Page 177 - ELT_15th June 2020_VOL 372_Part 6th

2020 ] S. MUTHUSAMY v. ADDL. DIRECTOR GENERAL (ADJ.), D.R.I., MUMBAI 855

for defence or counter ensure that the noticees are afforded opportunity to de-
fend or counter for that which has not found a place in the show cause notice.
Suffice it to say, that the doubts of the adjudicating authority about the existence
of the source of the imports, based on his foray into investigation, which led to
firming of the conclusion that the imports were a ‘sham’ for siphoning money
outside was not on record at any time before the adjudication order was issued.
7. Continuing in this vein, the adjudicating authority has concluded
that the drawings for ‘jack-up rigs’ imported in 41 consignments with a value of
` 2,02,84,76,993 could not have been put to use at the Dahej facility as the work in
progress on such vessels were at an advanced stage and in accordance with de-
sign supplied by a reputed Houston-headquartered enterprise.
8. According to the impugned order, ‘drawings’ for vessels were im-
ported against 14 bills of entry, declaring the value as ` 186,59,37,365, even
though eight vessels were already under construction in accord with the designs
imported from various other entities and at stages of development that obviated
the need for more ‘drawings.’ Likewise, eleven imports of ‘drawings’ for ‘ship lift
& transfer systems’ with the declared value of ` 137,69,75,389, including four
consignments invoiced at ` 67,28,73,615, as yet pending clearance at Nhava She-
va were also held to be of no use to the importer. The ten consignments, pertain-
ing to ‘panel production line’, invoiced at ` 55,04,50,000, yet to be claimed for
clearance against bills of entry were also similarly found to be related to work
that was either being undertaken or had been completed by resort to expertise
provided by other entities. On these bases, it was concluded by the adjudicating
authority that the imports of ` 582.18 crores -
‘1.15.4.... had no commercial or functional utility for ABG. The import of
these drawings was a sham-a mere cover for enabling to fraudulently ob-
tain Letters of Credit from their banks and thereby fraudulently remit forex
overseas in the guise of such imports.’
9. It would thus appear that the conclusion of ‘nil’ commercial value
was not a reflection of the utility of the ‘drawings’ themselves to a builder of
ships but of superfluity in the present operations of the importer. This undenia-
bly philosophical approach to valuation, however, has no place in Section 14 of
Customs Act, 1962 which specifies the parameters for acceptance of a declared
price and the rigorous mechanics for determination of a substitute value by the
assessing officer should such need arise and which, manifestly, is a reflection of
commercial approach to valuation that has nought to do with the uses to which
an importer may put the imported goods to.
10. It was further determined by the adjudicating authority that the
imported goods had been prepared at the Dahej facility of the importer by mak-
ing minor alterations in the drawings originally procured from genuine sources
and already in their possession. The evidence for this appears to be the retention
of certain marks of the original while making the alterations and the record of
alterations within the system was found to be attributable to certain individuals
deployed at the Dahej facility.
11. It would also appear that the adjudicating authority frowns with
disfavour on the internal mechanism by which approval was accorded to the
purported procurement of the impugned goods for not being appropriately elab-
orate for such huge investments. It would also appear that the placing of the pur-
chase orders was, in the absence of the persons who were concerned with it or
EXCISE LAW TIMES  15th June 2020  177