stock lot from NIDB, enhanced the value in a few cases and assessed the bills of entry which were also approved by the Assistant Commissioner.
8. The adjudicating authority has held that the Appraiser has failed to get the description of goods declared by the importer verified before assessing the goods, but the Ld. Counsel submitted that as per the Customs Appraising Manual, imported goods are normally to be assessed on Second Appraisement System. In any case, at the time of examination of the goods at the time of ex-bond clearance, no discrepancy in respect of description or quantity was noticed. Accordingly, it has been submitted that the penalty imposed on the Appraiser may be set aside.
9. The Ld. DR justified the impugned order. He argued that various types of liquor have been imported at extremely low prices and hence these values have been rightly enhanced and differential duty demanded.
10. Heard both the sides and perused the record.
11. The goods imported vide the two bills of entry have been declared as "mixed stock lot of alcoholic beverages". The declared values for various types of alcoholic beverages are admittedly lower than the prices noticed by the customs in the case of other imports. Through the impugned order, the assessable value of various items have been enhanced on the basis of various bills of entry indicated in the show cause notice. The appellant has raised various kinds of objections to such enhancement of value. The appellant has also justified the lower prices with the submission that the imported goods cannot be compared with import of prime goods since the import consignments are made up of various brands which have been sold together at discounted prices to clear the stock from UAE market.
12. As per the scheme of valuation under the Customs Act, 1962, as per Section 14, the transaction value is required to be accepted for assessment purposes except in circumstances, outlined in Rule 3 (earlier Rule 4) of the Customs Valuation Rules. Unless the price actually paid for the transaction falls within the exceptions, Customs authorities are bound to assess the duty on the transactional value. This position of law is well settled by the Hon'ble Supreme Court in the case of Eicher Tractors v. CC, Mumbai : 2000 (122) E.L.T. 321 (S.C.) in which the Hon'ble Apex Court observed as follows:
"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 in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exceptions specified in Rule 4(2) namely:-
(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which-
(i) are imposed or required by law or by the public authorities in India; or
(ii) limit the geographical area in which the goods may be resold; or
(iii) do not substantially affect the value of the goods;
(b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued;
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and
(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3)."
13. In the present case, we find that the adjudicating authority has not recorded any specific reason for disregarding the transaction value, other than the suspicion that values are misdeclared as seen by comparison with various other bills of entry, as is cited in the show cause notice. Hence, we conclude that rejection of the transaction value was not strictly in terms of the provisions of Customs Act read with the Customs Valuation Rules as held by the Hon'ble Apex Court.
14. We have also perused copies of the 15 bills of entry whose copies have been handed over to the importer. Each of the bills of entry cover import of a particular type of alcoholic beverage with a particular brand name. Evidently these bills of entry cover import of prime consignments of liquor in commercial lot. However, the imports made through the two bills of entry under consideration in the present case are entirely different. These bills of entry cover a heterogeneous mix of various types of alcoholic beverages with different brand names. It has also been submitted that these belong to old stock, labels were damaged, packaging indicates that it is meant for sale in UAE market, etc. Such goods are "stock cleared" and sold to the importer as "parallel imports" at discounted prices. Hence we are of the view that the value of such goods cannot be compared with the values declared for individual import consignments of prime branded liquor consequently. We set aside the enhancement of value of goods imported vide the two bills of entry. We also set aside the confiscation of imported goods on the charge of misdeclaration of value.
15. The statement given by the Customs Appraiser Shri Kumar Sheel is available in record. We have perused the same and note that he had originally assessed the two bills of entry after considering the import values of alcoholic beverages imported as mix stock lot in other cases. In his original assessment order of the bills of entry the declared values have been accepted in most of the items. The value have also been loaded and enhanced in respect of a few items on the basis of comparable values of mix stock lot. Such increase have also been accepted by the importer.
16. In view of the above discussions, we come to the conclusion that rejection of transaction values by the adjudicating authority on the basis of bills of entry of prime goods cannot be approved. Allegations of misdeclaration of value on the above basis also cannot be sustained. However, the enhancement in value ordered by the Customs Appraiser on the basis of data of stock lot goods which stand admitted by the importer at the time of assessment is upheld.
17. In conclusion, the impugned order is set aside as far as the demand for differential duty and imposition of penalties on the importer as well as Shri Vijay Gupta, MD, the loading of value as above by the Appraiser is upheld. The penalty imposed on Shri Kumar Sheel, Appraiser is also set aside