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Manmohan Gupta and Actis Vs. Commissioner of Customs (import) - Court Judgment

LegalCrystal Citation
CourtCustoms Excise and Service Tax Appellate Tribunal CESTAT Mumbai
Decided On
Reported in(2005)(191)ELT907Tri(Mum.)bai
AppellantManmohan Gupta and Actis
RespondentCommissioner of Customs (import)
1.1 appellant has filed this appeal against in original no cao. cc(ygp) 18/2004 adj dtd 23 june 2004, issued under f. no: siib/gen-38/2002 acc, passed by the commissioner of customs (import) air cargo complex, sahar, mumbai (hereinafter referred to as "the commissioner) where in the commissioner has imposed a penalty of rs. 7,50,000/- (rupees seven lakhs fifty thousand only) on the appellant under section 112(a) of the customs act, 1962 & has confirmed a duty demand of rs. 57,98,140/- against general engineering & spares (presently known as actis technologies pvt ltd) wherein the appellant was the partner of the erstwhile partnership firm which was finally converted into a private ltd company under the new name and style wherein the appellant is a director. also a mandatory.....
1.1 Appellant has filed this Appeal against in Original no CAO. CC(YGP) 18/2004 Adj dtd 23 June 2004, issued under F. No: SIIB/GEN-38/2002 ACC, passed by the commissioner of customs (Import) Air Cargo Complex, Sahar, Mumbai (hereinafter referred to as "the Commissioner) where in the commissioner has imposed a penalty of Rs. 7,50,000/- (Rupees Seven Lakhs fifty thousand only) on the appellant under Section 112(a) of the customs Act, 1962 & has confirmed a duty demand of Rs. 57,98,140/- against General engineering & Spares (Presently known as ACTIS TECHNOLOGIES PVT LTD) wherein the appellant was the partner of the erstwhile partnership firm which was finally converted into a Private Ltd Company under the new name and style wherein the appellant is a Director. Also a mandatory penalty of the equivalent amount of Rs. 57,98,140/- on the said erstwhile partnership firm, under Section 114A of the Act has been imposed and has directed payment of interest by the said firm on the above purported duty amount in terms of the Section 28 AB of the Act and directed that the sum of Rs. 10,00,000/- deposited under protest by the said erstwhile partnership firm during the course of investigation be adjusted towards the purported duty demand of Rs. 57,98,140/- 1.2 During the years 1997, 1998 and 1997, the said partnership firm imported at Air Cargo Complex, Sahar, Mumbai, 38 consignments of diverse models and diverse specifications of Proxima Projectors, Projector Systems Lamp Assembly, Lamp Replacement, Digital Light Projectors, etc with identification number prefix and suffix given by the overseas manufacturers. All items imported (hereinafter referred to as the 'said [email protected]) have numbers for identification purpose with distinct prefix and suffix, which would be evident from the items of imports, e.g., PROXIMA DP-LSI, PROXIMA DP 5900 D, PROXIMA DP 5800 D, PRXIMA DP 9200, MODEL DP 4200, POLYSILICON 5610 D, DP4200, POLYSILICON MODEL 5610 P, 5610P, POLYSILLOCON DP 5610 P, POLYSILICON DP 5610 P, Projection system DP 5600, LSI Lamp Replacement DP 5500. PROXIMA DP 5900 D POLYSILICON Systems Series 5500 D PROXIMA LCD PANEL MODEL A 810 C-R, DP LSI, DIGITAL LIGHT PROJECTOR-DP 4200, DIGITAL LIGHT PROJECTOR 4100, POLYSILICON PROJECTION SYSTEM-SERIES 5500. Most of the consignments were imported from one Messrs PERFORMA-USA, who was the MASTER VALUE ADDED DISTRIBUTOR of Messrs. PROXIMA and was eligible for discounts upto 40% These facts were directly intimated by M/s Proxima to the Indian Customs vide their letters dated 30 july 1998 and 3rd November 1998.

1.3 All afore sated 38 consignments, are the subject matter of the present appeal. Each of the Bill of Entry of the said 38 consignments was assessed, by the proper officer, description of items imported was found as per declarations and value of the goods as declared was not impugned. The imports were found to be covered by the EXIM POLICY and each consignments was allowed as authorisedly imported. On payment of assessed customs duty, as levied, in respect of each of the 38 Bills of Entry. Final out of charge orders were made by the concerned customs Officers. Goods of the said Bill of Entry were during the years 1997, 1998 and 1999, where ordered to be closed under Section 47 of the Customs Act, 1962 (hereinafter referred to as "the Act") At no point of time the assessment orders made in respect of the aforesaid 38 consignments were ever reviewed by the Department under Section 129D of the Act nor were any appeal filed by the Department against any of the said 38 assessments orders.

1.4 On or about 03.08.1999, appellants Ahmedabad Branch of the said erstwhile partnership firm made its first import at Air Cargo Complex, Ahmedabad by importing from M/s ISTM Engineering Pvt Ltd, Singapore a consignment of four (4) nos of EPSON brand multimedia projectors. They, filed a Bill of Entry Serial no 4384/99 dtd 3/8/1999 for Home Consumption along with all import documents for assessments and clearance. After the clearance of the said duty paid consignments, it was detained by Ahmedabad Customs the importer was coerced to pay an amount of Rs. 3,50,000/- by way of security deposit for the release of the said goods pending adjudication proceedings which were launched.

The case was adjudicated vide Order in Original dated 25.1.2001 enhancing the values against which the appellant's Company has filed an appeal and an application for the stay before this Hon'ble Tribunal no C/459/01 being decided separately.

1.5 Enquiries were however continued and a SCN dtd 16.5.2002 was issued by officers of Sahar Air Cargo alleging misdeclaration of value and demanding duty under proviso to Section 28 of the Customs Act 1962. The duty demands as made were confirmed.

1.6 Vide order dtd 23.6.2004, the commissioner confirmed the demands of duty with interest on enhancing the valuation as proposed. Penalties under the provision of the Act were imposed on the importer & the partner. Hence this appeal.

2.1 A perusal of the impugned order reveals that the Commissioner has arrived at his conclusions after considering and recording the main allegation in para 42 thereof, as regards the imported to have evaded Customs duty on imports of Proxima projectors by placing Reliance on the investigation report submitted by the U.S. Customs and the statement of Shri M M Gupta Managing Partner of the importer by : i) getting the sales routed through another firm namely PERFORMA in the U.S allegedly the price paid by PERFORMA to PROXIMA was much higher than that reflected in the invoices issued by Performa to the importer.

ii) The two firms i.e. the importer and Performa are run by members of the Gupta family.

iii) The report received from US Customs showed that Performa had paid much higher prices for the projectors which were supplied to the importer.

2.2 Appellants have contested the reliance placed on the statements of Shri M M Gupta. The appellants contended that the statements were recorded under duress and signatures were obtained on prepared statement. commissioner in para 44 of the impugned order after accepting that the statements are not in the hand writing of gupta & they are retracted. He thereafter refers to averments which cannot be denied & finds corroboration in the constitution of the firms and Management of Proforma & the importer. This corroboration is surely no corroboration of the avertments relevant for valuation of the goods.

The commissioner thereafter finds that in view of the retraction of the statements it would be difficult to justify the charges. He thereafter considers the U.S. Custom report as independent corroboration & finds the statements not to be the role based for the charge in the notice & therefore finds retraction not a effect any material difference. We find nothing dehors the statement of Gupta which are constituting the major part of the notice. Reliance on the statements began at page 3 of the notice & proceeds to cover pages, a verbatim reliance, upto page 18 to 22, then again at page 23 out of the 28 page show cause notice. The rest being, reliance on US Custom Report & inference drawn from the statement of Shri Gupta & the charges. There is no other independent enquiries made or statement recorded of any other person. The perfunctory manner in which the issue of retraction of these statements has been dealt with in a paragraph of less than half a page exhibits a preset mind to not to consider the material with a judicious approach as required of a quasi judicial adjudicator. Force in therefore found in the grounds urged the appellant.

i) Statements found by the commissioner not to be in the handwriting of Shri Gupta who is an educated Technically qualified person & when no reasons exist in the statement own handwriting it would prove the said statements to be not voluntary.

ii) No prudent businessmen would immediately admit to short levy without going through the records. This only indicates that Gupta was forced to sign a prepared confession.

iii) No further enquiries have been made from Gupta about how he compensated 'Performa' for sending undervalued goods to India. No bank verification of further sales effected by Gupta & the importer charging for after sales service etc was verified as was submitted before us. This would call for not accepting the statement to be true voluntary confession.

iv) The annexure of the statement dated 15/07/03 Shri Gupta has mentioned that he does not agree with the amounts and that would indicate no reason why he should subsequently give confessional statements.

v) There is no material on record to indicate remittance of differential sums. Undervaluation cannot be assumed from a lower sale price itself & the commissioner has erred; since the allegedly reliable statements do admit of no such differentials in imports accounts Once these colourable statements of confession are discarded and are not to be looked at, the only material left in the US Customs Report.

2.3 Examining the US Customs Report it is found that it is a solicited report via the efforts & reference made by Directorate of Revenue Intelligence Officers at New Delhi. The appear to have sent a 'spread sheet' with certain data on it. This 'Spread Sheet' was not a relied upon document inspite of and on persistent demands by the importer, the same was not given even for an inspection. On what basis the 'Spread Sheet' & its data & what it was base & prepared & sent is a matter of conjecture of assumption or presumption. The report of US Customs is based on document where contents are surreptitiously & by design being kept away from the defence. It is well settled law that even if a document is not relied upon by the department if the same is sought to be relied upon by the defence inspection of the same soul be granted.

(M.S. Naina (2000(123) ELT 39 (Cal) & Sunder Ispat Ltd& . Non supply of this 'Spread Sheet' which is considered to be the pivot document on which the US Customs Report is based should be considered to be fatal to the case of revenue. The order impugned had to be set aside only on this ground of denial of natural justice following the settled position of law.

2.4 The US customs Report is not to be considered as evidence is a plea made in the grounds in appeal before us & we concur with the same. The US Customs Report is an unsigned photocopy. It is well settled by the decision of the Apex Court in the case of CC v. East Punjab Traders & this Tribunal's decision in case of V.K. Impex v.CC (Port) Kolkata similar US Customs Report) that such documents cannot ipso facto be relied upon. The differentiation of the Apex Court's decision by the Commissioner in this case concluding that the source of photocopies in East Punjab Traders was doubtful while in this case the source was not doubtful as arrived in para 45 of the impugned order cannot overcome the stipulation of law laid down in by the Supreme Court. Moreover, when the 'Spread Sheet' sent on which this report is based is being kept away by Revenue, a report originating & based on the same cannot be found to be valid evidence. The distinguishing attempted can be held to be only baseless & devoid of any merit and a ritual to distinguish and not follow the Supreme Courts decision. We find the Commissioner has not even cared to deal with the Tribunal decision in case of V K Impex cited before him. This order is to be set aside on this ground itself of US Customs report not reliable.

2.5 a) The Ld. Advocate for the appellants have brought out the following ambiguity & discrepancy & shortcoming in the U.S. Customs report.

i) At page 3 of the said report it has been categorically stated that, "the informations on the SEDs and spread sheet provided by the Government of India was incomplete description (model number, series number etc). In most cases it was not possible to match his information with the sales invoices of PROXIMA".

U.S.A investigation agency has clearly admitted that it was not possible for them to match informations provided by the Indian Customs with the sales invoices of PROXIMA. Obviously, said U.S.A. report is based on assumption and presumption and directionless.

ii) "Reporting Agent was able to match up some of these items and observe that there is some indication of undervaluation on the Export documentation" iii) Said investigation carried out at the offices of PROXIMA revealed the PROXIMA did not prepare any invoices for export nor did they prepare shipper's Export Declaration.

iv) U.S.A. based investigation agency has reported the current market price of PROXIMA DESKTOP MODEL LS-1. It is significant to note here that inquiry and investigations were pertaining to value of the goods for the imports (i.e. Exports from U.S.A.) made during years 1997 to 1999 and were not made to establish the current price (i.e. either in June 2001 or September 2001) particularly when the subject matter of the instant demand raised is for the period of years 1997 to 1999. There is also no information in the said report that at what price PROXIMA sold this item to PERFORMA. Moreover price stated in the report does not indicate whether it is FOB price or CIF price.

v) Re: PROXIMA DESK TOP PROJECTOR DP-5500-D It may be noted that price of the projector depends upon its model, year of manufacture and series numbers. Same are generally indicated by way of using suffix and prefix to the model number. Report say that PERFORMA indicated that 1998 price for the DP-5500 is US $ 3600/-. Report clearly states that PROXIMA did not indicate which series of DP-5500 was purchased by PERFORMA. (A.B.C. or D) Said report clearly demits that suffix influence the price of the projector. This shows that the investigations made by the U.S.A. agency were haphazard and not substantive, because of the lack of proper informations and materials provided by the Indian Customs.

vi) Re: DP-5500 D, PROXIMA indicated that PERFORMA paid US $ 4500 EACH FOR THE DP-5500 in 1998. In this case also there is no indication of suffix (A,B, Cor D) Price of US $ 4500/- mentioned here is altogether of a different model and different series but not DP - 5500-D vii) Re: PROXIMA DESK TOP Projector it is admitted by the U.S.A. investigation Agency that they were "unable to identify from any of the documentation available" reason given is "missing model number" viii) apart from above said report discloses that there were several other instances where the investigation agency was unable to identify items, model number and series numbers.

The mere observation by the US Agent of an undervaluation without arriving at any reason in the year 2001 for imports of 1997 to 1999 the only material now being relied sans the statement of Gupta, be a reason to proceed with this show cause notice on undervaluation. In view of the ambiguity, discrepancy & short coming shown in this report, the said report of US Custom cannot be relied upon. Burden to prove undervaluation is on the department. They can discharge the same by relying on evidence & material that is of cogent & tangible nature. In Puja International (1995 (76) ELT 69 this Tribunal held that 'assessable value' cannot be determined on basis of assumption & presumption. Suspicion created by the material in this case is not sufficient to reject the transaction value as held in Swiss Time (1996(88) ELT 77). We, respectfully concurring, would conclude in similar manner on the basis of the material herein. b) Commissioner is placing reliance on sole evidence i.e. 'U.S. Customs Report' by treating the same as independent material, when it is solicited material based on a 'Spread Sheet' prompted by the investigators & that 'Spread Sheet' is being kept as a well guarded secret. It is evident that the said report relies upon and is based on incomplete and incorrect misleading information supplied to US authorities as is evident from the following plea made.

a) From page 3/13 of the said purported Report it is seen that the Report was based on a "Spread Sheet" provided by the respondent authorities. It would be further seen that the said purported Report has been made with reference to the items referred to in the said "Spread Sheet". It was therefore incumbent upon the respondent Customs authorities to make available to the appellant, along with the said purported Report, a copy of the "Spread Sheet". In the absence thereof it is impossible for any person to correlate and find out as to as regards which goods and what goods and of what quality/specification thereof were the enquiries made and with reference to which the said purported US Report has been given.

However, the specific request therefore to the respondent authorities of the appellant, as would be evident from the materials on record as stated herein above, was wrongfully and illegally rejected. This is not only violative of the principles of natural justice but also makes the purported US Report, which is based on and/or with reference to the said alleged "Spread Sheet" submitted by the respondent, a purported document which cannot be relied upon.

It is evident that to hide relevant and material facts which would have enabled the appellant to demonstrate patent flaws and/or irrelevancy of the purported US Report this wrongful and illegal methodology has been adopted by the respondent Customs authorities in the present case, thus vitiating the entire proceedings.

b) Further, it would be evident from the said purported Report, at page 4/13 thereof, that the same has been prepared on incomplete information contained in the "Spread Sheet" submitted by the respondent. This is evident from the following observation in the said purported report: "The information on the SEDs and the spread sheet provided by the government of India was incomplete description (model number, series number, etc). In most cases it was not possible to match this information whit the sales invoices from Proxima" It is settled and evident that a purported Report, based on incomplete information, can have no evidentiary value in the eye of law nor can a charge of under-valuation against an assessee/importer be made on the basis of such incomplete and/or purported Report, which is based on assumptions and presumptions at the most.

c) The said purported Report is vague and clearly indicates that the same is based on assumptions and presumptions and thus cannot be relied upon. In this respect, inter alia, the following observations at page 4/13 of the said purported Report is relevant: "Reporting Agent was able to match up some of these items and observe that there is some indication of undervaluation on the export documentation" "Proxima indicated that the 1998 price for the DP 5500 is S3,600.00 each, the total for five would be $ 18,000.000 US. Proxima did not indicate which model of the DP 5500 was purchased by PERFORMA (A,B,C or D) the suffix would further influence the price of the projector" "Proxima indicated that PERFORMA paid 4,500.00 each for the DP 5500 in 1998 for a total of $ 22,500. Again, no suffix was indicated in the model number".

It is thus evident the relevant and proper materials, necessary to correlate goods imported and forming the subject matter of alleged investigation with the alleged prices of sale in USA was also not available and that the entire exercise, resulting in the purported Report, was no assumptions, presumptions, and/or incomplete information. No reliance in law can be placed. Therefore, on such an alleged Report.

d) As against several items serialised in the said alleged Spread Sheet "created by the Indian Customs" (as referred in the said purported Report at page 4/13 thereof) the purported Report stated as follows:- "unable to identify this item" or unable to identify this entry" or" unable to identify".

This is contained against at least 18 serial numbers of the said alleged Spread Sheet referred to in the purported Report. In the event the said alleged purported report is unable to identify the goods, it is incomprehensible how on the basis of this purported Report the Commissioner could come to the conclusion, as contained in the impugned order, that the said goods were under valued. This also demonstrates that not only no reliance can be placed upon the said purported US report but also that even on the basis thereof no finding of undervaluation could be arrived at by any reasonable person, properly instructed, and that the contrary purported findings of the Commissioner are misconceived, ex-facie erroneous and perverse.

e) the said purported Report is self contradictory. At pages 3/13-4/13 thereof it is stated that according to the Reporting Agent "Proxima did not prepare invoices for export nor did they prepare Shippers Export Declarations (SEDs) and that these items have been the responsibility of freight forwarder of PERFORMA. In respect of the subject goods with reference to "PROXIMA's invoices." If no invoice was prepared or generated by PRXIMA for export nor SEDs prepared by them, then how could there by an allegation that "some indication of under valuation on the export documentation" of PERFORMA, another legal identity, as has been observed in the said purported Report, on the basis of invoices of PROXIMA for their alleged sale of the goods to PERFORMA in USA. No documentary evidence in the form invoices from PROXIMA to PERFORMA were obtained by the US Customs. In absence of such document it is not possible to ascertain the sale pattern of PRIOXIMA to PERFORMA including discount offered. More so when the U.S. Report is an unsigned piece of evidence. Therefore no credence can be given to the said self contradictory US. Customs Report nor any reliance placed thereon.

This is incredible.

f) In para 46 of the impugned order the Commissioner has held that in some cases the model numbers are not accurately shown and that the suffixes such as A,B,C, and D with the model number are missing and that the same does not make any material difference since the information supplied is according to each line of the "Spread Sheet" supplied by Indian customs and this "Spread Sheet contains the actual import particulars. This is ex-facie incorrect. As per the purported Report the invoice amount represents Proxima's alleged price on Performa. It states that "Proxima's invoices indicates that Performa paid ...". The same does not say that Performa exported the said goods at these prices. Moreover, there is nothing in the impugned order or the purported Report to sow that the Proxima had stated that they had received the invoiced amounts from Performa.

For these reasons also, the said purported Report is an unreliable document.

g) The concluding portion of the purported report of the USA customs reads as Under: "It appears that PERFORMA is undervaluing the projection equipment exported to India. Since there is no loss of revenue to the United States. The US Attorney's office declined federal prosecution of PERFORMA or KHANDELWAL" The above remark of the US Agent is self contradictory. On one hand it gives a clean chit that there is no loss of revenue to the United States and on the other hand suggests that it appears that PERFORMA is undervaluing projection equipment exported to India. Both these views cannot be reconciled. If there is undervaluation there is bound to be corresponding loss. The US Agent is groping in the dark assuming and presuming under valuation without any evidence. His report lacks credibility. Therefore the said report which has been prepared in such a slipshod manner cannot be made the basis of action against the appellant and deserves to be discarded in favour of justice and fairplay.

From the above it is evident & has to be held that the Commissioner has relied upon documents, which are not relevant nor complete, self contradictory, vague and devoid of any relevant material or substance.

The appellant has been penalised only on the basis of assumption and presumption, which is impermissible in law.

2.5 In any case, the report does not indicate any extensive enquiries to have been made with 'Performa' the overseas supplier to obtain their say in what circumstances they obtained goods from Proxima & thereafter sent them at lower values to India. No copies of invoices of Proxima were obtained; no evidence of Performa having been compensated in any fashion by the buyer in India is on record. The difference in prices of 'Proxima' & invoice price of 'Performa' was explained by the importer to Indian customs by the manufacturer in Norway vide letter dtd 30/7/98 & 3/11/98. This letter clarifies that "Performa" is an authorized distributor of 'Proxima' & is to assist the manufacturer in developing the India market & as a MVAD (Master Value Added Distributor) Performa was eligible to 40% discount & the importer in India being on official channel Partner in India of Performa the price of Performa to India buyer would be correct. Commissioner has not caused any enquiry on these letter, dtd 300798 & 3/11/98 & has summarily rejected the same by holding that, " I am afraid this explanation lacks conviction when the investigation conducted by U.S.Customs show against many of the models are the prices that were received by Proxima from imports. If Performa had got any discount they would have reflected in the prices then" The rejection by the Commissioner of the stand/explanation by Proxima vide their tow letters is in his own personal opinion & not founded on facts as his been held by him, of prices actually received by Proxima from Performa. The U.S. report only states "Performa paid .... "There is nothing to conclude that Proxima received. There was no enquiry made with Proxima by the Commissioner. It is not submitted, & can be taken judicial notice that in business distributor gets commission after sales are effected when the commission of 40% mentioned in their letters is reckoned, then their appears to be no undervaluation.

2.7 a) These two letters on record, are much earlier to the initiation of the present proceedings. They are found to be relevant to explain the variation in the prices. The observations of the Commissioner of the importer to have not provided any credible & satisfactory explanation to justify the prices is therefore factually incorrect. The appellant in para 14 of the reply to the Show Cause Notice dtd 27/11/03 had clearly mentioned that the supplier, Performa is MVAD of Proxima & is entitled to 40% discount. These facts were directly intimated to Indian Customer by the manufacturer Proxima vide letter years earlier in 1998. Therefore it is to be held that Commissioner has resorted to suppression veri & suggest falsi to substantiate the intenable upholding of the charge of undervaluation on facts & merits. It would also establish the claim of bar of limitation since the facts ever known to the department in 1998 itself.

b) The impugned order by coming to a finding in para 48 shows total non application of mind by relying upon the decision of D Bhoormul & the attempted distinguishing of the decision in case of Sound-n-Image in order to justify the undervaluation. The D. Bhoormul case was on snuggling and onus on the department in such cases, it can not be applied to valuation matters especially where onus is cast on the Revenue to determine the valuation and as per transaction value and only on reasons to move away from transaction value. Value is required to be accepted in absence of evidence. The principles laid down by the Supreme Court in Sound Image & other decision) in Eicher Tractor Ltd cannot be ignored & value arrived as in this case.

The finding that appellants had not produced any clarification on difference in prices arrived is factually in correct in view of the two letters from the manufacturers four years earlier on record of the department & the plea taken in the written reply to this notice.

c) The case has been built on a prejudice & the order being biased & not passed in an impartial manner is also evident from ....

i) In S.No. 5 of annexure A. goods were imported from ASK Proxima, Norway and not from USA hence the value of this item reported by the US customs from Proxima to Performa was irrelevant as the same had been mistakenly shown to have been sold by Proxima to Performa where as the fact of the matter is that they have imported these items from Norway.

ii) S.No. 1 of annexure B where in Model Projector LS1 was directly imported from Proxima USA, whereas the value adopted in above Annexure B was value charged by Proxima to Performa as per US Customs report. Since the model had been directly imported from Proxima USA, there was no question of adopting the value charged by Proxima to Performa and value of this item could not be enhanced and the excess differential customs duty proposed to be levied of Rs. 1,54,651/- needed to be dropped.

iii) As per S.No. 27 of the US Customs report (S.No. 20 of Annexure A of the Indian Customs) the model shown was DP 5610 whereas the model actually imported as per invoice no 147410 was DP 5610 P. Hence the value reported by the US Customs in respect of Model DP 5610 could not be adopted for Model DP5610 P actually imported as mentioned above.

iv) As per S.No. 3 of Annexure B US Customs had reported model Polysilicon Projector 5500 D whereas the model actually imported was Polysilicon Projector 5500. Hence the value reported by US customs for model 5500 D could not be adopted forth model 5500 actually imported.

v) S.No. 7 and No. 4 of Annexure A where for the model at S.No. 7 i.e. DP 5900 D the value shown was US $ 3650 per unit, imported on 19 September 1998, whereas for the same Model at S.No. 4 imported on 13th October 1998 value shown is US $ 4500 per unit. This showed an upward trend of 23.28% within a period of less than a month. This was contrary to the price trend in respect of IT products which went down with passage of time.

vi) The US Customs had reported that M/s Performa was started in 1998 which was patently wrong as the Annexure A and Annexure B of the Indian Customs which proposed to levy differential Customs duty gave instances of supplies made by the M/s Performa are from May 1997.

"As for the alleged defects in the US Customs report, in some cases the model numbers are not accurately shown in that the suffixes such as A,B,C and D with the model numbers are missing. On going through the report, I find that this does not make any material difference since the information supplied is according to each line of the spreadsheet supplied by Indian Customs and this spread sheet contains the actual import particulars. The data supplied in the report are therefore clearly relatable to the actual imports by the importer. Further, the show cause notice does not demand duty in respect of imports where data are not available. It has also been contended by the importer that two cases, namely Sr. nos 5 of Annexure A and 1 of Annexure B, the duty has been incorrectly demanded. According to the importer, the import was directly from proxima. Norway in the former case and from Proxima, US in the latter Hence the question supply from Performa did not arise I find from the US Customs report that they have clearly stated that Proxima never prepared the export invoices or the shippers export declarations, which would have been prepared either by the freight forwarder or Performa. They have also reported the price charged to Performa I am therefore unable to accept the importers contention" are not upheld.2.8 The conduct of their proceedings in gross violation of principle of natural justice, relying on prompted unreliable reports, relying upon coersedly obtained statements since retracted without any corroboration & on merits no cause to call for charge of undervaluation would lead us to strike down the demands of duty arrived at along with penalty under Rule 114A of Customs Act 1962. No interest could be therefore also be determined.

2.9 When no undervaluation is to be upheld, the charge of 111 (a) & 111 (m) arrived by taking up the enhanced values for basic purpose cannot be upheld. There is no cause for penalty under Section 112 of Customs Act 1962.

2.10 when duty demands, penalties & confiscation are not being upheld, the order is to be struck down.

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