ORFICE OF THE COMMISSIONER OF CUSTOMS GMPORT) Niew CUSTOM HOUSE, BALLARD ESTATE, MUMBAT— 400 001. F.No.SG/INE-0UAK-V05/SHBQ) Date of order : 28.09.2007. ‘§/10-10/AK-1/2006 SUB() '$/10-27/07 VA Passed by :_ SANGHAMITRA PANDA Date of Issue: 2 s/ref2e9 COMMISSIONER OF CUSTOMS (1) C.A.0. NO. 1 {3 2007/CACICCHISPIGE VA ORDER-IN-ORIGINAL 1. This copy is granted free of charge for the use of the person to whom itis issued. ‘An appeal against this order lies to the Regional Bench, Customs, xcise and Service Tax Appeilate Tribunal, Jai Centve, 4th & 5th Floor, 34 P. D'Mello Road, Poona Street Masjid Bunder (East), Mumbai 400 009. ‘The appeal is required to be filed as provided in Rule 6 of the Custors (fappeals) Rules, 1982 in form C.A.3 appended to said rules. The appeal should be in quadruplicate and needs to be filed within 90 days and shall be accompanied by - () Four copies of the order appealed against (at least one of which should be Pi P e certified copy) draft drawn in favour ef the Asstt, Re (i) A crossed b: the Tribun svar of the Bench of | on a branch of any nationalized bank located at a place where the bench is situated for Rs. 200/- or Rs. 1000/- as applicable under Sub Section (6) of the Section 129 (A) of the Customs Act, 1962, 4 The appeal shail be presented in person to the Asstt. Registrar of the Pench oF an Officer authorized in this behalf by him or sent by registered post addressed to the Asstt. Registrar or such Officer Any person desirous of appealing against this decision or order shall pending the appeal deposit the duty demanded or the penalty levied sherein and produce proot et such payment along with the appeal failing whic the apps ion 11s of thy Castoms Act. 1962 liable to be rejected forSub : Import of Hydraulic Pumps by M/s. Shashi Dhawai Hydraulic Pvt. Ltd. Information was received that M/s Shashi Dhawal Hydraulics Pvt. Ltd., having their office at 45, Vikas Centre, $. V. Road, Near Santacruz Bus Depot, Santacruz (W), Mumbai-400 054, and having IEC No.0390007498, (hereinafter referred to as M/s Shashi Dhawal or Importer) who are the authorized dealers for hydraulic pumps in India for many European countries, are importing the hydraulic pumps at highly under-invoiced price by showing just 30-35% of the actual price to Customs. In the month of December 2002, they cleared a shipment of David Brown brand Hydraulic Pump No. P2APJ 190906 A-192 at Mumbai port imported from UK. The supplier was M/s $ & H Universal, UK 13, Hightown Liversedge, West Yorkshire, WE 15 JL,Yorkshire, UK. The price declared to Customs was around £ 100 per pe, whereas the actual price was £ 255 per pe; thereby M/s Shashi Dhawal were evading Customs Duty. On the basis of this information investigations was launched by Special Investigation and Intelligence Branch (Imports), New Custom House, Ballard Estate, Mumbai, (hereinafter referred to as SIIB (1)). 2. It was verified that a sister concem of importer, M/s Shashi Charu Hydraulics Pvt. Ltd., New Delhi had imported a consignment of 100 pes of Hydraulic Pump No. P2APJ 190906 A-192 from M/s David Brown Hydraulics Ltd. U.K, the manufacturer of the subject pump. at unit price of £ 210/pe vide Bill of Entry No. 870925 dated 05.08.2003 from Jawahar Customs. Nhava Sheva against Invoice No. Invoice No.147536 dated 11.06.2003. 3. Inquiries were made with Shri Nagendra Saxena, Director, M/s David Brown (India) Lid, [now known as Hames Engineering Pvt, Ltd.], Mumbai, authorised distributor in India for M/s David Rrown Hydraulics, UK. In response a letter dated 25.08.2005 was received from Mr. Gary Tully, Sales Manager, M/s David Brown Hydraulies, UK, the manufacturer of subject pump. requesting to make direct inquiry with him via e-mail 4 Accontingly Inquiries were made with M/s David Brown Hydraulies Lid, U.K, via e- mail letter F. No. SG/INF-O1/AK-1/2005 SIB(1) dated 31.08.2005 in regard to the price of hydraulic Pumps No. P24PJ1909064192. He was also provided with the copy’ 0ae No.147556 dated 11.06.2003 in order to verify the genuineness of the same. Mr. Gary Tuffy, Sales Manager, Europe, M/s David Brown Hydraulics Ltd. vide letter dated 05.09.2005, received via e-mail, expressed his inability to give the price for the years 2001 through 2005 saying that different customers attract different prices depending upon the ‘volume purchased and the nature of the business relationship. He was again requested vide letter F.No.SG/INF- O1/AK-1/2005SIIB() dated 05.09.2005 to at least give the minimum and maximum price at Which the subject pumps was sold to the Indian clients during the period 2001-2005 and the price at which the subject pump was sold in the International Market during 2001-2005. Shri Gary Tuffy, vide e-mail dated 05.09.2005 confirmed that the pump was sold by them to consumer at minimum price of £ 188 and maximum £ 252 and the most common price was the one of the invoice provided by this office to them ie. £ 210/pe. Subsequent to his e-mail he also sent the letter on the letter-head of M/s David Brown, confirming the same. This was the price given in Invoice No. 147556 dated 11.06.2003 against which import was made by M/s, Shashi Charu Hydraulics Ltd., New Delhi vide Bill of Entry No. 870925 dated 05.08.2003 from Jawahar Custom House, Sheva. 5. In view of the above invoice of the manufacturer for the hydraulic Pumps No P2API190906A 192 for £ 210/pe, confirmation of the unit price of £ 210/pe for the years 2001-2005 by Shri Gary Tufly, Sales Manager, Europe, M/s David Brown Hydraulics Ltd., invoices of the supplier of M/s Shashi Dhawal appeared to be manipulated, on the behest of Mis Shashi Dhawwal itself, since it is hard to believe that when the manufacturer itself is acer selling the same goods at £ 210/pe to M/s Shashi Charu Hydraulic Pvt. Ltd. the siste of Mis Shashi Dhawal, how a UK based trader can sell the same at £ 90/Pe to M/s Shashi Dhawal, 6. In response to summons dated 17.04.2006 Shri Shashank Patel submitted vide letter dated 24.04.206 the details of the imports of the subject hydraulic pumps in the name of M/s Shashi Dkawal Hydraulies Pvt. Lid which revealed that 490 pes of this hydraulic pump were imported trom M/s $ & H Universal, a trader, based in UK at a stagnant unit price of £ 90/Pe from October 2001 through April 2003. Surprisingly from July 2003 onward the imports ectlh from Ms David Brown Hydraulics Ltd. UK, the manufacturer, at a much higher price of £ 21 0¢pe up to May 2004 and thereafter at £ 252/pe. This clearly “eananctraiesthat the imports from M/s $ & 11 Universal, a trader, were heavily underinvoiced. This becomes more evidei in light of the confirmations of the unit price of this product by Mr. Gary Tuffy, Sales Manager, M/s David Brown Hydraulics, UK, the manufacturer of the product for the period 2001 through 2005. 7. Statement of Shri Shashank Patel, Director, M/s. Shashi Dhawal Hydraulics Pvt. Ltd. was recorded under section 108 of Customs Act, 1962 on 23.05.2006 wherein he interalia stated that he was one of the Director of M/s Shashi Dhar Spare Pvt. Ltd., M/s Shashi Charu Hydraulics Pvt. Ltd. and M/s. Shashi Dhawal Hydraulics Pvt. Ltd.; that other Director in M/s Shashi Dhawal Hydraulics Pvt Lid was Shri Ketan Haribhai Patel; that they have got the IEC Shashi Dhawal issued in the name of M/s Shashi Charu Hydraulics Pvt, Lid. and M Hydraulics Pvt. Ltd and effected the imports in the name of both the firms; that he had already submitted the details of the import of the hydraulic pump in the name of M/s Shashi Dhawal vide letter dated 24.04.2006; that from 2001 to 2003 this pump was imported from Mis S & H Universal, UK, an authorised distributor of M/s David Brown for Indian Tenitory, at the price of £.90/Pc; that total 490 pes of This pump were imported during that period at that price; that thereafter he imported directly from the Manufacturer M/s David Brown Hydraulics Ltd UK at unit price of € 210/pe and £ 252/pe and these details had also been submitted by him vide letter dated 24.04.2006; that during 2000 & 2001 they approached M/s David Brown Hydraulic Lid to be their authorised distributor for India for subject hydraulic pump, they in turn informed that they already have distributor for India territory based in London named Mis S & H Universal: that he asked M/s David Brown to give them distributorship but they told them to approach M/s S & H only; that on contacting M/s $ & H they got the competitive quotations as they were not having big business in India that time; that £ 90 was finalized without warranty & packing; that M/s S & H, being a authorised distributor, were enjoying distributor discount and refund of VAT; that this was what they were told by M/s S & H; that sine M/s § & H committed to M/s David Brown big quantity they had to tur around this big quantity and sell them; that he was purchasing this pump since year 2001 and alter buying few pumps M/s David Brown got confidence in his company and so M/s David Brown issued to them a sub-distributorship letter; that for all the above business they did with MoS & H. they were making advance payments to M/s S & Hand thereafter M/s $ & H svere » plying