PN 34/2025 IN FORCE Import policy & restrictions ·?

Order-in-Original No. 115/2025-26/CAC/CC/(IMPORT-I)/PKT/ADJ-IMP-I dated 26.12.2025 issued to M/s. K.K. Enterprises & ors. w.r.t SCN issued vide F.No.VIII/26/38/2008-HRU dated 05.06.2009.

Reliability

In force — no superseding record on file.

Document text

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MINISTRY OF FINANCE/ DEPARTMENT OF REVENUE CENTRAL BOARD OF INDIRECT TAXES & CUSTOMS, INDIAN CUSTOMS - MUMBAI ZONE - I OFFICE OF THE COMMISSIONER OF CUSTOMS (IMPORT-1) 2™1 FLOOR, NEW CUSTOM HOUSE, SHOORJI VALLABHDAS ROAD, BALLARD ESTATE, MUMBAI — 400001.

Tel. No. 22757401 Fax No. 22757402

e-mail: adjn-commr-impInchi@agov.in

F.No. GEN/ADJ/COMM/737 /2025-ADJN-O/O COMMR-CUS-IMP-I -ZONE-I-MUMBAI Passed by: PRADYUMN KUMAR TRIPATHI COMMISSIONER OF CUSTOMS (IMPORT-I) Date of Order: 12.12.2025 C.A.0. No: 115/2025-26/CAC/CC(IMPORT-1)/PKT/ADJ(IMP-I)Dateof Issue:MS 12.2025 DIN No. 20251277000000444C6B

ORDER-IN-ORIGINAL

This copy is granted free of charge for the use of the person to whom it is issued.

oe An appeal against this order lies to the Regional Bench, Customs, Excise and Service Tax Appellate Tribunal, Jai Centre, 4th & 5th Floor, 34 P. D'Mello Road,.Poona Street Masjid Bunder (East), Mumbai 400 009. a: The appeal is required to be filed as provided in Rule 6 of the Customs (Appeals) 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 certified copy). A crossed bank draft drawn in favour of the Asstt. Registrar of the Bench of the Tribunal on a branch of any nationalized bank located at a place where the bench is situated for Rs. 1,000/-, Rs. 5,000/- or Rs. 10,000/- as applicable under Sub Section (6) of the Section 129A of the Customs Act, 1962.

The appeal shall be presented in person to the Asstt. Registrar of the bench or 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 seven and a half per cent of the duty demanded or the penalty levied therein and produce proof of such payment along with the appeal failing which the appeal is liable to be rejected for noncompliance with the provisions of Section 129E of the Customs Act, 1962.

F.No. GEN/ADJ/COMM/737/2025-ADJN-O/O COMMR-CUS-IMP-I -ZONE-I-MUMBAI

iling which the appeal is liable to be rejected for noncompliance with the provisions of Section 129E of the Customs Act, 1962.

F.No. GEN/ADJ/COMM/737/2025-ADJN-O/O COMMR-CUS-IMP-I -ZONE-I-MUMBAI

Sub: Adjudication of Show Cause Notice dated 05.06.2009 issued to M/s K.K. Enterprises, Secunderabad, M/s Mamta Exim Services, M/s C.G. International, Mumbai and others for under-valuation of Used Excavators/ parts imported through Nhava Sheva Port - Reg.

BRIEF FACTS OF THE CASE

M/s K.K. Enterprises, (holders of IEC No. 2695000588) (herein after referred to as ‘M/s KKE’) represented by its proprietor, Shri Rama Swamy Kolluri having their registered office at Plot No. 29, Ground Floor, BHEL Enclave, Akbar Road, Bowenpally, Secunderabad-9, had been importing used excavators and various other spares required for earth moving equipments from various countries like China/ Malaysia/Japan/ Korea etc.

Specific Intelligence gathered by the officers of DRI, Chennai Zonal Unit, Chennai, indicated that M/s KKE were involved in under-declaring the value of used excavators/ their spares imported from various countries through Nhava Sheva, Mumbai/ ICD/CFS, Sanath Nagar, Hyderabad/ Custom House, Mumbai/ Air Cargo Complex, Mumbai etc., and that they are importing these in their own name and also through other firms, viz., M/s Mamta Exim Services (holders of IEC No. 0308006763) (herein after referred to as ‘M/s MES’) and M/s C.G. International (holders of IEC No. 0308047753) (herein after referred to as ‘M/s CGI’), who are just lenders of name/IEC.
In pursuance of the above intelligence, the officers of DRI, Chennai Zonal Unit/Mumbal Zonal Unit/ Regional Unit, Hyderabad, conducted simultaneous searches at the following places on 10.12.2008 and recovered certain incriminating records/files/documents, computers, laptop, mobile phones relating to import of used excavators, spare parts etc., by M/s KKE, M/s MES, M/s CGI under different respective Panchanamas (as per Annexure - A.1 to A.7 of the Show Cause Notice):

, mobile phones relating to import of used excavators, spare parts etc., by M/s KKE, M/s MES, M/s CGI under different respective Panchanamas (as per Annexure - A.1 to A.7 of the Show Cause Notice):

(i) Business premises of M/s KKE situated at Plot No. 29, Ground Floor, BHEL Enclave, Akbar Road, Bowenpally, Secunderabad-9.

(ii) Workshop-cum- Service Centre of M/s KKE situated at D.No. 4-4, Survey No. 203 & 204-B, D. Pochampally, Medak Road, Qutbullahpur Mandal, Ranga Reddy District.

(iii) | Residential premises of Shri Rama Swamy Kolluri situated at Plot No. 29, First Floor, KK House, BHEL Enclave, Akbar Road, Bowenpally, Secunderabad-9.

(iv) Residential premises of Shri Kamla Kumar Sharma, Services Head and in-charge of Workshop of M/s KKE, situated at Flat No. 101, SB Avenue, Road No. 3, Mallikharjuna Colony, Old Bowenpally, Secunderabad-11.

(v) Office premises of M/s Mamta Exim Services at Room No. 46, 94, Fancy Chamber, 4th Floor, Surat Street, Masjid Bunder (E), Mumbai-400 009;

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(vi) Office premises of M/s C.G. International at Room No. 45, 94, Fancy Chamber, 4th Floor, Surat Street, Masjid Bunder (E), Mumbai-400 009;

(vii) Residential premises of Shri Girish Shrikant Hindelkar, at Flat No. 304, 3rd Floor, Mohan Residency, Opp. Subway, Panvel Pada Road, Virar (E), Thane.

eet, Masjid Bunder (E), Mumbai-400 009;

(vii) Residential premises of Shri Girish Shrikant Hindelkar, at Flat No. 304, 3rd Floor, Mohan Residency, Opp. Subway, Panvel Pada Road, Virar (E), Thane.

3.1. The search of workshop cum Service Centre of M/s KKE revealed that a total of 27 used excavators/graders imported totally valued about 4.14 Crores (approx. market value) and other imported spare parts/ equipment including Rock Breakers etc. totally valued Rs. 4.14 Crores (approx. market value) were stacked in the said premises. The officers seized the said available imported equipment/ goods totally valued Rs. 8.28 Crores (approx. market value), on the reasonable belief that they are items inter alia grossly undervalued at the time of import and also recovered certain records/registers.

3.2 Along with the records/documents, the officers also recovered in total Five laptops, Two Hard Disc Drives and Four Mobile Hand sets from the above said premises under the above mentioned panchanamas on the reasonable belief that they would contain the crucial evidences in connection with under-valuation resorted to by the said firms. The officers also obtained the relevant Bills of Entry filles from the office of the Assistant Commissioner of Customs, ICD, Sanath Nagar, Hyderabad in respect of imports made by M/s KKE (as per Annexure-A.8 of the Show Cause Notice). The above mentioned hard disc drives, Laptops/ Mobile sets recovered were sent for analysis to the Government Examiner for Questioned Documents, Hyderabad (GEQD) and they vide letter Ref.

se Notice). The above mentioned hard disc drives, Laptops/ Mobile sets recovered were sent for analysis to the Government Examiner for Questioned Documents, Hyderabad (GEQD) and they vide letter Ref. No.CCH-382-387/2008/1054 dated 02.04.2009 forwarded the forensic analysis report (as per Annexure-A.9 of the Show Cause Notice).

Preliminary scrutiny of the recovered documents have revealed that the said firms had resorted to gross under-valuation of the used excavators and its parts imported by them from various suppliers. Shri Rama Swamy Kolluri and Smt. K. Lakshmi Padmavathi, his wife are the main persons who looked after all the activities relating to undervaluation. Crucial documents evidencing the undervaluation of the used excavators were available in made up files recovered from the business premises of M/s KKE.
Scrutiny of the relevant filles recovered/obtained revealed the following:

A. DOCUMENTS RECOVERED FROM THE BUSINESS PREMISES OF M/S KKE. SECUNDERABAD, MWS MAMTA EXIM SERVICES, M/S C.G. INTERNATIONAL MUMBAI UNDER THREE DIFFERENT PANCHANAMAS DATED 10.12.2008: (i) These files contained documents such as Bills of entry, invoices/ Proforma Invoices of overseas suppliers, packing lists, bills of lading, etc., relating to imports made by M/s KKE, M/s MES, M/s CGI in respect of Import of Used excavators, spares for excavators etc. from various overseas suppliers such as M/s Finbond Heavy

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ting to imports made by M/s KKE, M/s MES, M/s CGI in respect of Import of Used excavators, spares for excavators etc. from various overseas suppliers such as M/s Finbond Heavy

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Machinery, Malaysia, M/s Hiap Hin Machinery Pte Limited, Singapore, M/s Kranji Auto & Machinery, Singapore, M/s Metromach Equipment Trading, Malaysia, M/s Newtown Engineering Pte Ltd., Singapore, M/s IB Equipment Sdn Bhd., Malaysia, M/s Tunghan Machinery, Malaysia, M/s Mont-ed Industries, Malaysia, M/s C & C Tractor Parts Trading, Malaysia, M/s Mta Technology, South Korea. Ex;1.B.E No. 750370 dated 17.03.2008 was filed by M/s KKE in JNPT, Nhava Sheva, Mumbai for Import of Used Hitachi Excavator Machine Model No. Ex200-2 Serial No. 147-71675. The suppliers of M/s Finbond Heavy Machinery Sdn Bhd, Kualalampur, Malaysia and the value of the excavator was indicated as US$ 13000 CIF vide Invoice No. 08/2134 dated 23.02.2008. As per the Bill of Entry, the Assessable value of the imported consignment was Rs. 7,40,012/- and Customs duties were assessed as Rs. 2,11,934 (BCD: 7.5%, CVD: 14%, Ed. Cesses @ 3%, Addl. Duty (Imports): 4%). (as per Annexure-A.10 of the Show Cause Notice). Ex;2 B.E. No. 861427 dated 06.06.2008 was filed by M/s MES in JNPT, Nhava Sheva, Mumbai for import of two used machinery, viz., Komatsu Motor Grader Machine Model No. GD 405A-50320 and Hitachi Hydraulic excavator machine Model no. Ex60-3 44642. The suppliers of M/s Finbond Heavy Machinery SDN BHD, Kualalampur, Malaysia and the value of the excavators were indicated as US $ 13082 and US $ 7500.

aulic excavator machine Model no. Ex60-3 44642. The suppliers of M/s Finbond Heavy Machinery SDN BHD, Kualalampur, Malaysia and the value of the excavators were indicated as US $ 13082 and US $ 7500. As per the Bill of Entry, the Assessable value of the imported consignment was Rs. 8,95,965/- and Customs duties were assessed as Rs. 2,56,594/- (as per Annexure-A.11 of the Show Cause Notice). Ex;3 B.E. No. 671981 dated 06.11.2008 was filed by M/s CGI In JNPT, Nnava Sheva, Mumbai for import of two used Ex100-2 121 31828 and Ex60-3 105 44209 and declared the values of the said machinery as US $ 10500 and US $ 9000 respectively and paid a total duty of Rs. 2,84,281/- (as per Annexure-A.12 of the Show Cause Notice). Ex;4 B.E. No. 850404 dated 29.05.2008 was filed by M/s MES In JNPT, Nhava Sheva, Mumbai for Import of spare parts of hydraulic excavators and declared the values of the imported consignment as Singapore Dollars 36472.4 respectively covered under Invoice No. 1159166 dated 13.05.2008 and the value of the consignment was assessed as Rs. 12,68,118/- and paid a total duty of Rs. 3,63,179/- (as per Annexure-A.13 of the Show Cause Notice). The suppliers of the above spares are M/s Kian Ann Engineering Limited, Singapore. Ex;5 B.E. No. 666903 dated 03.11.2008 was filed by M/s MES in JNPT, Nhava Sheva, Mumbai for import of spare parts of hydraulic excavators and declared the values of the imported consignment as US $ 60818 respectively covered under Invoice No. I|V081014 dated 14.10.2008 and the value of the consignment was assessed as Rs.

lic excavators and declared the values of the imported consignment as US $ 60818 respectively covered under Invoice No. I|V081014 dated 14.10.2008 and the value of the consignment was assessed as Rs. 30,95,879/- and paid a total duty of Rs. 8,86,235/- (as per Annexure-A.14 of the Show Cause Notice). The suppliers of the above spares are M/s Sungbo Industrial Co. Limited, Korea. Ex;6 B.E. No. 681755 dated 14.11.2008 was filed by M/s MES in JNPT, Nhava Sheva, Mumbai for import of spare parts of hydraulic excavators and declared the values of the imported consignment as US §$ 22313 respectively covered under Invoice No. 25808 dated 29.10.2008 and the value of the consignment was assessed as Rs. 11,35,821/- and

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paid a total duty of Rs. 3,25,390/- (Annexure-A.15). The suppliers of the above spares are M/s Gah Hup Seng Sdn Bhd, Malaysia.

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paid a total duty of Rs. 3,25,390/- (Annexure-A.15). The suppliers of the above spares are M/s Gah Hup Seng Sdn Bhd, Malaysia.

(i) MADE UP FILE NO. 42 RECOVERED FROM THE BUSINESS PREMISES OF MWS KKE ON 10.12.2008: This file contained the documents such as invoices/Proforma Invoices of overseas suppliers, packing lists, extracts of meetings held with foreign suppliers, some worksheets showing model nos. of excavators, their prices etc. Ex;1 Documents at SI. No. 7 to 9 in the said file indicated that M/s KKE participated in a meeting held with M/s Mta Technology between 19.06.2008 and 21.06.2008. As per the contents, Shri David Kim of Mta Technology, S/Shri Rama Swamy, Rao and Sharma attended the meeting. Against the subject "Payment" at S. No. 2, it was mentioned that KK will arrange T/T for pending shipment within end of next week (by June, 26, 2008). With regard to payment for further P.O., it was indicated that KK will pay 30% before shipping and the rest amount may delay to pay within 30 days after shipping as it is paid by Singapore. In the said sentence, ‘as it is paid by Singapore’ was cut and however it was appearing (as per Annexure-A.16 of the Show Cause Notice). Ex:2 Documents at SI. No. 11 to 18 in the said file contained certain information in excel format containing the particulars like Equipment model & S. No., supplier name, buying Invoice, customs invoice, difference in cash, Invoice currency. It was indicated that the details pertain to years, 2006-07 and 200708 of "Kolluri.

ike Equipment model & S. No., supplier name, buying Invoice, customs invoice, difference in cash, Invoice currency. It was indicated that the details pertain to years, 2006-07 and 200708 of "Kolluri. Against supplier name, M/s Finbond Heavy machinery, New town Engineering Pte Limited etc. were indicated. The invoice currencies shown are USD and SGD. The amounts shown in column ‘buying invoice’ is more than "customs invoice’ and the difference between the figures indicated against buying invoice and customs invoice were indicated in the column difference in cash. (as per AnnexureA.17 of the Show Cause Notice).

(iii) REGISTER TITLED MC. BY CONSUMPTION REGISTER FROM 23.08.2007 RECOVERED FROM THE WORKSHOP OF WS KKE, D POCHAMPALLY ON 10.12.2008: This register contain certain details of excavators. List of excavators was indicated in pages 1 to 4. In respect of each excavator S. No., Model No., Sr. No, Date, Page No. Customer name, Dispatch date etc. were indicated. For example, against S. No. 147, It was indicated that Ex200-2-147-71675 machine was shown as received in the workshop of D. Pochampally on 24.03.2008 (as per Annexure-A.18 of the Show Cause Notice). The details of spares used for the said excavator were shown in page No. 281 to 284. Against some of the machines names of buyers and their mobile/contact numbers were written and however, in respect of this machine no such Information was inscribed.

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B. DOCUMENTS CONTAINED IN THE GEQD, HYDERABAD'S REPORT DATED

02.04.2009:

Scrutiny of the GEQD report revealed that there are extracts of correspondence between M/s KKE and their overseas suppliers in the form of Statement of Accounts, e-mail correspondence, copies of invoices, some statements/worksheets showing the expenses, sale of excavators customer wise etc. The documents retrieved from the computer hard discs/laptops/ mobile phones which were in use by the concerned persons during the material period. The documents pertaining to import of used excavators/ spares supplier wise are discussed hereunder:

(i) DOCUMENTS RELATING TO TRANSACTIONS WITH SUPPLIERS OF EXCAVATORS, VIZ, M/S FINBOND HEAVY MACHINERY: The correspondence between M/s KKE and M/s Finbond Heavy Machinery Sdn Bhd indicate that persons like Mr. Rama Swamy/ Rao corresponded with persons like Mr. Loh, Christine etc. Through e-mail correspondence, M/s KKE received the actual prices, photographs of excavators, their serial nos., proforma invoices, confirmation of acceptance of prices, final prices, confirmation of shipment of machinery etc.; Ex;1:- Page No. 248 is a copy of e-mail dated 19.12.2007 received by M/s KKE from Mr. L Y Loh addressed to Mr. Rama Swamy and it was mentioned that they would supply Ex-100-2 121 31828 at a price of 23,800 CIF Nhava Sheva (as per Annexure-A.19 of the Show Cause Notice); Ex;2:- Page No. 375 and 853 are two different Invoices containing two different values of same machine which were raised by M/s Finbond on M/s KKE.

va (as per Annexure-A.19 of the Show Cause Notice); Ex;2:- Page No. 375 and 853 are two different Invoices containing two different values of same machine which were raised by M/s Finbond on M/s KKE. One invoice for machine Ex200-2 147-71675 showing the value of US $ 13,000 and another Invoice for the same machine viz. Ex200-2 147-71675 and the value shown here was US $ 37950 (as per Annexure-A.20 of the Show Cause Notice).; Ex;3:- Page No. 521 is a copy of e-mail dated 16.05.2008 received by M/s KKE from Mr. Loh of M/s Finbond Industries Sdn Bhd, addressed to Mr. Rama and it was indicated that GD405A-1 50320 was the unit confirmed by Mr. Rama at USD 33,650 CIF Nhava Sheva and informed that they were going to ship the said unit to M/s KKE (as per AnnexureA.21 of the Show Cause Notice); e-mail dated 27.08.2007 received by M/s KKE from Mr. Christine of M/s Finbond Industries addressed to Mr. Rama Swamy of M/s KKE and it was indicated that M/s KKE confirmed the machinery, Ex60-3 44642 and Ex60-3 43934 and two proforma invoices issued by M/s Find Bond Industries were also enclosed and Page No. 826 is the Proforma invoice issued in the name of M/s KKE (Attention Mr. Rama Swamy) pertaining to used excavator Ex60-3 bearing Serial No. 10S-44642 for an amount of US$ 25,250 (as per Annexure-A.22 of the Show Cause Notice). Page Nos. 941-943 relate to ae-mail dated 17.10.2007 having subject as 'Updated statement & shipment list" received by M/s KKE from Shri Christine of M/s Finbond Industries. Along with the said e- mail, updated statement and shipment list were enclosed. Page No.

ject as 'Updated statement & shipment list" received by M/s KKE from Shri Christine of M/s Finbond Industries. Along with the said e- mail, updated statement and shipment list were enclosed. Page No. 942 (as per Page 5 of 83 \

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Annexure-A.23 of the Show Cause Notice) is the shipment list containing the information of about 50 machines, viz., destination, model no., serial number, selling price, term, vessel, ETD, ETA, from-To, specifications etc. In the said list S. No. 32 relate to Ex60-3 10S-44642 and its selling price was indicated as USD 25,250. This figure was tallying with the amount indicated in the Proforma Invoice vide Page No. 826 indicated above.

(ii) DOCUMENTS RELATING TO SPARE PARTS FOR EXCAVATORS IMPORTED:

The GEQD report also contain e-mails correspondence like proforma invoices, statements of accounts etc., copies of commercial invoices, proforma invoices, freight related correspondence etc. Ex;1:- Page No. 733 and 734 (as per Annexure-A.24 of the Show Cause Notice) pertain to e-mail between M/s KKE and M/s Kian Ann Engg Limited. In the mail, Smt. Padma asked the persons of M/s Kian Ann to collect cheque from Shri Christopher for S$ 38206 being the differential amounts pertaining to Order Nos. 1095106 & 1098271. Ex;2:- Page No. 173 and 174 (as per Annexure-A.25 of the Show Cause Notice) are two different invoices having the same No. IV-081014 dated 14.10.2008 issued by M/s Sungbo Industrial Co. Limited, in respect of the spares of excavators consigned to M/s MES and the values contained in each invoice was US $ 60818 & 121587. Ex;3:- Page Nos. 194-197 (as per Annexure-A.26 of the Show Cause Notice) pertain to e-mail dated 14.08.2007 received by M/s KKE from Mr. Kishore of M/s V Bird Universal Sdn Bhd and forwarded statement showing freight amounts payable in respect of various containers booked by various suppliers like M/s Gah Hup Seng Sdn Bhd, IB Equipment, M/s Hiap Hin Machinery etc. As seen from the above, M/s V Bird Universal Sdn Bhd had been requesting M/s KKE to pay an amount of 2514.4 RM (Ringgit Malaysia) for container bearing No. BHCU 3087184. It also contains the amounts payable towards freight in respect of various other consignments shipped by other suppliers. Ex;4:- Page Nos.

M (Ringgit Malaysia) for container bearing No. BHCU 3087184. It also contains the amounts payable towards freight in respect of various other consignments shipped by other suppliers. Ex;4:- Page Nos. 816-820 (as per Annexure-A.27 of the Show Cause Notice) is statement of accounts received by M/s KKE through mail from M/s Finbond Heavy Machinery Sdn Bhd, Malaysia. The details contained therein relate to the amounts received by M/s Finbond through TT from Singapore, Murali A/c etc. in RM and it was converted into US $. For example, the conversion rates from RM to US $ were indicated as 3.44, 3.45, 3.47 etc. were applied and the account was maintained in US $. The amounts received were shown as debit and the amounts payable by them were shown as credit. The credit amounts were shown in respect of various shipments made by them.

The contents of all other documents such as Invoices, packing lists, Bills of lading, Bills of entry, etc., are similar to those discussed / narrated above and specific discussion regarding the contents of the said documents contained in the respective files is done for illustrative purpose. The documentary evidences detailed above are in reflection of the

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contents of import documents pertaining to M/s KKE, M/S MES, M/s CGI. The records/files/ registers recovered from various places were relied upon even though few instances were described above for illustrative purpose.

From the above it appeared that: (a) M/s KKE, M/s MES, M/s CGI had imported used excavators/ spares required for the same from various suppliers of China/ Japan/Korea/ Malaysia/ Singapore during the period from October, 2005 to December, 2008 through Mumbai Sea Port/Nhava Sheva/ ICD, Hyderabad/ ACC, Mumbai/ ACC, Hyderabad etc.;

(b) M/s KKE corresponded with their overseas suppliers of excavators as well as spare parts for excavators in respect of imports in their name as well as in the name(s) of M/s MES and M/s CGI;

(c) Smt. K. Padmavathi, wife of Shri K. Rama Swamy, Proprietor of M/s KKE received mails and forwarded mails relating to the business of M/s KKE with their overseas suppliers;

(d) The values/ prices indicated in the documents submitted to the Customs as well as in the copies of documents/ invoices/ e-mail correspondence etc. available in the files recovered from M/s KKE/ documents retrieved from the hard discs/Laptops/ Mobile phones which are in use by M/s KKE were not tallying and there by it appeared that the documents submitted to the Customs for the purpose of assessment were not reflecting the actual values;

Mobile phones which are in use by M/s KKE were not tallying and there by it appeared that the documents submitted to the Customs for the purpose of assessment were not reflecting the actual values;

7, In view of the above, the concerned persons of the importers, viz. S/Shri/ Smt. Kolluri Rama Swamy, Proprietor of M/s KKE, K. Padmavathi, wife of ShriK Rama Swamy, A.Viswanadham, Sales Head of M/s KKE, Girish Shrikant Hindelkar, Proprietor of M/s MES, Charudutt Girish Hindelkar, Proprietor of M/s CGI, were summoned under Section 108 of the Customs Act, 1962. During the course of their depositions, they were shown the originals/copies of the Bills of entry, invoices of overseas suppliers, bank statements, e-mails/correspondence recovered from computers by the GEQD, etc., that were available in the records recovered/obtained from M/s KKE and their depositions were recorded.

7.1. Shri Rama Swamy Kolluri, Proprietor of M/s KKE in his voluntary statement (as per Annexure-A.28 of the Show Cause Notice) dated 10.12.2008 had interalia stated that in the year 1994, he started his proprietary firm, i.e. M/s K.K Enterprises at Visakhapatnam for trading of spare parts for excavators at Visakhapatnam; that he shifted his base from Visakhapatnam to Hyderabad in 2004; that the day-to-day affairs of his firm are being looked after by him with the help of his wife Smt. K.

excavators at Visakhapatnam; that he shifted his base from Visakhapatnam to Hyderabad in 2004; that the day-to-day affairs of his firm are being looked after by him with the help of his wife Smt. K. Lakshmi Padmavathy and other managerial executives and supporting staff; that his firm was engaged in the import of used excavators, spare parts for excavators, bulldozers, graders, etc., from M/s Fincond Heavy Machinery, Malaysia, M/s Hiap Hin Machinery Pte Limited, Singapore,” M/s Kranji Auto & Machinery, Singapore, M/s Metromach Equipment Trading, Malaysia.

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F.No. GEN/ADJ/COMM/737/2025-ADJN-O/O COMMR-CUS-IMP-I! -ZONE-I-MUMBAI

M/s Newtown Engineering Pte Ltd., Singapore, M/s IB Equipment Sdn Bhd., Malaysia, M/s Tunghan Machinery, Malaysia, M/s Mont-ed Industries, Malaysia, M/s C &C Tractor Parts Trading, Malaysia, etc., and spare parts / hydraulic components from M/s Mta Technology, South Korea, etc; that they were having service division located at Dommara Pochampalli village, Ranga Reddy District.

alaysia, etc., and spare parts / hydraulic components from M/s Mta Technology, South Korea, etc; that they were having service division located at Dommara Pochampalli village, Ranga Reddy District.

7.1.1 Toa specific query, Shri Rama Swamy stated that he was interacting with Mr. Loh of M/s Finbond Heavy Machinery, Malaysia, Mr. Kent of M/s Hiap Hin Machinery Pte Limited, Singapore, Mr. Toh of M/s Kranji Auto & Machinery, Singapore, Mr. K. K. Kan of M/s Metromach Equipment Trading, Malaysia, Mr. Khoo of M/s Newtown Engineering Pte Ltd., Singapore, Mr. A.K. Wong of M/s IB Equipment Sdn Bhdc., Malaysia, Mr. Lam of M/s Tunghan Machinery, Malaysia, Mr. Chai of M/s Mont-ed Industries, Malaysia and Mr. Kim of M/s MTA Technology, South Korea in respect of his business dealings with said firms; that his wife, Smt. Padmavathi, Shri M.S. Shankar, employee of his firm were also interacting with the overseas suppliers in connection with their business.

7.1.2 To aspecific query, Shri Rama Swamy stated that their overseas suppliers used to forward the photos of used excavators through e-mail along with prices and he used to negotiate the deals, that they were purchasing most of the used excavators from M/s Finbond Heavy Machinery, Malaysia and without waiting for payments, they used to supply the goods in the name(s) of the firm(s) as per his suggestions;

purchasing most of the used excavators from M/s Finbond Heavy Machinery, Malaysia and without waiting for payments, they used to supply the goods in the name(s) of the firm(s) as per his suggestions; as per his instructions to their suppliers, they used to release the invoices for the amounts specified by him for making payments through official banking channels and the balance amount through channels other than normal banking channels; that they had been sending the differential amounts, i.e. difference between the actual invoice amount and the value indicated in the invoices sent through bank, through various persons like, Mr. Sunny, Mr. Murthy and Mr. Anand; that the said persons used to collect the amounts from his office and hand over the same to their overseas suppliers at Japan /Singapore/Malaysia; that thereafter they used to receive confirmation of receipt of the said amounts by him self or his wife through e-mails/SMS from them.

7.1.3 To a specific query, Shri Rama Swamy stated that their overseas suppliers maintain actual account statement in respect of their firm and they used to communicate the said account statements to them periodically through e mail for the purpose of reconciliation of accounts, that all the transactions relating to sending of differential amounts and its related activities were looked after by him and his wife, Smt.

ough e mail for the purpose of reconciliation of accounts, that all the transactions relating to sending of differential amounts and its related activities were looked after by him and his wife, Smt. Padmavathi, that all major decisions relating to purchase of goods from overseas suppliers were being taken by him or his wife, that they had been importing in majority cases through Nhava Sheva and M/s Mamta Clearing & Forwarding Agency represented by Shri Girish Hindelkar are their CHAs at Mumbai; that after clearance of the goods from the Customs, the imported goods used to be transported to their work shop at D. Pochampalli, Hyderabad. After going through the Pancharama dated 10.12.2008 drawn at his residence, Shri Rama Swamy agreed with the contents recorded therein.

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----- Start of picture text ----- 7.1.4 With reference to a specific query, Shri Rama Swamy stated the present market prices (approximate) of each variety of second hand excavators which were as listed below and that the final negotiations will be done either by himself or by his wife. Ecc ag CL eS [See a cc a [i a ae a a a (aa 2 ee ee [a Sc a | eee ey pa [ae] eee os ae(a ----- End of picture text -----

her by himself or by his wife. Ecc ag CL eS [See a cc a [i a ae a a a (aa 2 ee ee [a Sc a | eee ey pa [ae] eee os ae(a ----- End of picture text -----

7.1.5 Shri Rama Swamy further stated that Ex 60-1 refers to oldest model and Ex 60-2, 60-3, 60-5 are further modified models of in EX 60 series and that in other cases of machinery also the oldest model starts from number 1 and ends with maximum number on the right side as suffix. After going through the B.E. No.955637 dated 18.10.2007 filed by M/s KKE at Nhava Sheva Custom House, and Commercial Invoice No.07/3004 dated 25.09.2007 of M/s Finbond Heavy Machinery SDN BHD, Malaysia Shri Rama Swamy Stated that they imported one used Kobelco Hydraulic Excavator, Model- SK-60 having Serial No.LE-15978 and they declared its value as US $ 7,500 (CIF) to the Customs, Nhava Sheva. After going through entry S. No.108 of Page No.15 of Made-Up File no.3 recovered vide SI. No.42 of annexure to Panchanama dated 10.12.2008 drawn at the business premises of M/s KKE, Shri Rama Swamy stated that the said entry refers to the actual buying price of one unit used Kobelco Hydraulic Excavator, Model- SK-60 having Serial No.LE-15978 and the same as US $15,500 (FOB) and that they declared US $ 7,500 (CIF) as its value to the customs vide B.E. No. 955637 dated 18.10.2007; that they had been resorting to under-valuation of used excavators in a similar manner in respect of their other imports also.

IF) as its value to the customs vide B.E. No. 955637 dated 18.10.2007; that they had been resorting to under-valuation of used excavators in a similar manner in respect of their other imports also.

7.1.6 After going through Page Nos.11 to 18 of Made-up File No.3 recovered vide Sl. No.42 of Annexure to Panchanama dated 10.12.2008 from the business premises of M/s KKE, Shri Rama Swamy stated that the said pages contained the details of used excavators imported by their firm during the years, 2006-07 & 2007-08 with model number like EX-60-2, Ex-100-1, Ex-60-3, etc., and the suppliers as M/s Finbond Heavy Machinery, Malaysia, M/s Hiap Hin Machinery Pte Limited, Singapore, M/s Kranji Auto &

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Machinery, Singapore, M/s Metromach Equipment Trading, Malaysia, M/s Newtown Engineering Pte Ltd., Singapore, M/s IB Equipment Sdn Bhdc., Malaysia, M/s Tunghan Machinery, Malaysia, M/s Mont-ed Industries, Malaysia, M/s C & C Tractor Parts Trading, Malaysia, etc; that the invoice currencies indicated were Singapore /American Dollars; that the total under invoiced amount works out to be US $ 26,10,863 and SG $ 2,34,700 for the two financial years 2006-07 & 2007-08 and that the details contained in the said pages relating to buying invoice value (actual transaction value); that they had not been declaring the actual transaction values to the customs and in the Bills of Entry, they declared the same value for different varieties of goods i.e. EX-60-1, EX-60-2, EX-60-3 for a continuous period of around two years.

ransaction values to the customs and in the Bills of Entry, they declared the same value for different varieties of goods i.e. EX-60-1, EX-60-2, EX-60-3 for a continuous period of around two years.

7.1.7 Shri Rama Swamy further stated that while selling the used excavators imported by them to their customers in India, they had been issuing Invoices to the extent of around 60% of actual value of the goods and balance amounts were being collected in the form of cash from them as they were not declaring the actual values to the customs, that M/s MES, Mumbai and M/s CGI, Mumbai were registered as proprietary concerns and Shri Girish Hindelkar and Shri Hindelkar Charu Dat, are the proprietors of the above two firms, respectively and Shri Charu Dat, is son of Shri Girish Hindelkar, who is also running a CHA firm in the name of M/s Mamta Clearing & Forwarding Agency in Mumbai, that all the transactions relating to the above said two firms were made by Shri Girish Hindelkar; that as per his request only, Shri Girish opened the above two firms and in the name(s) of the above two firms he got the used excavators, bulldozers, etc.

o firms were made by Shri Girish Hindelkar; that as per his request only, Shri Girish opened the above two firms and in the name(s) of the above two firms he got the used excavators, bulldozers, etc. imported and he paid a commission of around 2.5% to Shri Girish for utilizing the name(s) of the said firms; that he negotiated the prices of the imported goods with their regular overseas suppliers and instructed them to send the said goods in the name (s) of either of the two firms and after importation of goods by the above two firms, the consignments are being billed in the name of M/s KKE and he transferred the amounts to the said two firms for making payments through banking channels and under-valued amounts were remitted through hawala channels.

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7.1.8 After going through Page Nos.7 to 9 of Made-up File No.3 recovered vide S!. No.42 of Annexure to Panchanama dated 10.12.2008 from the business premises of M/s KKE, Secunderabad, Shri Rama Swamy stated that the said pages relate to minutes of meeting held during the period from 19/6/08 to 21/06/08 with their overseas supplier M/s. MTA Technology, South Korea represented by Mr.

hri Rama Swamy stated that the said pages relate to minutes of meeting held during the period from 19/6/08 to 21/06/08 with their overseas supplier M/s. MTA Technology, South Korea represented by Mr. Kim and the details of discussions held were recorded as "Minutes of Meeting’ and as per the said minutes, the agreed payment terms are 30% prior to dispatch of the goods and the balance 70% amount to be payable within 30 days of the shipment as the same was paid from Singapore and the words indicated therein, viz., "as the same is paid by Singapore’ were cut out as it was desired to have it as an implicit understanding and not to bring it out explicitly on record; thereafter, the goods i.e. hydraulic pump parts were imported from M/s MTA Technology in the name of M/s MES, Mumbai and that the 70% amount mentioned therein was paid by persons

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based at Singapore who were known to him in addition to the value specified in the invoices and that he paid the said amounts to the persons at Singapore.

paid by persons

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based at Singapore who were known to him in addition to the value specified in the invoices and that he paid the said amounts to the persons at Singapore.

7.1.9 In response to a specific query, Shri Rama Swamy stated that he was aware that non-declaration of actual value of the goods with an intention to evade payment of Customs duty at the time of import is an offence under the Customs Act, 1962 and that he resorted to under valuation due to the stiff competition in the market and he admitted his mistake in not declaring the correct transaction values to the Customs and that he was ready to discharge the total customs duties involved in this issue and accordingly, he paid an amount of Rs.35 Lakhs on 10.12.2008 and Rs.15 lakhs on 11.12.2008 towards differential duty and submitted two post dated cheques for Rs. 1.00 Crores (Rupees One Crore only) towards differential duty payable.

7.1.10 Shri Rama Swamy further stated that they had also resorted to under valuation in respect of spare parts of excavators imported by them and transferred the under-valued amounts to their suppliers through channels other than normal banking channels and the extent of under-valuation differs from product to product, from supplier to supplier and that it would be on an average upto 50%, except in the case of rock breakers and that they did not resort to under-valuation in respect of imports from M/s Boohung Heavy Industries, South Korea;

and that it would be on an average upto 50%, except in the case of rock breakers and that they did not resort to under-valuation in respect of imports from M/s Boohung Heavy Industries, South Korea; that he would furnish the statements of accounts of their overseas suppliers indicating the actual price of the imported goods, in a day or two.

7.2 Smt. K. Lakshmi Padmavathy, W/o Shri Rama Swamy Kolluri in her statement dated 10.12.2008 (as per Annexure-A.29 of the Show Cause Notice) had interalia stated that she had been taking care of the day to day finance and banking activities of M/s KKE and also attending to the liaison work with the suppliers by way of correspondence through e-mails, telephonic conversations, issue of purchase orders with respect to spare parts and components for earth moving equipments, making payments etc., and also taking care of branch transactions as per her husband's requirements and she was also drawing salary from M/s KKE.

7.2.1 With reference to specific queries about resorting to under invoicing in respect of various machinery/ spare parts, sending amounts to their foreign suppliers, importing goods in the name(s) of M/s MES and M/s CGI etc., Smt Padmvathi also reiterated the same as deposed by Shri Rama Swamy in his statement dated 10.12.2008 and stated that she had attended to the work of M/s KKE as per the instructions and guidance of her husband.

also reiterated the same as deposed by Shri Rama Swamy in his statement dated 10.12.2008 and stated that she had attended to the work of M/s KKE as per the instructions and guidance of her husband.

7.3 Shri A Viswanadham, Sales Head of M/s KKE in his statement dated 10.12.2008 (as per Annexure-A.30 of the Show Cause Notice) had interalia stated that he joined in M/s KKE as Sales Executive in the year, 2001 and presently he was working as Sales Head of Machinery in M/s KKE and looks after all the activities of their firm which was engaged in the business of import of excavators, graders, rock breakers and spares required for the said machinery, that he joined the search proceedings conducted at their / workshop at D.Pochampally and that he was present in further search proceedings and|. =( Page 11 of 83

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her search proceedings and|. =( Page 11 of 83

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that they would ensure the safe custody of the seized goods totally valued Rs. 8.28 Crores which were seized and deposited with them thereafter; that their proprietor, Shri Kolluri Ramaswamy looks after all the operations of their service centre/workshop; that Shri K. Ramaswamy also imported various consignments of used excavators, parts of excavators, etc., in the names of other firms viz., M/s MES, M/s CGI, Mumbai and the consignments so imported in the name(s) of the other firms and in the name of M/s KKE would initially be transported to their Workshop at D. Pochampally and that they undertook the overhauling of the said used machinery and during the course of repairs, they replace the old parts with new ones basing on the requirement; that after completion of the servicing and making the equipment ready for operation, they used to dispatch the same to their customers; that Shri K. Rama Swamy will negotiate the sale price of the repaired equipment, that while arriving at the market value, the value of various spares being replaced, service charges, our profit margins etc.

ri K. Rama Swamy will negotiate the sale price of the repaired equipment, that while arriving at the market value, the value of various spares being replaced, service charges, our profit margins etc. will be considered in addition to the actual landing cost of the equipment, Customs duties paid, etc.; that the accounts branch of their head office, Bowenpally would be sending the documents in connection with dispatch of machinery from workshop and basing on the same, as sales Head he looked after the dispatch work of various machinery from workshop premises; that he would be functioning from their work shop premises and used to coordinate with Shri K. Rama Swamy with regard to dispatch of various machinery.

7.3.1 With reference to a specific query, Shri Viswanadham stated that he did not attend to any correspondence/ price negotiations relating to imports with their overseas suppliers and after receiving the documents from the accounts branch viz., Bill of Lading, Invoice, packing list etc., he used to coordinate with their CHA with regard to transportation the goods to their workshop; that Bills of Entry and other documents relating to imported machinery transported to workshop will be directly handed over to their accounts branch at Bowenpally; that he was not having any idea about the payments made by their firms to their overseas suppliers; that after repair/ refurbishing of the used machinery while dispatch of the same to their customers, he used to receive the copy of the Bill of Entry along with other documents like the invoice raised on the party, etc.

efurbishing of the used machinery while dispatch of the same to their customers, he used to receive the copy of the Bill of Entry along with other documents like the invoice raised on the party, etc. and other than that he did not have any role in the imports; that however, he was aware that M/s KKE is resorting to under-valuation of goods imported as their firm is resorting to raise the sale bills for imported goods for lesser values and used to collect the balance amounts in cash from the customers; that the amounts so collected in cash without any bill were for making payments to their overseas suppliers through channels other than normal banking channels; that thereby the final prices of goods to be sold in domestic market were fixed by my Shri Rama Swamy, proprietor of M/s KKE and his wife; that the sale bills were given to their customers towards sale of excavators to the extent of only 60% of the actual sale value and the balance amount would be taken in cash and the details of the same were maintained by Smt. K. Padmavathi.

7.3.2 Shri Viswanadham further stated that M/s MES and M/s CGI, Mumbai were registered as proprietary concerns and Shri Girish Hindelkar and Shri Hindelkar Charu

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Padmavathi.

7.3.2 Shri Viswanadham further stated that M/s MES and M/s CGI, Mumbai were registered as proprietary concerns and Shri Girish Hindelkar and Shri Hindelkar Charu

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Dat, are the proprietors of the above two firms respectively and all the transactions relating to the above said two firms were made by Shri Girish Hindelkar; that in name of the above two firms, Shri Rama Swamy imported used excavators, bulldozers, etc., by paying a commission of around 2.5% to Shri Girish for utilizing the name(s) of the said firms; that Shri Rama Swamy used to negotiate prices of import goods with their regular overseas suppliers and as per his advice, they used to send the goods in the name of either of the two firms; that Shri Girish Hindelkar and Shri Charu Dat Hindelkar, are proprietors of M/s MME and M/s CGI only on paper and all the transactions were supervised by Shri Rama Swamy and his wife Smt. Padmavathi. Shri Viswanadham furnished the present market values (as on that date) in respect of each variety of imported used excavators/ machinery and the details indicated by him are same as those indicated by Shri Rama Swamy, Proprietor of M/s KKE in his statement dated 10.12.2008.

pect of each variety of imported used excavators/ machinery and the details indicated by him are same as those indicated by Shri Rama Swamy, Proprietor of M/s KKE in his statement dated 10.12.2008.

7.3.3 With regard to a specific query about the interstate movement of the machinery, Shri Viswanadham stated that they had been bringing the machinery consigned to Bangalore from Mumbai to Hyderabad and while they were transferring the same to their Bangalore Branch they were paying VAT and that they were not paying any VAT when bringing the goods in transit to Hyderabad and for doing so, they were consigning the machinery from Mumbai to Bangalore even though the same were brought to Hyderabad and that they were paying VAT only when they were clearing from Hyderabad to Bangalore. With regard to a specific query, Shri Viswanadham further stated that they obtained Service Tax Registration in the name of M/s KKE in 2007 and subsequently as they did not cross Rs. 10 lakhs limit they did not collect any service tax from customers and they applied for cancellation of our service tax registration. With reference to a : specific query, Shri Viswanadham stated that their customers would be making payments by cheque/ cash and that at times they would not reflect the cash payments in their books of accounts as per the requirements of their customers.

tated that their customers would be making payments by cheque/ cash and that at times they would not reflect the cash payments in their books of accounts as per the requirements of their customers.

7.4 ~~ Shri Charudatt Girish Hindelkar, S/o Shri Girish Srikanth Hindelkar, Proprietor of M/s CGI in his statement dated 10.12.2008 (as per Annexure-A.31 of the Show Cause Notice) had interalia stated that he worked with his father's Customs clearing agency upto 2005 and he was having Customs Pass of CHA, A.M. Sodder and after 2005 he started his own Customs clearing services by name M/s Mamta Clearing and Forwarding Agency and for that he used the CHA Licences of M/s Mukadam Freight Systems and as it was suspended due to customs case involving import of Chinese toys, he had taken the help of M/s S.K. Kanjilal, another CHA for filing Bills of Entry as his firm was not in possession of CHA License; that he had attended to clearance of imports of M/s CGI, M/s MES, M/s KKE etc.; that his father, Shri Girish met a person by name Shri Rama Swamy Kolluri of M/s KKE in connection with clearance of imports of used excavators, that after clearance of goods from the Customs after filing Bills of Entry in the name(s) of CHAs mentioned above, the said goods were sent to M/s KKE by lorries; that Shri Rama Swamy used to make payments; that during the visit of his father to Hyderabad, Shri Rama ~ Swamy made proposals for starting new firms which would be owned by us and he Page 13 of 83 K i:

hri Rama Swamy used to make payments; that during the visit of his father to Hyderabad, Shri Rama ~ Swamy made proposals for starting new firms which would be owned by us and he Page 13 of 83 K i:

expressed his intention to use the name and identity for import of used excavators and spares; that Shri Rama Swamy assured his father with regard to making all the communications with the foreign suppliers in respect of proposed imports in the name(s) of new firms, for making payments to foreign suppliers through the bank accounts of new firms proposed etc.; that for lending the name(s) of new firms he would pay commission of 2%, apart from agency charges of his CHA firm, M/s Mamta Clearing and Forwarding Agency. Shri Charudatt further stated that as the scheme seemed lucrative, his father and he himself started two firms by name M/s MES and M/s CGI and obtained IEC Codes and they offered the said IEC codes to Shri Rama Swamy for his imports and in process he paid customs duties through the said firms and they sent the imported goods covered under the documents of M/s MES and M/s CGI on payment of 2% CST; that they used to raise the invoice to M/s KKE by adding their commission of 2% over and above the landing price including value of imported machinery, customs duty, transportation charges, their commission etc; that his father would be having idea about all the financial matters pertaining to imports in the name(s) of M/s MES and M/s CGI; that he was only assisting his father, Shri Girish Shrikant Hindelkar in customs clearing work.

ing idea about all the financial matters pertaining to imports in the name(s) of M/s MES and M/s CGI; that he was only assisting his father, Shri Girish Shrikant Hindelkar in customs clearing work.

7.5 Shri Girish Shrikant Hindelkar, Proprietor of M/s MES in his statement dated 11.12.2008 (as per Annexure-A.32 of the Show Cause Notice) had interalia stated that upto 1985 he was in private employment with various firms and in 1985 he started his own Customs clearing agency, by name M/s Union Clearing Service and it was operated upto 2000 and thereafter he started liasoning at DGFT office with regard to DEEC and DEPB matters; that his son also started a Customs clearing agency in the name of M/s Mamta Clearing and Forwarding agency; that he came in contact with Shri Rama Swamy Kolluri of M/s KKE in December, 2005 in connection with import of used excavators and spare parts and from February, 2006 onwards they were allotted the work of Customs clearance of goods imported by M/s KKE; that Shri Viswanadham, Manager of M/s KKE used to send original documents pertaining to imports and they used to send the imported consignments to Hyderabad after customs clearance and they used to receive agency charges of 1%; that there after in March, 2008 Shri Rama Swamy came up with a proposal of opening new firms for importing the goods on behalf of him and for that he offered a commission of 2 to 3% and that he would give over riding commission of Rs.

i Rama Swamy came up with a proposal of opening new firms for importing the goods on behalf of him and for that he offered a commission of 2 to 3% and that he would give over riding commission of Rs. 1.50 per dollar of his purchase invoice value; that he agreed with the said proposal as it looked lucrative and opened a new firm by name M/s MES; that Shri Rama Swamy placed orders with his overseas suppliers from various countries and used to release funds into his firm's accounts for making payments to overseas suppliers; that in September, another firm by name M/s CGI was opened and his son, Shri Charudatt Girish Hindelkar was the proprietor of the said firm; that the imports in the name of M/s MES and M/s CGI were done only for Shri Rama Swamy Kolluri as per his requirement, under his direct guidance and under his direct finance and thus, he was the real importer in the case; that they allowed only to use the name(s)/ IEC code(s) etc. of M/s MES, M/s CGI.

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EC code(s) etc. of M/s MES, M/s CGI.

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7.5.1 With reference to a specific query about the reasons for import of goods in the name(s) of M/s MES and M/s CGI by Shri Rama Swamy even though he possess IEC code for his own firm, M/s KKE, Shri Girish stated that he was told by Shri Rama Swamy that he would like to be relived from his load in importing and intend to expand his business. Shri Girish further stated that he was not aware about the mis-declaration of value of the goods imported by M/s KKE: that when ever customs loaded the value, Shri Rama Swamy used to accept the loading. With reference to a specific query with regard to payment of differential customs duties in respect of consignments imported by M/s MES and M/s CGI, Shri Girish informed that on earlier occasion when this aspect was raised, Shri Rama Swamy assured him that he would honour the same and asked not to worry about it.

mported by M/s MES and M/s CGI, Shri Girish informed that on earlier occasion when this aspect was raised, Shri Rama Swamy assured him that he would honour the same and asked not to worry about it.

7.6 — Shri Girish Shrikant Hindelkar, Proprietor of M/s MES in his further statement dated 17.12.2008 (as per Annexure-A.33 of the Show Cause Notice) had interalia stated that even though M/s CGI was shown to bea proprietary firm of his son, Shri Charudatt, he was the actual person who looked after its day to day business and he was responsible for all the imports made in the name of M/s MES as well as M/s CGI; that Shri Rama Swamy Kolluri has appointed him as their imports manager for representing M/s KKE before Customs, docks and warehousing agency etc. as and when required; that there was one live consignment of two used excavators, under BE No. 700265 dated 08.12.2008 in the name of M/s CGI as on that date and the said consignment was first checked. He further stated that as per their bankers, two more consignments booked in the name of M/s MES are likely to come as the documents pertaining to the same were released and that he did not have any idea about the new consignments as the same were booked by Shri Rama Swamy and he only corresponded with the overseas suppliers.

ts pertaining to the same were released and that he did not have any idea about the new consignments as the same were booked by Shri Rama Swamy and he only corresponded with the overseas suppliers.

In view of the revelations of Shri K. Rama Swamy, Proprietor of M/s KKE and his wife, Smt. K. Padmavathi in their statements about the persons who were assisting them in sending the amounts to Singapore through channels other than official banking channels, S/Shri T. Anand of Hyderabad, B. Sanjeeva Rao and K.V.V. Satyanarayana Murthy of Visakhapatnam were summoned under Section 108 of the Customs Act, 1962. Summons forwarded to the address of Shri T. Anand in Hyderabad were returned by the Postal authorities with an endorsement that "person left" (as per Annexure-A.34 of the Show Cause Notice). The statements of the other two persons were recorded and they had interalia stated as detailed below:

8.1 Shri B Sanjeeva Rao (alias Sunny) resident of Gajuwaka, Visakhapatnam in his statement dated 28.01.2009 (as per Annexure-A.35 of the Show Cause Notice) had interalia stated that after his studies he was engaged in electrical work at Visakhapatnam and in 2003, he went to Singapore and worked as Electrician and returned back to India in December, 2007 as he was suffering from diabetes and thereafter he was attending to contracts of Electrical and Marble polishing works for the buildings at Visakhapatnam;

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that while he was in Singapore, he met Shri K Rama Swamy of M/s KKE several times at Takka of Singapore, where most of the Andhra people would meet each other and are residing; that after his returning back to India, during March, 2008, Shri Rama Swamy met him at Visakhapatnam; that Shri Rama Swamy informed him that he require Singapore dollars at Singapore and for that he offered that he would arrange Indian rupees at Visakhapatnam as per the market exchange rates in vogue; that he requested to enquire with some of his friends in Singapore who would be regularly receiving their salary at Singapore in Singapore dollars so that for them the cash in Indian rupees could be arranged in India to their family members; that he contacted one of his friends by name Shri Venkatesh who was working in Singapore and explained him about the requirement of Singapore dollars by Shri K Rama Swamy and told him that he would coordinate in collecting cash in India from Shri Rama Swamy and would deliver the same to the concerned persons and requested him to enquire with his friends to arrange Singapore dollars there; that thereafter, Shri Venkatesh contacted his friends and accepted to arrange Singapore dollars there;

cerned persons and requested him to enquire with his friends to arrange Singapore dollars there; that thereafter, Shri Venkatesh contacted his friends and accepted to arrange Singapore dollars there; that accordingly when ever Singapore dollars are ready with him Shri Venkatesh used to’inform him and in turn he used to inform the same to Shri Rama Swamy so that his persons at Singapore could collect the amount of Singapore dollars there, that Shri Rama Swamy used to make payment of cash in Indian rupees as per the market rates in vogue and he used to collect the same from him at Gajuwaka/ Autonagar areas in Visakhapatnam, where Shri Ramaswamy used to come there and hand over the same, that after receipt of the same from Shri Rama Swamy, he used to hand over the same to the concerned persons as per the advice of Shri Venkatesh: that Shri Venkatesh used to inform him the mobile numbers of the concerned persons and he used to furnish my mobile number to them and on being contacted, he used to hand over the amounts to them and the said activity continued from April to November, 2008; that he did not remember the names of the persons who would be coming to him for receiving the amounts and he did not maintain any record in this regard and he did not remember the exact amount he received from Shri Rama Swamy in such manner and that as per his remembrance, he received an amount of Rupees twenty lakhs (approximately) from Shri Rama Swamy on various occasions between April to November, 2008;

Shri Rama Swamy in such manner and that as per his remembrance, he received an amount of Rupees twenty lakhs (approximately) from Shri Rama Swamy on various occasions between April to November, 2008; that as per the request of Shri Rama Swamy he was under impression that he would be helping him in arranging Singapore dollars at Singapore and that he was not aware that the same would lead to hawala transactions; that he did not personally receive any amounts either from Shri Rama Swamy or from his friends at Singapore and that he did not retain any amount with him out of the amounts received from Shri Rama Swamy and that he was not aware about the purpose for which Shri Rama Swamy requires the foreign currency (Singapore dollars) at Singapore.

8.2 Shri K. V.V. Satyanarayana Murthy of Visakhapatnam in his statement dated 09.01.2009 (as per Annexure-A.36 of the Show Cause Notice) had interalia stated that he was attending to electrical work at Visakhapatnam and that his brother-in-law was working as a welder in Singapore and thereby his sister's family was residing in Singapore

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in-law was working as a welder in Singapore and thereby his sister's family was residing in Singapore

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and that his sister's daughter was studying Engineering course in GITAM, Visakhapatnam; that his brother-in-law of Singapore had contacts with Shri Rama Swamy and as per their contacts, his brother-in-law used to make call him and to instruct him to receive cash in Indian rupees from Shri Rama Swamy and accordingly, he used to come to Hyderabad and received cash in Indian rupees; that the amounts so received are spent for the construction of the house of his brother-in-law and at times he handed over the same to his sister's daughter for her educational purpose; that he did not remember the exact amount he received and he stated that as per his remembrance, he received a total of Rs. ten lakhs (approx.) from Shri Rama Swamy; that when ever Shri Rama Swamy was not there he used to receive the cash in kept in sealed packets from any of the employees of M/s KKE in their office at Secunderabad as per the instructions/ advice of Shri Rama Swamy.

ma Swamy was not there he used to receive the cash in kept in sealed packets from any of the employees of M/s KKE in their office at Secunderabad as per the instructions/ advice of Shri Rama Swamy.

8.2.1 With reference to a specific query whether he was having knowledge of hawala transactions of money resorted to by Shri Rama Swamy, Shri Murthy stated that as per his brother-in-law's instructions, he used to receive money from Shri Rama Swamy and he was of the opinion that his brother-in-law was sending money from Singapore through Shri Rama Swamy who was frequently visiting Singapore and except that he did not have any knowledge and that he did not retain any amount out the amounts received from Shri Rama Swamy.

As the initial statements of S/Shri/ Smt. Charudutt Girish Hindelkar, Girish Shrikant Hindelkar, K. Padmavathi and K. Rama Swamy were recorded in December, 2008 and that the GEQD report was received in April, 2009, they were once again summoned for giving their evidences. During the course of investigation, they were shown the copies of the documents recovered from various premises and also relevant extracts of GEQD report and were asked to give their evidence. They had interalia stated as detailed hereunder:

e shown the copies of the documents recovered from various premises and also relevant extracts of GEQD report and were asked to give their evidence. They had interalia stated as detailed hereunder:

9.1. Shri Charudutt Girish Hindelkar, Proprietor of M/s CGI, in his further statement dated 20.05.2009 (as per Annexure-A.37 of the Show Cause Notice) had interalia stated that M/s CGI was opened exclusively for importing the consignments of used excavators, spares of excavators as per the requirement/ advice of Shri Rama Swamy Kolluri of M/s KKE and that they did not import any other consignments other than the same; that they also did not import any consignments for his own purpose and opened the firm only to facilitate the imports of Shri Rama Swamy and imported consignments in the name of M/s CGI; that as per the import documents, viz., foreign supplier's invoices, Bills of Lading, bank payments, Bills of entry, M/s CGI are the importers and that with regard to the imports of M/s CGI he looked after the work pertaining to clearance of imported consignments and subsequent transportation of the goods from Mumbai to Hyderabad and all the financial aspects were taken care by his father. 9.1.1 On going through copy of Bill of Entry 671981 dated 06.11.2008 filed by M/s CGI ‘ Shri Charudutt stated that they imported two used Hitachi Hydraulic excavators bear Page 17 of 83 \ er FAY

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Nos. Ex100-2 12L 31828 and Ex60-3 10S 44209 and they declared the values of the said machinery as US $ 10500 and US $ 9000 respectively and paid a total duty of Rs. 284281/- (Rs. 153074+ 131207) in respect of the above said two machinery. On going through Page No. 248 of the GEQD report Shri Charudutt stated that it was a copy of e- mail dated 19.12.2007 received by M/s KKE from Mr. L Y Loh of M/s Finbond Industries Sdn Bhd, Malaysia and mentioned that they would supply Ex 100-2 12L 31828 at a price of 23,800 CIF Nhava Sheva.

9.1.2 With reference to a specific query, Shri Charudutt stated that he understood they declared lesser value than the value contained in the e-mail of M/s Finbond Industries Sdn Bhd and stated that he came to know about it only on going through the documents shown to him now and that he was not aware of it previously. After going through the copies of Bills of Entry filed by M/s CGI and Page Nos. 571 & 582 of GEQD report, with reference to a specific query, Shri Charudutt stated that the values declared in respect of excavator models Ex60-3, Ex120-2 etc. which were Imported in the name of M/s CG1 (US$ 9000 & 11500 etc.) are much lesser than the values of the same model machinery viz., EX60-3, Ex120- (US $ 25200, US $ 24950 respectively).

120-2 etc. which were Imported in the name of M/s CG1 (US$ 9000 & 11500 etc.) are much lesser than the values of the same model machinery viz., EX60-3, Ex120- (US $ 25200, US $ 24950 respectively).

9.1.3 In connection with the same, Shri Charudutt stated that the correspondence and price negotiations with the foreign suppliers were done by Shri Rama Swamy only and as per the agreement between M/s CGI and Shri Rama Swamy, they (M/s CGl) had filed Bills of Entry only basing on the bank documents received by them at Mumbai and that other than that he was not aware of the under-invoicing resorted to in respect of the imports made in the name of M/s CGI; that his father, Shri Girish negotiated with Shri Rama Swamy only with regard to payment of our commission of 2.5% for lending the name of our proprietary firm, M/s CGI and that they have resorted to that only for petty amount of commission and they did not reap any other benefits out of this.

9.1.4 With reference to a specific query, Shri Charudutt stated that he was aware that not-declaring the true value before Customs at the time of import is an offence and that he was not aware of that in respect of imports made in the name of M/s CGI;

dutt stated that he was aware that not-declaring the true value before Customs at the time of import is an offence and that he was not aware of that in respect of imports made in the name of M/s CGI; that all the imports made in the name of M/s CGI pertain to Shri Rama Swamy of M/s KKE and that it was also clear from the e-mail correspondence available with M/s KKE, that they only negotiated the prices and paid the amounts to the foreign sellers and also that the amounts paid from their bank accounts to the foreign suppliers officially were those transferred by Shri Rama Swamy into their bank accounts. With reference to a specific query, Shri Charudutt stated that though all the imported consignments pertain to Shri Rama Swamy which were imported in the name of M/s CGI, as proprietor of the said firm, he undertook to hold responsibility with regard to short payment of customs duties due to under- invoicing resorted to by Shri Rama Swamy and that he would take up the matter with Shri Rama Swamy.

9.2 Shri Girish Shrikant Hindelkar, Proprietor of M/s MES in his further statement dated 20.05.2009 (as per Annexure-A.38 of the Show Cause Notice) had interalia stated that Page 18 of 83 Is.

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M/s MES was opened exclusively for importing the consignments of used excavators, spares of excavators as per the requirement/ advice of Shri Rama Swamy Kolluri of M/s KKE and that they did not import any other consignments other than the same for their own purpose; that as per the import documents, viz., foreign supplier's invoices, Bills of Lading, bank payments, Bills of entry, M/s MES are the importers. On going through copy of Bill of Entry 861427 dated 06.06.2008 filed by M/s MES Shri Girish stated that they Imported two used machinery, viz., Komatsu Motor Grader Machine Model No. GD 405A50320 and Hitachi Hydraulic excavator machine Model no. Ex60-3 44642 on declaring the values as US $ 13082 and US $ 7500 respectively and paid a total duty of Rs. 2,56,594 (Rs. 1,63,092 + 93,502)

9.2.1 On going through the relevant pages of the GEQD report shown to Shri Girish, he observed that they pertain to correspondence made by M/s KKE with the overseas suppliers in connection with excavators/ spare parts for excavators being imported in the ‘name of M/s KKE as well as M/s MES, M/s CGI.

y pertain to correspondence made by M/s KKE with the overseas suppliers in connection with excavators/ spare parts for excavators being imported in the ‘name of M/s KKE as well as M/s MES, M/s CGI.

9.2.2 With reference to a specific query, Shri Girish stated that he understood that the values declared by them in the B.E. NO. 861427 dated 06.06.2008 in respect of machinery model nos. GD-405A-1 and Ex60-3 10S-44642 (US $ 13082 & 7500) are much lesser than the values (i.e. US $ 33,650 and US $ 25,250) contained in the documents shown to him and that he came to know about it on going through the documents shown to him and that he was not aware of it previously; that correspondence and price negotiations with the foreign suppliers were done by Shri Rama Swamy only and as per the agreement between M/s MES and Shri Rama Swamy, they fled Bills of Entry basing on the bank documents received by us at Mumbai and he was not aware of the underinvoicing resorted to in respect of the imports made in the name of their firms, viz., M/s MES and M/s CGI and that he negotiated with Shri Rama Swamy only with regard to payment of their commission of 2.5% for lending the name(s) of their proprietary firms and that they resorted to the said practice only for a petty amount of commission and that they did not reap any other benefits out of it.

of 2.5% for lending the name(s) of their proprietary firms and that they resorted to the said practice only for a petty amount of commission and that they did not reap any other benefits out of it.

9.2.3 With reference to a specific query, Shri Girish stated that he was aware that notdeclaring the true value before Customs at the time of import is an offence; that all the imports made in the name(s) of M/s MES and M/s CGI pertain to Shri Rama Swamy of M/s KKE; that it was also clear from the e-mail correspondence available with M/s KKE, they only negotiated the prices and paid the amounts to the foreign sellers. In connection with this he further reiterated that what ever the amounts were paid from their bank accounts to the foreign suppliers officially is only out of the amounts transferred by Shri Rama Swamy into their bank accounts.

9.2.4 With reference to a specific query, Shri Girish stated that though all the imported consignments pertain to Shri Rama Swamy which were imported in the name(s) of M/s Mamta Exim Services/ M/s C.G. International, as proprietors of the above said two firms, he and his son will undertake that they will hold responsibility with regard to short payment-.

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of customs duties due to under invoicing resorted to by Shri Rama Swamy and further stated that he would take up the matter with Shri Rama Swamy.

737/2025-ADJN-O/O COMMR-CUS-IMP-1 -ZONE-I- MUMBAI

of customs duties due to under invoicing resorted to by Shri Rama Swamy and further stated that he would take up the matter with Shri Rama Swamy.

9.3. On 18.05.2009, Smt. K. Padmavathy appeared before the officers of DRI, Hyderabad in response to summons issued to her and requested for taking help of her employee, Shri A. Viswanadham for typing her statement using the computer available in DRI, Hyderabad and had given her evidence. Smt. K Padmavathy, W/o Shri Rama Swamy Kolluri in her further statement dated 18.05.2009 (as per Annexure-A.39 of the Show Cause Notice) had interalia stated that even though officially she did not hold any post in M/s KKE, as per the instructions of her husband who would be out of station for most of the time on his business obligations, she used to attend to e-mail correspondence, price negotiations, amounts payments etc. to with their overseas suppliers; that M/s S.L. Traders, her proprietor concern would be purchasing the spares from domestic suppliers and selling the same to their customers. On going through the statement dated 10.12.2008 of Shri A. Viswanadham which was shown to her, Smt. Padmavathy agreed with his depositions.

mestic suppliers and selling the same to their customers. On going through the statement dated 10.12.2008 of Shri A. Viswanadham which was shown to her, Smt. Padmavathy agreed with his depositions.

9.3.1 With reference to a specific query, Smt Padmavathy stated that the laptops, hard disk, mobile phones with SIM cards seized from the business premises of M/s KKE were used by them during the relevant period and they contain the information/ details about their business activities. With reference to a specific question about the name "Rao" referred to in e-mail correspondence made by them with their overseas suppliers, Smt. Padmavathy stated that it refers to a person who was called as Shri Rao, who worked with them only for a short period; that she did not his exact name and that he was having computer knowledge and used to give e-mails on behalf of M/s KKE and he attended to correspondence with their overseas suppliers as per the instructions of Shri K. Rama Swamy. .

that he was having computer knowledge and used to give e-mails on behalf of M/s KKE and he attended to correspondence with their overseas suppliers as per the instructions of Shri K. Rama Swamy. .

9.3.2 During the course of her deposition, she was shown the forensic analysis report received from the GEQD, Hyderabad pertaining to analysis of data contained in various hard discs of computers, laptops, mobile phones that were recovered from various places and she was shown some of the documents retrieved from the laptops/ hard discs etc. and on going through the documents and on perusing the other documents contained in GEQD report, Smt. Padmavathy stated that basically the e-mail correspondence appearing in the GEQD report containing the name 'padma' refers to she (Smt. Padmavathy) only and that she used to correspond/forward/receive e-mails from various suppliers of excavators, spare parts on behalf of M/s KKE, Secunderabad. With reference to a specific query in connection with the contents of GEQD report relating to issue of invoice for 30% of value, showing payment terms as CIF instead of FOB, payment of amounts through various persons in Singapore etc., that was appearing in the e-mail correspondence made by her with the overseas suppliers, Smt. Padmavathy stated that she made such correspondence as per instructions of her husband, Shri Rama Swamy, who was the proprietor of M/s KKE; that she also noted down certain details about under

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dence as per instructions of her husband, Shri Rama Swamy, who was the proprietor of M/s KKE; that she also noted down certain details about under

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invoicing in some of the small note books which were recovered from their office premises on 10.12.2008.

9.3.3 Smt Padmavathy further stated that in similar manner she attended to various e- mails pertaining to various suppliers of spare parts like M/s Gah Hup Seng Sdn Bhd, M/s Kian ann Engg Limited, etc.

9.3.4 With reference to a specific query about making payments to S/Shri Anand, Murthy, Sunny (Sanjeeva Rao), Smt Padmavathy stated that she used to hand over the amounts to them in the absence of her husband as per his instructions. With reference to a specific question about the names of Shri Loh, Sivam, Murali appearing in the Statements of accounts received from their overseas suppliers through e-mails, Smt. Padmavathy stated that as her husband had been in contact with their overseas suppliers and used to visit them frequently, he would know about them and that she had no idea about them.

-mails, Smt. Padmavathy stated that as her husband had been in contact with their overseas suppliers and used to visit them frequently, he would know about them and that she had no idea about them.

9.3.5 With reference to a specific query with regard to resorting to under-invoicing, not declaring the correct values in respect of goods imported in the name of M/s KKE, M/s MES, M/s CGI, Smt. Padmavathy stated that she attended to the work of M/s KKE as per the instructions of her husband and he, being proprietor of M/s KKE, he would explain about the above aspects in detail.

9.4 Shri K Rama Swamy appeared before the officers of DRI on 21.05.2009 and requested to permit him to take the assistance of Shri K. Viswanadham for typing his statement using computer available in DRI office and given his statement (as per Annexure-A.40 of the Show Cause Notice). On going through the statements dated 11.12.2008, 17.12.2008 and 20.05.2009 of Shri Girish Srikanth Hindelkar and statements dated 10.12.2008 and 20.05.2009 of Charudutt Girish Hindelkar, Shri Rama Swamy agreed with their depositions and stated that he issued instructions to them for filing bills of Entry in the name(s) of M/s MES and M/s CGI and that the imports made in the name of the said two firms originally belong to M/s KKE and accordingly he corresponded with foreign suppliers, negotiated the prices, paid the amounts, transferred the amounts to the accounts of M/s MES and M/s CGI for making official payments through banks and dealt with the payments of balance amounts to their overseas customers.

id the amounts, transferred the amounts to the accounts of M/s MES and M/s CGI for making official payments through banks and dealt with the payments of balance amounts to their overseas customers.

9.4.1 Shri Rama Swamy agreed with the depositions the following persons given before the officers of DRI on various occasions, after going through the same.

(i) Statement dated 10.12.2008 of Shri A. Viswanadham. (ii) Statements dated 10.12.2008 and 18.05.2009 of Smt. K. Padmavathy, wife of Shri K. Rama Swamy. (iii) | Statement dated 09.01.2009 of Shri K.V.V. Satyanarayana Murthy of Visakhapatnam. (iv) | Statement dated 28.01.2009 of Shri B. Sanjeeva Rao of Visakhapatnam. ffs

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Shri Rama Swamy further stated that all the above persons attended to the works entrusted to them as per his instructions/request. Smt. Padmavathy attended to the e- mail correspondence with the overseas suppliers only basing on my advice.

e above persons attended to the works entrusted to them as per his instructions/request. Smt. Padmavathy attended to the e- mail correspondence with the overseas suppliers only basing on my advice.

9.4.2 With reference to a specific query Shri Rama Swamy stated that with regard to his business activities he was on tours for most of the time and that thereby his wife Smt. K. Padmavathi used to attend all e-mail correspondence, price negotiations, amounts payments etc. to their overseas suppliers and that she had attended to the all the activities in the capacity of Chief executive of M/s KKE.

9.4.3 After going through GEQD analysis report containing various documents retrieved from Computers/ laptops/ mobile phones recovered from various premises, which was shown to him and with reference to a specific query about the name "Rao" referred to in e-mail correspondence made by M/s KKE with their overseas suppliers, Shri Rama Swamy stated that the name "Mr. Rao" refers to a person by name Shri Rao who worked with them for a short period and he did not know his correct name and he used to assist them in forwarding malls to our foreign suppliers and that he attended to correspondence with their overseas suppliers on behalf of M/s KKE; that name "Rama" referred to in e- mail correspondence refers to himself (Shri Rama Swamy).

eign suppliers and that he attended to correspondence with their overseas suppliers on behalf of M/s KKE; that name "Rama" referred to in e- mail correspondence refers to himself (Shri Rama Swamy).

9.4.4 Ongoing through Page Nos. 413 to 418 of GEQD report. Shri Rama Swamy stated that the said pages contain a copy of agreement between M/s KKE and M/s Boohung Heavy Industries Co. Limited, Korea; that they did not resort to any undervaluation in respect of imports made by them from M/s Boohung Heavy Industries Co. Limited; that the goods supplied by them contain Rock breakers and Rock chisels and that a part quantity of rock breakers and chisels imported by them from M/s Boohung Heavy Industries, were seized by the officers of DRI on 10.12.2008 at their workshop; that they did not resort to any undervaluation in respect of spares imported from M/s Dallian Track Import and Export Co. Limited.

9.4.5 Shri Rama Swamy was shown some of the relevant pages contained in GEQD report and after going through them Shri Rama Swamy explained that M/s V Bird Universal Sdn Bhd were one of their freight forwarders who provided logistics support to them in connection with transport of imported goods from suppliers like M/s Gah Hup Seng, E.S. Seal, M/s Hoe Leong Corp, Mta Technology etc., and that M/s KKE paid freight amount to such freight forwarders even though their import documents contain the contract terms as CIF; that they received statements of accounts, machines list, Proforma invoices, other mail confirmations etc.

uch freight forwarders even though their import documents contain the contract terms as CIF; that they received statements of accounts, machines list, Proforma invoices, other mail confirmations etc. on various occasions which pertain to the machinery purchased from them; that they received two different invoices from M/s Sungbo Industrial Co. Limited having different values pertaining to one single imported consignment; that his wife Smt. Padmavathy requested their overseas suppliers to issue invoices fer customs purposes with 30% / 50% of the actual value.

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9.4.6 With reference to a specific query, Shri Rama Swamy stated that the agents of M/s V Bird Universal Sdn Bhd at Nhava Sheva used to issue them Delivery orders for their import consignments, on behalf of M/s V Bird Universal and that since the Bill of Lading copies contain the endorsement “freight prepaid” they used to issue delivery orders basing on the said documents and he stated that however, they used to make payment of freight to M/s V Bird Universal Sdn Bhd. With reference to a specific query, Shri Rama Swamy stated that in addition to M/s V Bird Universal Sdn Bhd, the other freight forwarding companies who arranged containers for import of spares include, M/s Kerry Logistics Sdn Bhd, M/s Box Container Sdn Bhd, M/s Osjay Shipping Sdn Bhd etc and that the freight amounts payable/ paid to all the above firms would be almost at the same rate.

clude, M/s Kerry Logistics Sdn Bhd, M/s Box Container Sdn Bhd, M/s Osjay Shipping Sdn Bhd etc and that the freight amounts payable/ paid to all the above firms would be almost at the same rate.

9.4.7 With reference to a specific query, Shri Rama Swamy stated that their overseas suppliers of excavators are basically traders and as per the prices finalized by him, they used to procure the machinery and keep them ready in their sites/ yards and basing on the convenience, they used to send the machine as per their dispatch instructions communicated to them either through mail over phone. Thereby even though selling prices are finalised we used to receive the machinery after some period as per their requirement in India as per market conditions; that however the price would be the same which was initially agreed upon by M/s KKE and the sale price of the respective machinery was being shown by the suppliers in their books of accounts and the payments made and amounts due etc. were being shown by them in their running accounts.

9.4.8 On going through the relevant extracts pertaining to forensic analysis of SMS messages retrieved from Mobile phones pertaining to persons by name, S/Shri Sivam, Anand, Kri Murthy, Loh, Sing Murthy, recovered from their business and residential premises, Shri Rama Swamy stated that some of the messages pertain to amounts received by their overseas suppliers, etc. and as regards the messages pertain to Sing Murthy, he stated that he could not remember about them and would explain about them later.

pertain to amounts received by their overseas suppliers, etc. and as regards the messages pertain to Sing Murthy, he stated that he could not remember about them and would explain about them later.

9.4.9 With reference to a specific query, Shri Rama Swamy stated that Shri Sivam was his friend working in Malaysia and that he used to coordinate the payments to M/s Finbond; that Mr. Loh is Owner of M/s Finbond; that Mr 'Anand Mal’ is Shri Anand is the same person whom about whom he explained in his statement dated 10.12.2008; that he was not aware of the present whereabouts of Shri Anand and that he did not contact him in the recent past.

9.4.10 With reference to a specific query, Shri Rama Swamy stated that with regard to spares received from M/s Gal Hup Seng, Malaysia, they resorted to mis-declaration of contract terms as CIF instead of FOB and except the freight they did not resort to any undervaluation.

9.4.11 With reference to a specific query, Shri Rama Swamy stated that the imports. made by M/s MES and M/s CGI pertains to M/s KKE and the said machinery as well as Page 23 of 83 \

F.No. GEN/ADJ/COMM/737/2025-ADJN-O/O COMMR-CUS-IMP-I| -ZONE-I-MUMBAI

spares imported in the name(s) of the said firms were transported to M/s KKE; that he would come back with in few days with regard to payment of Customs duties in respect of the said two firms on the above aspects.

n the name(s) of the said firms were transported to M/s KKE; that he would come back with in few days with regard to payment of Customs duties in respect of the said two firms on the above aspects.

9.4.12 Shri Rama Swamy further stated that they resorted to undervaluation of the goods imported and that the documents shown to him reflects the same; that in connection with this they have already paid an amount of Rs. 1 Crore towards their duty liability and they would make further payments in due course.

During the course of investigation, M/s KKE, voluntarily made payment of Rs. 1 Crore towards discharge of their liability, by way of DD/ cheques for Rs. 35 lakhs, 15 lakhs and 50 lakhs and the same were forwarded to the Commissioner of Customs, Nhava Sheva and the same were deposited into Govemment account vide Cash Treasury receipts of Custom House, Nhava Sheva (as per Annexure-A.41 of the Show Cause Notice).

10.1. Upon furnishing of the above cheques for an amount of Rs. 1 Crore, M/s KKE requested for provisional release of goods vide their representations 11.12.2008, 02.01.2009, 06.01.2009 and 11.02.2009, 23.03.2009 (as per Annexure-A.42 of the Show Cause Notice) requesting for provisional release of goods seized on 10.12.2008. M/s KKE in their letters expressed their intention to make payment of differential amount of Customs duties relating to undervaluation resorted to by them. Basing on their representations, the goods worth Rs.

n their letters expressed their intention to make payment of differential amount of Customs duties relating to undervaluation resorted to by them. Basing on their representations, the goods worth Rs. 4.14 Crores were ordered for provisional release by the Additional Director General and the same were released to M/s KKE in two different occasions, upon execution of bonds for equal amount of value of the goods and furnishing of Bank Guarantee for an amount of Rs. 50 lakhs. The goods released provisionally to M/s KKE worth Rs. 4.14 Crores were detailed in WS-1 (of the SCN) out of the total quantity of imported goods seized valued Rs. 8.24 Crores.

10.2 M/s KKE vide their letters dated 23.03.2009 and 20.05.2009 (as per AnnexureA.43 of the Show Cause Notice) furnished the details of relevant bills of entry under which the imported goods seized at their workshop on 10.12.2008. The details of relevant bills of entry pertaining to the imported goods seized on 10.12.2008, were indicated in WS-2 (of the SCN) and the goods seized are imported by M/s KKE/M/s MES/ M/s CGI between the period from October, 2007 to November, 2008.

From the various evidences in the form of documents recovered from various places, Forensic analysis report and depositions of various persons, connected to the case such as concerned persons of M/s KKE, M/S MES, M/S CGI and others, it appeared that:

ecovered from various places, Forensic analysis report and depositions of various persons, connected to the case such as concerned persons of M/s KKE, M/S MES, M/S CGI and others, it appeared that:

(a) The goods seized at the workshop premises of M/s KKE by the officers of DRI contain both used excavators and spare parts for excavators imported by M/s KKE, M/S MES and M/s CGI through Nhava Sheva Port;

{

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(b) Out of spare parts and other equipment seized at the premises of M/s KKE, the items listed at S. No. 1 to 29 are Rock breakers and breaker chisels imported by M/s KKE from M/s Boohung Heavy Industries Co. Limited, Korea under B.E. No. 685800 dated 18.11.2008 etc. imported through Custom House, Nhava Sheva;

(c) Various types of other spares parts for excavators listed from S. No. 30 to 78 were imported in the name of M/s MES under9 different Bills of Entry filed at Custom House, Nhava Sheva and the suppliers are M/s Kian Ann Engineering Limited, M/s Sungbo Industrial Co. Limited and M/s Gah Hup Seng Sdn Bhd, Malaysia;

(d) Out of 27 excavators seized, three excavators listed at S. No. 92, 102 & 103 of the annexure to Panchanama dated 10.12.2008, were imported by M/s KKE under Two different Bills of Entry. Under these two bills of Entry in addition to the three excavators seized, M/s KKE also imported another excavator bearing No. Ex60-2 10K 36377;

orted by M/s KKE under Two different Bills of Entry. Under these two bills of Entry in addition to the three excavators seized, M/s KKE also imported another excavator bearing No. Ex60-2 10K 36377;

(e) Similarly twelve excavators listed at S. Nos. 81, 85,84, 93,96,97,98,99, 100, 101, 104 & 105 were imported in the name of M/s MES under 11 different Bills of Entry filed at Custom House, Nhava Sheva and in addition to these 12 excavators, M/s MES also imported 7 more excavators;

(f) Remaining twelve excavators listed at S. No. 79,80, 82, 83, 86, 87, 88,89, 90, 91, 94 & 95 were imported in the name of M/s CGI under9 different Bills of Entry filed at Custom House, Nhava Sheva and therebya total of 22 Bills of Entry were filed in respect of 35 excavators were imported through Custom House, Nhava Sheva;

(g) The analysis of documents retrieved from the hard discs, laptops, mobile phones recovered from various premises including the business premises of M/s KKE Indicates that M/s KKE had been regularly corresponding with their overseas suppliers of excavators as well as spare parts for excavators etc.;

(h) The prices of goods for which negotiations were concluded by M/s KKE, were imported in the names of M/s KKE, M/s MES as well as M/s CGI and they in turn are being transferred to M/s KKE on raising invoices by M/s MES as well as M/s CGI;

(i) The proprietors of M/s MES and M/s CGI categorically admitted that they lent the names of their proprietary concerns to Shri Rama Swamy for a commission of 2.5%;

y M/s MES as well as M/s CGI;

(i) The proprietors of M/s MES and M/s CGI categorically admitted that they lent the names of their proprietary concerns to Shri Rama Swamy for a commission of 2.5%;

(j) Analysis of report received from GEQD indicate that M/s KKE had been receiving mails from their overseas suppliers including the statement of accounts, machines list supplied etc. and the statements of accounts forwarded by the overseas suppliers indicate the actual value of the goods shipped by them and manner of receipt of amounts through various channels like through banking channels as well as from various other persons in Singapore, Malaysia etc.

(k) The statements of accounts received from M/s Finbond Machinery, one of the main supplier of used excavators, graders etc. indicate that they had been receiving amounts

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----- Start of picture text ----- rey ----- End of picture text -----

Page 25 of83

in RM through Singapore and the same were converted into US Dollars and shown in their accounts;

(l) In most of the case, the prices quoted by the suppliers of used excavators were accepted by M/s KKE as the business dealings were continuous with the same suppliers over a period of time;

(m) The prices of various types of excavators declared in the Bills of Entry over a period of time and their actual values contained in the GEQD report are as tabulated below:

r a period of time;

(m) The prices of various types of excavators declared in the Bills of Entry over a period of time and their actual values contained in the GEQD report are as tabulated below:

|Grader<br>terms<br>declared<br>Value<br>price|
|---|
|Machine<br>declared<br>in B/E<br>ranging<br>currency|
|Model<br>in B/Es<br>about|
|25250|
|tee<br>25200<br>le<br>27050|
|24950|
|24950|
|jsootez |Torso<br>[or<br>[rene<br>[uso [eso [Uso<br>deme<br>|<br>37600|

(n) In respect of three excavators vide S. No. 79, 86 & 87 of Panchanama dated 10.12.2008, imported in the name of M/s CGI from M/s Popli Resource Group Inc., no evidence were found and the machine models, 60-1, 60g, 60Ss were also different for adopting values of similar machines. Further the document retrieved from GEQD vide Page No. 1279 indicate the same values which were declared before Customs;

(0) The Proforma invoices, shipments list, other email documents retrieved from GEQD report indicate that the prices indicated in respect of excavators was on CIF basis.

(p) Most of the excavators imported are Hitachi made and the above details indicate that M/s KKE had been resorting to gross under valuation of used excavators over a period of time and through out the span from 2005 to 2008 they did not change the unit price of excavators that was being declared before the customs;

ross under valuation of used excavators over a period of time and through out the span from 2005 to 2008 they did not change the unit price of excavators that was being declared before the customs;

(q) The statements of machines imported by Shri Rama Swamy Kolluri during the years, 2006-07 and 2007-08 which were available in the files recovered from the business premises of M/s KKE also indicate the under valuation resorted to by M/s KKE;

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(r) In respect of imports of Rock breakers/ chisels for rock breakers vide sl.no.1 to 29 of panchanama dated 10.12.2008 imported in the name of M/s KKE from suppliers, viz M/s Boohung Heavy Industries Co. Limited, the values declared in the relevant Bills of Entry are in accordance with the prices contained in the agreement copy found in GEQD report, which was made between M/s KKE and M/s Boohung Heavy Industries Co. Limited, Korea;

(s) In respect of spare parts required for excavators also M/s KKE had been resorting to under valuation in respect of specific overseas suppliers like M/s Kian Ann Engg Limited, M/s Sungbo Industrial Co. Limited;

(t) Further in most of the cases of import of spares for excavators, they had been resorting to mis-declaration of contract terms as CIF even though they had been entering into price negotiations on FOB basis and also that they had been sending amounts towards freight to freight forwarding companies like M/s V Bird Universal Sdn Bhd,

ven though they had been entering into price negotiations on FOB basis and also that they had been sending amounts towards freight to freight forwarding companies like M/s V Bird Universal Sdn Bhd,

(u) Even though the imports were made in the name(s) of M/s MES and M/s CGI In certain cases, M/s KKE were in fact the defacto owners of the said goods, as they corresponded with the overseas suppliers, transferred the amounts to the bank accounts of M/s MES, M/s CGI for making official payments and made the payments of differential amounts through channels other than banking channels;

(v) Further, this fact is supported by finding the goods imported by M/s MES and M/s CGI in possession of M/s KKE and the same were seized when they are in their possession;

(w) Concerned persons like Shel KVV Satyanarayana Murthy, B Sanjeeva Rao (Sunny) also admitted and explained about the modus operandi followed by Shri K Rama Swamy with regard to arranging the amounts in Foreign currency at Singapore and making payments to the concerned persons in India in Indian rupees for arranging Foreign currency at Singapore;

(x) The documents submitted to the Customs for the purpose of assessment and payment of customs duties did not reflect the actual transaction values;

for arranging Foreign currency at Singapore;

(x) The documents submitted to the Customs for the purpose of assessment and payment of customs duties did not reflect the actual transaction values;

(y) The actual transaction value of the goods imported by M/s KKE/ M/s MES/ M/s CGI are very much available in respect some of the consignments and since in respect of other consignments, the values declared are much lower than the contemporary prices of the same type of used excavators of the same brand (Hitachi) and same model imported;

(z) | M/s KKE had suppressed the actual transaction values of the goods imported before the customs and obtained another set of invoices indicating lesser values for the purpose of payment of customs duties/ corresponded with overseas suppliers with regard to sending Invoices for lesser values for customs purpose. Even though M/s MES, M/s CGI did not correspond with the foreign suppliers, they formed part in the conspiracy of importing the goods by gross under-declaration of goods and causing loss of revenue to. ~

| YES

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the Government. The intention of the above mentioned importers to evade applicable customs duties by way of suppressing the facts make them liable to be penalized under Section 114 A of the Customs Act, 1962.

ent. The intention of the above mentioned importers to evade applicable customs duties by way of suppressing the facts make them liable to be penalized under Section 114 A of the Customs Act, 1962.

(aa) Shri K Rama Swamy, Proprietor of M/s KKE is liable for penalty under Section 112 (a) of the Customs Act, 1962 in as much he is involved in under-valuation of the goods imported by M/s MES and M/s CGI, by way of corresponding with their overseas suppliers, sending the amounts to their overseas suppliers through illegal channels i.e other than normal banking channels, obtaining of second set of invoice with lesser values etc., for the purpose of customs and furnishing of the same to the customs for the purpose of assessment. Further, as per his instructions the goods imported in the name of M/s MES and M/s CGI were sent to M/s KKE, Secunderabad.

|The importation of the goods in question had taken place from October, 2007 and thereby the amended provisions of Section 14 of the Customs Act and Customs Valuation Rules, 2007 are applicable. As per the amended provisions of Section 14 of the Customs Act, 1962, for the purpose of assessment of the imported goods, the value shall be the transaction value of such goods and shall include, in addition to price actually paid or payable, any amount that the buyer is liable to pay for costs and services, including Commissions and brokerage, assists, engineering, design work, royalties and License fees, costs of transportation to the place of importation, insurance, and handling charges;

d services, including Commissions and brokerage, assists, engineering, design work, royalties and License fees, costs of transportation to the place of importation, insurance, and handling charges;

12.1 In the instant case, it appeared that it was clearly evident from the evidences retrieved from the computers/ laptops/ mobile phones that M/s KKE were resorting to undervaluation as is evidenced from the e-mail correspondence made by M/s KKE with their overseas suppliers. Thereby it appeared that the prices declared by M/s KKE/ M/s MES/ M/s CGI were to be rejected in terms of Rule 12 of Customs Valuation Rules in as much as the same would not be true transaction value under Rule 3 of Customs Valuation Rules, 2007. Further, as per Section 46 (4) of the Customs Act, 1962 and Rule 11 of Customs Valuation Rules, the importer is required to furnish a declaration as to the truth of the contents of Bill of Entry and also to declare full and accurate details relating to the value of the goods.

12.2 Further it also appeared that the importers also suppressed the fact of payment of freight amounts to the concerned freight forwarding companies in respect of import of parts of excavators from suppliers like M/s Gah Hup Seng Sdn Bhd, etc.

s also suppressed the fact of payment of freight amounts to the concerned freight forwarding companies in respect of import of parts of excavators from suppliers like M/s Gah Hup Seng Sdn Bhd, etc.

12.3 In view of the above, it appeared that the values declared by M/s KKE/ M/s MES/M/s CGI to the Customs authorities for assessment of Customs Duties do not represent the actual transaction values in terms of sub-Section (1) of Section 14 of the Customs Act, 1962 read with Rule 3 of Customs Valuation (Determination of price of imported goods) Rules, 2007 and are liable for rejection.

12.4 M/s KKE/ M/S MES/ M/s CGI appeared to be willfully under-declared the true value of the goods and their acts were with a clear intention to evade payment of applicable

Page 28 of 83

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Customs duties and thereby it wasa fit case to invoke the proviso to Section 28(1) of the Customs Act, 1962 and accordingly interest was also chargeable under Section 28 AB of the Customs Act, 1962:

ustoms duties and thereby it wasa fit case to invoke the proviso to Section 28(1) of the Customs Act, 1962 and accordingly interest was also chargeable under Section 28 AB of the Customs Act, 1962:

12.5 The documents retrieved in the GEQD report indicates that the actual value of the used excavators imported in the name of M/s KKE, M/s MES, M/s CGI is much higher than the values declared before Customs. Further, In respect of which direct evidences could not be retrieved, as the excavators imported were used, it appeared that the application of Rule 4/ Rule 5/Rule 7/ Rule 8 of Valuation Rules, 2007, could not be resorted to. Further the documents recovered from various places did not contain any other type of objective and quantifiable data with reference to determining the value, it appeared that the determination of values of the said used excavators need be carried out only with best judgment method in terms of Rule 9 of Customs Valuation Rules, 2007, basing on the actual values of similar model used excavators imported by them during the past period by the said importers.

best judgment method in terms of Rule 9 of Customs Valuation Rules, 2007, basing on the actual values of similar model used excavators imported by them during the past period by the said importers.

12.6 Therefore it appeared that recourse has to be taken to the relevant rules quoted above using the reasonable means consistent with the general provisions of these rules and in sub section (1) of Section 14 of the Customs Act 1962. For determining the value under Rule 9 the actual values of same model machines retrieved from the forensic analysis report are considered to be more apt in as much as over a period of time the importer had been importing the used excavators by declaring the same value for a certain type of machinery and the actual value of the machinery is more or less the same over a period of time.

12.7 As regards imports of spares as per the statements of accounts/ e-mail correspondence over a period of time, the importers resorted to same percentage of under valuation to the extent of 70% / 50% etc. Further in respect of certain spares received from specific suppliers they had resorted to mis-declaration of value by way of mentioning the contractual terms as CIF though the prices negotiated are on FOB basis and the amount of freight was being paid to the respective freight forwarding agents through persons in Singapore.

12.8 Keeping the above position in view, worksheets in respect of used excavators/speres for excavators were prepared with the parameters as detailed hereunder:

PREPARATION OF WORKSHEETS FOR DETERMINATION OF DIFFERENTIAL CUSTOMS DUTIES IN RESPECT OF USED EXCAVATORS:

13.1. In respect of imports made by M/s KKE one work sheet was prepared as WS-3 (of the SCN) covering a total of 4 excavators under 2 different Bills of Entry. In view of the

Page 29 of 83

K eae &

fact that only in respect of certain excavators imported in the name of M/s MES, direct evidences are available and two different worksheets WS-4(of the SCN) and WS-5(of the SCN) were prepared in respect of imports of excavators by M/s MES in terms of Rule 3 and Rule 9 of Customs Valuation Rules, 2007. Similarly in respect of imports made in the name of M/s CGI also two different worksheets in terms of Rule 3 and Rule 9 of Customs Valuation Rules, 2007 were prepared WS-6(of the SCN) and WS-7(of the SCN). In respect of three excavators listed vide S. No. 79, 86 & 87 of Panchanama dated 10.12.2008, imported in the name of M/s CGI from M/s Popli Resource Group Inc., no evidences were found and the machine models were also different for adopting values of similar machines. Hence, differential amounts of Customs duties payable were not shown against these. The Proforma invoices, shipments list, other email documents retrieved from GEQD report indicate that the prices Indicated in respect of excavators was on CIF . basis.

PREPARATION OF WORKSHEETS FOR DETERMINATION OF DIFFERENTIAL CUSTOMS DUTIES IN RESPECT OF SPARE PARTS IMPORTED IN THE NAME OF M/S MES:

prices Indicated in respect of excavators was on CIF . basis.

PREPARATION OF WORKSHEETS FOR DETERMINATION OF DIFFERENTIAL CUSTOMS DUTIES IN RESPECT OF SPARE PARTS IMPORTED IN THE NAME OF M/S MES:

13.2 As regards import of spares for excavators, in respect of import consignment received from M/s Sungbo Industries Co. Limited two different invoices having the same number, same date and covering the same quantity of spares with different values were found and that among the said two values, M/s MES declared lower values than the actual values, and also in respect of the Imports from M/s Glap Hup Seng Sdn Bhd, the amounts paid towards freight payable to the freight forwarders was not included in the assessable value by way of mis-declaring the contract terms of CIF instead of FOB, worksheet WS8(of the SCN) under Rule 3 of Customs Valuation Rules, 2007 is prepared in respect of the above consignment.

13.3 In respect of the spares imported from M/s Kian Ann Engineering Limited, even though no direct evidence are available, the mail correspondence pertaining to the imports from the said supplier over a period of time indicates that they had been importing the identical goods from the said supplier and also that the goods were grossly under valued. Hence, the extent of undervaluation resorted to in respect of a earlier consignments that were quoted in e-mall was made applicable and a worksheet WS-9(of the SCN) under Rule 4 was prepared.

lued. Hence, the extent of undervaluation resorted to in respect of a earlier consignments that were quoted in e-mall was made applicable and a worksheet WS-9(of the SCN) under Rule 4 was prepared.

13.4 In respect of Rock breakers and breaker chisels etc. imported from M/s Boohung, Korea listed vide S. No. 1 to 29 of Panchanama dated 10.12.2008, imported in the name of M/s MES, no evidences were found. Hence, differential amounts of Customs duties payable were not shown against these.

In the present case, M/s KKE/ M/s MES/ M/s CGI had suppressed the actual transaction values of the goods imported before the customs and obtained another set of

Page'30 of 83

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Invoices indicating lesser values for the purpose of payment of customs duties with an intention to evade applicable customs duties on the imported goods and hence the Customs duties sought to be evaded, viz., Rs. 6,25,124/-, Rs. 96,98,165/- and Rs. 19,37,564/- (detailed in WS-10) respectively is to be recoverable from the above three importers under proviso to section 28 (1) of the Customs Act, 1962 and consequently interest is chargeable under Section 28 AB of the Customs Act, 1962 and penalty is imposable under Section 114 A of the Customs Act, 1962. (WS-10 is as below:)

he Customs Act, 1962 and consequently interest is chargeable under Section 28 AB of the Customs Act, 1962 and penalty is imposable under Section 114 A of the Customs Act, 1962. (WS-10 is as below:)

||<br>WS-10;ABSTRACTOFCUSTOMSDUNESPAYABLEBYM/SKKE, <br>( tmportersno, A.V,Declared |Dutiespaid | Actual A.V. <br>IM/sKKE|WS3____| __—*'1650148/494179| 3727195<br>oe<br>7637337 <br>IMsmes [WSS |<br>5808472|<br>1665301|<br>15839073|<br>IMisMes_(Ws8 —|_**~—**—«1381184**3**|<br>3955602)205867**9**6<br>M/sMes [WSO _—| —_—«82647 5<br>2373912) __20881 26|M/SMES, M/SCGI<br> oe<br>1119303/<br>|<br>625124<br> aaa<br>4536185]<br>| _2870884|<br>**5**8**9**5893]<br>1940291)<br>9 3045| |. 3619133]|
|---|---|
|Mea re<br>7630510]<br>6144973|<br>1759817|<br>12910209|2185317]____1341302]<br>3697361]_1937564)|

14.1 From the foregoing discussions it appeared that:

a) The assessable value of Rs. 16,50,148/- declared by M/s KKE in respect of the 2 BES Imported through Custom House, Nhava Sheva, should be rejected and the revised assessable value of Rs. 37,27,195/- should be adopted in respect of the imported consignments for the purpose of customs assessment. Consequently, an amount of Rs. 6,25,124/-, being the differential duty (as detailed in WS-10) is to be demanded in terms of proviso to Section 28 (1) of the Customs Act, 1962;

b) The assessable value of Rs. 3,10,89,107/- declared in the Bills of Entry filled in the name of M/s MES in respect of the 20 B.E.S imported through Custom House, Nhava Sheva, should be rejected and the revised assessable value of Rs. 6,49,45,132/- should be adopted in respect of the imported consignments for the purpose of customs assessment. Consequently an amount of Rs. 96,98,165/-, being the differential duty (as detailed in WS-10) is to be demanded in terms of proviso to Section 28 (1) of the Customs Act, 1962;

c) The assessable value of Rs. 61,44,973/- declared in the Bills of Entry filed in the name of M/s CGI in respect of the 9 BES Imported through Custom House, Nhava Sheva, should be rejected and the revised assessable value of Rs. 1,29,10,209/- should be adopted in respect of the imported consignments for the purpose of customs assessment:

==> picture [56 x 27] intentionally omitted <==

----- Start of picture text ----- \2 ¢ . ----- End of picture text -----

onsignments for the purpose of customs assessment:

==> picture [56 x 27] intentionally omitted <==

----- Start of picture text ----- \2 ¢ . ----- End of picture text -----

==> picture [5 x 27] intentionally omitted <==

----- Start of picture text ----- ) ----- End of picture text -----

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Consequently an amount of Rs. 19,37,564/-, being the differential duty (as detailed in WS-10) is to be demanded in terms of proviso to Section 28 (1) of the Customs Act, 1962; d) M/s KKE being the actual owners of the goods imported in the name(s) of M/s MES and M/s CGI and all the goods imported in the name(s) of the said two importers were in turn transported to M/s KKE, a part quantities of which were found at the time of searches conducted at the premises of M/s KKE, M/s KKE are also appear to be responsible for discharging the duty liability alongwith M/s MES, M/s CGI:

e) M/S KKE, M/S MES, M/s CGI are liable to pay interest at applicable rates on the amount of duty short paid under Section 28AB of the Customs Act, 1962;

f) The consignments of Excavators/parts of excavators imported through Custom House, Nhava Sheva, Mumbal in the names of M/s KKE, M/s MES & M/s CGI totally valued at Rs. 37,27,195/- 6,49,45,132/- and 1,29,10,209/- (reassessed) (as detailed in Annexure-WS-10), including the goods seized listed from S. No.30 to 78, S. No.80 to 85 and S.No.88 to 105 in the Annexure to Panchanama dated 10.12.2008 drawn at workshop of M/s KKE, are liable to confiscation under Section 111 (m) of the Customs Act, 1962:

o.30 to 78, S. No.80 to 85 and S.No.88 to 105 in the Annexure to Panchanama dated 10.12.2008 drawn at workshop of M/s KKE, are liable to confiscation under Section 111 (m) of the Customs Act, 1962:

g) M/s KKE, M/S MES and M/S CGI are liable to penalty under Section 114A of the Customs Act, 1962;

h) Shri K. Rama Swamy, proprietor of M/s KKE is liable to penalty under Section 112 (a) of the Customs Act, 1962 for resorting to gross under valuation of goods imported in the names of all the three firms;

i) An amount of Rs. One Crore paid by M/s KKE during the course of investigation need to be adjusted towards the liability of M/s KKE.

Show Cause Notice dated 05.06.2009 was issued by DRI, Chennai vide F.No. VIII/26/38/2008-HRU wherein the following were called upon to Show Cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva:

15.1. M/s K.K. Enterprises (M/s KKE) (Noticee No. 1), Plot No.29, Ground Floor, BHEL Enclave, Mbar Road, Bowenpally, Secunderabad-9, were required to show cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, in respect of imports made through Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why:

o the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, in respect of imports made through Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why:

a) The assessable value of Rs.16,50,148/- declared in respect of 2 Bills of Entry filed by M/s KKE, should not be rejected and the revised assessable value of Rs. 37,27,195/(as detailed WS-10, WS-3) should not be adopted in respect of the aforementioned consignments for the purpose of Customs Assessment. Consequently the differential customs duty amounting to Rs. 6,25,124/- (Rupees Six lakhs twenty five thousand one hundred and twenty four only) which was short paid by M/s KKE, (as detailed WS-10,

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WS-3) should not be demanded under proviso to sub-Section (1) of Section 28 of the Customs Act 1962:

b) The goods imported by M/s KKE through Custom House, Nhava Sheva totally valued at Rs. 37,27,195/- (reassessed) (as detailed WS-10, WS-3) including the goods seized under Panchanama dated 10.12.2008 (other than S. No. 1 to 29 of the goods seized under Panchanama dated 10.12.2008), should not be confiscated under Section 111 (m) of the Customs Act, 1962;

C) Interest at applicable sates on the amount of customs duties demanded at (a) above should not be demanded from them in terms of Section 28 AB of the Customs Act 1962;

d) Penalty should not be imposed on them under Section 114A of the Customs Act 1962; and

demanded at (a) above should not be demanded from them in terms of Section 28 AB of the Customs Act 1962;

d) Penalty should not be imposed on them under Section 114A of the Customs Act 1962; and

15:2 M/s Mamta Exim Services, (M/s MES) (Noticee No. 2), Room No.46, 94, Fancy Chamber, 4th Floor, Surat Street, Masjid Bandar (E), Mumbai-400 009 and M/s K.K. Enterprises, Plot No.29, Ground Floor, BHEL Enclave, Akbar Road, Bowenpally, Secunderabad-9, were required to show cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, in respect of imports made through Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why:

a) The assessable value of Rs. 3,10,89,107/- declared in respect of 20 BEs filled in the name of M/s MES should not be rejected and the revised assessable value of Rs. 6,49,45,132/- (as detailed WS-4.5.8.9 & 10) should not be adopted in respect of the aforementioned consignments for the purpose of Customs Assessment. Consequently the differential customs duty amounting to Rs. 96,98,165/- (Rupees Ninety six lakhs ninety eight thousand one hundred and sixty five only) which was short paid, (as detailed WS-4, 5,8, 9 & 10) should not be demanded under proviso to sub Section (1) of Section 28 of the Customs Act 1962;

eight thousand one hundred and sixty five only) which was short paid, (as detailed WS-4, 5,8, 9 & 10) should not be demanded under proviso to sub Section (1) of Section 28 of the Customs Act 1962;

b) The said imported goods totally valued at Rs. 6,49,45,132 /- (reassessed) (as detailed WS-4,5.8,9 & 10) including the goods seized from the possession of M/s KKE under Panchanama dated 10.12.2008 shown in WS-4, 5, 8 & 9, should not be confiscated under Section 111 (m) of the Customs Act, 1962:

C) Interest at applicable rates on the amount of customs duties demanded at (a) above should not be demanded from them in terms of Section 28 AB of the Customs Act 1962;

d) Penalty should not be imposed on them under Section 114A of the Customs Act 1962. 15.3 M/s C.G. International, (M/s CGI) (Noticee No. 3), Room No.45, 94, Fancy Chamber, 4th Floor, Surat Street, Masjid Bandar (E), Mumbai 400 009 and M/s K.K. Enterprises, Plot No.29, Ground Floor, BHEL Enclave, Akbar Road, Bowenpally,

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Secunderabad-9, were required to show cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, in respect of imports made through Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why:

o the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, in respect of imports made through Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why:

a) The assessable value of Rs. 61,44,973/- declared in respect of 9 BEs filed in the “name of M/s CGI should not be rejected and the revised assessable value of Rs. 1,29,10,209/- (as detailed WS-6,7 & 10) should not be adopted in respect of the aforementioned consignments for the purpose of Customs Assessment. Consequently the differential customs duty amounting to Rs. 19,37,564/- (Rupees Nineteen lakhs thirty seven thousand five hundred and sixty four only) which was short paid, (as detailed WS6,7 & 10) should not be demanded under proviso to sub-Section (1) of Section 28 of the Customs Act 1962;

b) The said imported goods totally valued at Rs. 1,29,10,209/- (reassessed) (as detailed WS-6, 7 & 10) including the goods seized from the possession of M/s KKE under Panchanama dated 10.12. 2008 listed in WS-6 & WS-7 other than S. No. 79, 86 & 87 of the goods listed in Annexure to Panchanama dated 10.12.2008, should not be confiscated under Section 111 (m) of the Customs Act, 1962;

C) Interest at applicable rates on the amount of customs duties demanded at (a) above should not be demanded from them in terms of Section 28 AB of the Customs Act 1962,

d) Penalty should not be imposed on them under Section 114A of the Customs Act 1962.

ties demanded at (a) above should not be demanded from them in terms of Section 28 AB of the Customs Act 1962,

d) Penalty should not be imposed on them under Section 114A of the Customs Act 1962.

15.4 M/s K.K. Enterprises, Plot No.29, Ground Floor, BHEL Enclave, Akbar Road, Bowenpally, Secunderabad-9, were required to show cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, Post: Uran, District: Raigad, Maharashtra-400 707, as to why an amount of Rs. One Crore voluntarily paid by M/s KKE during the course of investigation, should not be adjusted towards the amounts of duties demanded above.

ShriK. Rama Swamy, (Noticee No. 4) Proprietor of M/s KKE was also required to show cause to the Commissioner of Customs, (Import), Jawaharlal Nehru Custom House, Nhava Sheva, within 30 days of receipt of the notice as to why penalty should not be imposed on them under Section 112 (a) of the Customs Act 1962 for resorting to undervaluation of the goods imported in the names of M/s KKE, M/s MES and M/s CGI as detailed Supra and an amount of Rs.1 Crore already paid should not be adjusted.

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RECORDS OF PERSONAL HEARING

In accordance with the principles of natural justice, opportunities for personal hearings were afforded to the noticees on multiple occasions. In some instances, personal hearings were conducted by the previous adjudicating authority i.e., the

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Commissioner of Customs, Import, JNCH and thereafter the Commissioner of Customs, NS-V, JNCH. However, due to a change in the adjudicating authority, fresh personal hearings were granted to the noticees.

17.1 The Noticees, i.e, M/s K K Enterprises (M/s KKE), C G International (M/s CGI) and Mamta Exim Servises (M/s MES) vide their letters dated 03.07.2009 requested for complete GEQD (Government Examiner of Questioned Documents) report and to grant more time for filing their reply to the impugned Show Cause Notice. The noticees M/s CGI and M/s MES and M/s KKE vide their letters dated 06.07.2009, 15.07.2009 and 05.09.2009 requested that their goods may be released. Noticee, M/s KKE further requested for reduction in the bank guarantee to be furnished by them for release of the impugned goods through their letters dated 19.09.2009 and 06.10.2009. Noticees M/s KKE, M/s CGI and M/s MES vide their letters dated 28.10.2009 again requested for providing all relied upon documents for filing a detailed reply.

tters dated 19.09.2009 and 06.10.2009. Noticees M/s KKE, M/s CGI and M/s MES vide their letters dated 28.10.2009 again requested for providing all relied upon documents for filing a detailed reply.

17.2 Shri Y.Sreenivas Reddy, Consultant on behalf of all Noticees, i.e, M/s KKE, M/s CGI and M/s MES vide his letters dated 05.11.2009 submitted that they do not have all the required Relied Upon documents including the GEQD report and requested to provide the same. On the reply to the Personal Hearing granted by the Commissioner of Customs (Import), JNCH, on 19.11.2009, the Noticee (M/s KKE) through their Consultant vide his letter dated 16.11.2009 requested for adjournment of Personal Hearing and for providing the relied upon documents.

17.3 Noticee (M/s KKE) vide their letter dated 25.11.2009 submitted that they deny the allegations of undervaluation and making of compensatory payments made by DRI as the same are baseless; that they have requested for providing the relied upon documents vide letters dated 03.07.2009 and 05.11.2009; that DRI should provide them the complete relied upon documents and to return unrelied upon documents; and to allow cross examine the persons (Sales head, M/s KKE; Proprietor, M/s MES; Proprietor, M/s CGI; Shri B Sanjeeva Rao and Shri KVV Murthy of Vishakhapatnam; and the Investigating officer in the case)whose statements were recorded in the subject matter. The same was reiterated by the Consultant of the Noticees (M/s KKE, M/s CGI and M/s MES) during the PH dated 26.11.2009.

ting officer in the case)whose statements were recorded in the subject matter. The same was reiterated by the Consultant of the Noticees (M/s KKE, M/s CGI and M/s MES) during the PH dated 26.11.2009. Further PH to the Noticees was scheduled for 18.03.2010, however, nobody appeared on the said date for PH. Consultant of the Noticees vide their letter dated 02.03.2010 requested for fixing next PH date after the relied upon documents have been provided by DRI to them.

17.4 DRI forwarded letter dated 03.02.2011 stating that all the relied upon documents from the GEQD have already been supplied in the case. Further PH to the Noticees was scheduled for 17.07.2012, Consultant of the Noticees (Shri G.Vidyadhar Reddy) in his submission dated 20.07.2012 requested for complete GEQD data report including the metadata.

17.5 DRI, Chennai was requested to provide the entire GEQD report and metadata vide letter dated 14.09.2012 to which DRI replied vide their letter dated 30.12.2012 that GEQD 7 Page 35 of 83 \ & |

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documents have already been provided to the Noticees; that GEQD documents were shown to the Noticees; that the request of entire GEQD report or metadata which have been extracted with the help of specialized techniques from seized computer cannot be entertained; that the RUDs and non RUDs have already been given to the Noticees.

report or metadata which have been extracted with the help of specialized techniques from seized computer cannot be entertained; that the RUDs and non RUDs have already been given to the Noticees.

17.6 However, due to a change in the adjudicating authority, fresh personal hearing to the Noticees was fixed on 17.07.2012 wherein the Noticee No. 1 (M/s KKE), was represented by their Consultant Shri G Vidyadhar Reddy who insisted on supply of copies of GEQD report and sought time. They submitted a letter dated 20.07.2012 in this regard. Further PH were scheduled on 24.07.2012, 21.12.2012 and 18.1.2013, however, no one attended the PH in the case. 17.7 Due to a change in the adjudicating authority, fresh personal hearing to the Noticees was scheduled on 12.05.2014 and 05.06.2014 that were requested by the said Consultant, Shri G Vidyadhar Reddy, for adjournment as they had to attend before the Hon'ble Sessions Court, Hyderabad on the same day and so, were not able to attend the PH. Further PH was fixed for 20.06.2014. Meanwhile, there was reorganization of the JNCH Commissionerates vide Board's Notification No. 78/2014-Cus (N.T) dated 16.09.2014.

re not able to attend the PH. Further PH was fixed for 20.06.2014. Meanwhile, there was reorganization of the JNCH Commissionerates vide Board's Notification No. 78/2014-Cus (N.T) dated 16.09.2014.

17.8 As per Board’s Instruction dated 29.06.2016, the case was approved by the Commissioner of Customs, NS-V on 25.07.2016 for transferring to Call Book case list. The case was withdrawn from the Call Book list as per Board’s instruction dated 03.01.2017 that was for withdrawal of the Board’s earlier instructions dated 29.06.2016 and 28.12.2016. Case was forwarded to the Commissioner of Customs, NS-V, JNCH for adjudication vide letter dated 16.02.2017.

17.9 PH was scheduled on 24.04.2017 which was attended by the Consultant of Noticee No. 4, Shri G Vidyadhar Reddy who requested for the entire GEQD (Government Examiner of Questioned Documents, Hyderabad) report for filing replies to the impugned SCN. Further, it was decided by the adjudicating authority that a reference shall be made to DRI for appointment of a Common Adjudicating Authority as there is another Show Cause Notice dated 14/10/2010 in relation to the same party & issue. The GEQD report was provided by the DRI office to the Noticee on 25.05.2017.

17.10 Noticee no. 4 represented by their Consultant Shri G Vidyadhar Reddy submitted their written submission dated 22.04.2017 wherein they interalia stated submitted that:

erms of this values; that the enhancement demanded does not sustain, and the same merits to be set aside; that similar is the situation of compared upon evidence in case of Worsksheet 5, 6,7,8 and 9; that the relied upon documents are only sketchy and this does not indicate that the value merits to be enhanced.

(xxviii) Noticee also pointed out that during the relevant time, not only these importers, several other importers also have imported the same second hand machines viz excavators of same models or comparable equipment, and the customs dept, is in possession of such data of import; that the Dept. did not chose to seek to compare any of such contemporary import of others or the price at which several such machines have been imported and cleared on payment of duty; that they pray the adjudicating authority to get this matter verified as whether their declared value is at par with the declared value for import by several others or at variance; that this itself shall establish that the price declared by us for payment of the customs duty had been genuine and there is no scope for enhancement of the value, as is proposed by the Dept. in the impugned notice.

hall establish that the price declared by us for payment of the customs duty had been genuine and there is no scope for enhancement of the value, as is proposed by the Dept. in the impugned notice.

(xxix) Noticee further submitted that it is alleged in the Show Cause Notice that they have sent additional amounts to the foreign suppliers than what is declared in the Bills of Entry filed with the Customs authorities which is based only on circumstantial conclusion, that also from Emails and GEQD reports and that the credibility of the email/GEQD report itself is doubtful, the Dept. has not bought out any evidence of actual remittance or the payment more than what is transacted in the invoices; that the Show cause notice attempted to depend on statements of two different persons Sanjeeva Rao and Stayanarayana Murty to show that Ramaswamy gave them money in India for the money delivered at Singapore; that the total quantum of this money is about thirty lakhs which is no match and non comparable to the extent of undervaluation alleged in the notice. Without admitting such a wild allegation levelled, nowhere is it demonstrated that such money, even if changed hands, is for the equipment which is undervalued and imported, and details of such equipment which have been paid, for by that alleged extra payments is not brought out in the Notice; that the Notice tried to create suspicion in the minds of. Page 45 of 83 ie

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ents is not brought out in the Notice; that the Notice tried to create suspicion in the minds of. Page 45 of 83 ie

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the authority quoting some money exchange for the accommodation of someone coming from Singapore to India or for someone who frequently travels to other countries, as money paid for undervaluation or due amounts without specifying the details for such equipment's. This is too generic an allegation and too small or generic basis to have credibility as if this was the amount which was paid over and above the declared transacted value; that there is no statement recorded from the authorised persons of these foreign companies, though the details of these firms are available on record. It is to submit that in allegations of undervaluation involving several parties, allegation of undervaluation be not levelled without any basis for such allegation; that it is settled law that the onus is on the revenue to establish the undervaluation cases. The values adopted in the Show Cause Notice become presumptory, for lack of evidence and as such Show Cause Notice needs to be set aside in the interest of justice

tablish the undervaluation cases. The values adopted in the Show Cause Notice become presumptory, for lack of evidence and as such Show Cause Notice needs to be set aside in the interest of justice

(xxx) Noticee further submitted that the proposal to enhance the value under Rule 3 r/w 9 and Rule 4 of Customs Valuation Rules 2007 is invalid, as first the transacted value ought to be rejected strictly in terms of Rule 12, which is not done; that the Show Cause Notice does not discuss how and why, under which provisions of Rule 12 transacted value is rejected. There are umpteen number of imports of Hitachi excavators (old and used) in the country during the relevant time, and all the imports have been in the comparable price range; that It is not the allegation of the DRI that the whole country had been undervaluing. If that is not the case, the contemporaneous import price of such equipment during the relevant time is comparable to the value declared by these importers, due to which it is clear that the declared values are fair transacted values and the same merits to be accepted, and does not need interference; that when so many imports exist of this equipment during relevant time, Dept. did not come up with any value of identical goods which were transacted at value higher than what is declared by this importer which itself demonstrate that the Dept. cannot allege undervaluation and demand duty. Once transacted value is rejected under Rule 12, for arriving at fair value the Dept. ought to sequentially follow Rule 4 to 9.

emonstrate that the Dept. cannot allege undervaluation and demand duty. Once transacted value is rejected under Rule 12, for arriving at fair value the Dept. ought to sequentially follow Rule 4 to 9. SCN simply jumped to Rule 9 without discussing contemporaneous import data Under Rule 4, 5. Even for arriving at suggested values under Rule 9, the Notice does not discuss the sequential basis and violates Rule 9(2) (vii) by suggesting arbitrary and fictitious values: based on importers own ‘proforma invoice’, in view of which SCN merits to be set aside. Noticee stated that based on Importers own proforma invoices and quotes, the allegation of undervaluation of identical goods comparison cannot be brought in.

(xxxi) | Noticee submitted that as there is no misdeclaration of nature of goods, and there is no undervaluation of the goods declared, there Is no issue of holding them liable to confiscation, hence section 111(m) is not invokable, and the same merits to be set aside; that there is no suppression in value of goods with intent to evade duty as is alleged, and is not demonstrated; that the bills of entry have been filed with chartered engineer certificate giving the year of make, price in year of make, and fair value taking , into account the depreciation; that the goods were physically examined by the customs

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neer certificate giving the year of make, price in year of make, and fair value taking , into account the depreciation; that the goods were physically examined by the customs

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officers, and fairness of value was adjudged; that not only that there have been several contemporaneous imports of several others which also was cleared at the same valuation, which demonstrates the international price of these goods during the relevant time; that in such a situation, in absence of any collusion or suppression of facts, penalty invoked under section 114A is not sustainable. (xxxiv) | Noticee also submitted that Ramaswamy, as proprietor of the firm, has only sourced the second hand machinery for his own firm, and also helped sourcing the capital goods for other two firms; that the sourcing for other two firms is as a part of business wherein, he bought the capital goods with proper commission from them, and the other two firms only are the ‘importers’ who handled the import and clearance of the goods in terms of section 2(26) and section 46 of the Customs Act 62; that there is no misdeclaration or undervaluation of the goods as explained above; that Proforma invoices cannot be basis for setting aside the declared and transacted value, based on surmises; that in absence of the above, the penalty proposed under section 112(a) on Ramaswamy be set aside as not sustainable.

(xxxv) Noticee submitted that in view of above, the show cause notice merits to be dropped, as unsubstantiated and without any cogent basis, as the declared values cannot be set aside.

stainable.

(xxxv) Noticee submitted that in view of above, the show cause notice merits to be dropped, as unsubstantiated and without any cogent basis, as the declared values cannot be set aside.

In accordance with the principles of natural justice, opportunities for personal hearings were afforded to the noticees on multiple occasions. In some instances, personal hearings were conducted by the previous adjudicating authority i.e., the Commissioner of Customs, Import, JNCH and thereafter the Commissioner of Customs, NS-V, JNCH. However, due to a change in the adjudicating authority, fresh personal hearings were granted to the noticees.

18.1 The previous adjudicating authority fixed the Personal hearings for the Noticees on 17.07.2012 wherein the Noticee No. 1 (M/s K.K.Enterprises), was represented by their Consultant Shri G Vidyadhar Reddy who insisted on supply of copies of GEQD report and sought time. They submitted a letter dated 20.07.2012 in this regard. Further PH were scheduled on 12.05.2014, 05.06.2014 that were requested by the said Consultant for adjournment as they had to attend before the Hon'ble Sessions Court, Hyderabad on the same day and so, were not able to attend the PH. Further PH was fixed for 20.06.2014. Meanwhile, there was reorganization of the JNCH Commissionerates vide Board’s Notification No. 78/2014-Cus (N.T) dated 16.09.2014.

re not able to attend the PH. Further PH was fixed for 20.06.2014. Meanwhile, there was reorganization of the JNCH Commissionerates vide Board’s Notification No. 78/2014-Cus (N.T) dated 16.09.2014.

18.2 As per Board’s Instruction dated 29.06.2016, the case was approved by the Commissioner of Customs, NS-V on 25.07.2016 for transferring to Call Book case list. The case was withdrawn from the Call Book list as per Board's instruction dated 03.01.2017 that was for withdrawal of the Board’s earlier instructions dated 29.06.2016 and 28.12.2016. Case was forwarded to the Commissioner of Customs, NS-V, JNCH for adjudication vide letter dated 16.02.2017.

\ Ss AN vi

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18.3 PH was scheduled on 24.04.2017 which was attended by the Consultant of Noticee No. 4, Shri G Vidyadhar Reddy who requested for the entire GEQD (Government Examiner of Questioned Documents, Hyderabad) report for filing replies to the impugned SCN. Further, it was decided by the adjudicating authority that a reference shall be made to DRI for appointment of a Common Adjudicating Authority as there is another Show Cause Notice dated 14/10/2010 in relation to the same party & issue. The GEQD report was provided by the DRI office to the Noticee on 25.05.2017.

mon Adjudicating Authority as there is another Show Cause Notice dated 14/10/2010 in relation to the same party & issue. The GEQD report was provided by the DRI office to the Noticee on 25.05.2017.

18.4 On request of the Commissioner of Customs, NS-V letter dated 02.08.2019, a Corrigendum dated 16.01.2020 to the impugned SCN dated 05.06.2009 was issued by the DRI, Chennai wherein the adjudicating authority was mentioned as the Commissioner of Customs, NS-V, JNCH instead of Commissioner of Customs, Import, JNCH.

18.5 In light of the changes made in the Customs Act, 1962 by the Finance Bill, 2018 with section 28 being one section where changes were made that were effective till 28.03.2019, approval for extension of the timeline for adjudication upto 27.03.2020 was given by the Chief Commissioner of Customs, Mumbai, Zone-ll on 27.03.2019.

18.6 PH to the Noticees was scheduled on 28.01.2020, 25.02.2020 however, no one appeared. Noticee No. 4 requested for adjournment vide letter dated 21.02.2020.

oms, Mumbai, Zone-ll on 27.03.2019.

18.6 PH to the Noticees was scheduled on 28.01.2020, 25.02.2020 however, no one appeared. Noticee No. 4 requested for adjournment vide letter dated 21.02.2020.

18.7 In view of the Board’s Instruction No. 04/2021-Customs dated 17.03.2021, issued pursuant to the Hon’ble Supreme Court’s judgement in the matter of M/s Canon India Pvt. Ltd. v/s Commissioner of Customs in Civil Appeal No. 1827 of 2018, the impugned SCN was transferred to Call Book vide Commissioner of Customs, NS-V order dated 23.03.2021 and the Noticees were informed about the same vide letter dated 24.06.2021. 18.8 In exercise of the powers conferred by sub-section (1) of section 4 read with section 3 and sub-sections (1) and (1A) of section 5 of the Customs Act, 1962 (52 of 1962), the Central Board of Indirect Taxes and Customs (CBIC) vide Notification No.29/ 2025Customs (N.T.) dated 24.04.2025 has appointed the Principal Commissioner or Commissioner of Customs (Import-l), Mumbai Customs Zone -l, New Custom House, Ballard Estate, Mumbai-400 001, to exercise the powers and discharge the duties conferred upon or imposed on the Commissioner of Customs, Nnava Sheva-V, Mumbai Customs Zone-ll, for the purpose of adjudication of the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009 (in the case of K K Enterprises, and others.).

nava Sheva-V, Mumbai Customs Zone-ll, for the purpose of adjudication of the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009 (in the case of K K Enterprises, and others.).

18.9 Due to a change in the adjudicating authority, fresh personal hearings were granted to the noticees on 24.09.2025, 13.10.2025 and 23.10.2025. Consultant of Noticee No. 1 (M/s K.K.Enterprises) and Noticee No. 4 (Shri K. Rama Swamy) appeared and reiterated the earlier submissions made vide their letter dated 22.04.2017 wherein interalia he stated that the said goods i e second hand machinery was allowed for home consumption by the Customs after physical examination and valuation by the Chartered Engineer. Thereof, it was inappropriate to re-assess the value of the goods without ‘rejecting the original assessment of the goods. The proposed re-valuation of the said

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of the goods without ‘rejecting the original assessment of the goods. The proposed re-valuation of the said

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goods by the DRI is based on proforma invoices and other email communications recovered during search proceedings. He insisted that such proforma invoices could not be considered for the purpose of determination of transaction value. He further submitted that value of similar goods of contemporary imports had not been considered by the DRI while re-determining the value of the impugned goods. He also contended the alleged cash payment to supplier on the basis of the fact that mere cash payments of Rs. 10-20 lakhs could not substantiate an alleged undervaluation of 6-8 crores. He finally submitted that the said SCN is pending for adjudication for a very long period of 15 years and the Noticees have already filed a Writ Petition before the Hon'ble High Court of Bombay for quashing and setting aside this SCN on this grounds. This Writ Petition is subject to the outcome of similar matters clubbed in a Special Leave Petition pending before the Hon'ble Supreme Court of India. Therefore, he prayed for adjournment of adjudication proceedings in this matter till the pendency of the case in the Hon'ble Supreme Court of India. 18.10 | find that the reasonable opportunity of being heard has been given to the notices and only Noticee No. 1 and 4 appeared. Noticees No. 2 and 3 didn’t appear for their Personal Hearing; therefore, | proceed with the adjudication of this case.

19. Appointment of Adjudicating Authority:

In exercise of the powers conferred by sub-section (1) of section 4 read with section 3 and sub-sections (1) and (1A) of section 5 of the Customs Act, 1962 (52 of 1962), the Central Board of Indirect Taxes and Customs (CBIC) vide Notification No.29/ 2025Customs (N.T.) dated 24.04.2025 has appointed the Principal Commissioner or Commissioner of Customs (Import-l), Mumbai Customs Zone -l, New Custom House, Ballard Estate, Mumbai-400 001, to exercise the powers and discharge the duties conferred upon or imposed on the Commissioner of Customs, Nhava Sheva-V, Mumbai Customs Zone-ll, for the purpose of adjudication of the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009 (in the case of K K Enterprises, and others.). Accordingly, !, being the Commissioner of Customs (Import-l), Mumbai Zone-|, have taken up the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-062009 (in the case of M/s K. K. Enterprises, (M/s KKE), and others.) for the purpose of adjudication.

19.1. Long pendency in Adjudication Proceedings due to injunctions by the Court: It is pertinent to mention here that this case was transferred to the call book in the light of the decision of Hon'ble Supreme Court in the matter of M/s Canon India Pvt Ltd. In view of the changes vide Finance Act, 2022 dated 30.3.2022 wherein it is inter alia clarified that any proceedings arising out of any action in accordance with the provisions Page 49of 83 * :

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d 30.3.2022 wherein it is inter alia clarified that any proceedings arising out of any action in accordance with the provisions Page 49of 83 * :

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of the Customs Act, as amended by this Act. Subsequently, Section 3 of the Customs Act, 1962 is amended to specifically include the officers of DRI, Audit and Preventive Formations in the class of officers of Customs. Hon'ble Apex court allowed the Review Petition filed by Department of Revenue and upheld the validity of the 2022 amendment provisions contained in Section 97 of the Finance Act 2022. Accordingly, show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009 (in the case of K K Enterprises, and others.) was removed from the call book by the competent authority.

19.2. Thus, | find that the adjudication of this SCN was kept in abeyance for a long period due to injunctions on the adjudication proceedings by different judicial forums on the issue of DRI officers’ power as being Proper officer’ for the issuance of SCN under section 28 of the Customs Act, 1962 as well as instructions issued by the Board to keep such cases in the Call book in this regard.

ers’ power as being Proper officer’ for the issuance of SCN under section 28 of the Customs Act, 1962 as well as instructions issued by the Board to keep such cases in the Call book in this regard.

19.3 | have carefully gone through the facts of the case by going through the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009 (in the case of K K Enterprises, and others.), and the Written& Oral Submissions made by the Noticee. Accordingly, | am proceeding to decide the matter by discussing all the core issues involved in this case.

20. Principles of Natural Justice followed:

20.1. M/s K.K. Enterprises (M/s KKE), M/s Mamta Exim Services (M/s MES), M/s C.G. International (M/s CGI), and Shri K. Rama Swamy, Proprietor of M/s K.K. Enterprises are four (04) noticees to the show cause notice issued vide F. No. VII/26/38/2008-HRU, dated 05-06-2009. | find that in the instant case, fair opportunities were provided to all the Noticees for replying to the show cause notice. Two noticees namely M/s Mamta Exim Services (M/s MES) and M/s C.G. International (M/s CGI), however, have failed to file any defence submissions though a considerable time has passed. | further find that these two noticee have failed to avail the opportunities of personal hearing provided to them to defend their case. | find that neither these Noticee/ authorized representatives on behalf of them have appeared for personal hearing on any of the 3 dates given to them to present their case nor have they submitted any reply to the allegation mentioned in the SCN. Thus, | find that sufficient time and opportunity have been given to these notice as prescribed under section 122A of the Customs Act, 1962 and therefore principles of natural justice have been complied with. Further, PH notices were sent via email, posted and affixed on the Notice board of this office premises, fulfilling the requirement to deliver the PH Notice as prescribed under section 153 of the Customs Act, 1962.

es were sent via email, posted and affixed on the Notice board of this office premises, fulfilling the requirement to deliver the PH Notice as prescribed under section 153 of the Customs Act, 1962.

20.2. | find it relevant to refer to the judgement of Hon’ble Tribunal Chennai in the case of V.K Thampi Vs. Collector of Customs and Central Excise, Cochin [1988 (033) ELT 424], wherein Hon'ble Tribunal held at para 7 that

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“an adjudicating authority is entitled to proceed ex-parte if the person concerned does not appear before it in response to a notice issued by it’.

20.3. Further, on the issue of affording sufficient opportunities to the Noticee to defend himself vis-a-vis allegations made, | find it relevant to refer to the judgement of Hon'ble Allahabad High court in the case of Modipon Ltd. Vs CCE, Meerut reported as 2002 (144) ELT 267 (AIL). The Hon’ble High Court at Para 19 held as follows:-

levant to refer to the judgement of Hon'ble Allahabad High court in the case of Modipon Ltd. Vs CCE, Meerut reported as 2002 (144) ELT 267 (AIL). The Hon’ble High Court at Para 19 held as follows:-

“No doubt hearing includes written submission and personal hearing as well but the principle of Audi Alteram Partem does not make it imperative for the authorities to compel physical presence of the party concerned for hearing and go on adjourning the proceedings so long the party concerned does not appear before them. ‘What is imperative for the authorities is to afford the opportunity. It is for the party concerned, there is no violation of the principles of natural justice. The fundamental principles of natural justice and fair play are safeguards for the flow ofjustice and not the instruments for delaying the proceedings and thereby obstructing the flow of justice. In the instant case as stated in detail in preceding paragraphs, repeated adjournments were granted to the petitioners, dates after dates were fixed for personal hearing, petitioners filed written submissions, the administrative officer of the factory appeared for personal hearing and filed written submissions, therefore, in the opinion of this Court there is sufficient compliance of the principles of natural justice as adequate opportunity of hearing was afforded to the petitioners” .

20.4. Further Hon’ble Supreme Court in the case of Chairman, Board of Mining Examination Vs. Ramjee (AIR 1977 SC965) held as follows:

ate opportunity of hearing was afforded to the petitioners” .

20.4. Further Hon’ble Supreme Court in the case of Chairman, Board of Mining Examination Vs. Ramjee (AIR 1977 SC965) held as follows:

“Natural Justice is no unruly horse, no lurking land mine, nora judicial cure-all. If fairness is shown by the decision maker to the man proceeded against, the form, features and the fundamentals of such essential procedural propriety being conditional by the facts and circumstances of such situation, no breach of natural justice can be complained of Unnatural expansion of natural justice, without reference to the administrative realities and other factors of a given case, can be exasperating......”

20.5 The Hon'ble Supreme Court in Titaghur Paper Mills Co. Ltd Vs State of Orissa AIR 1983 S.C.603=53 STC page 315 which arose under the Orissa Sales Act, 1947 held as follows:-

“Merely because the Sales Tax Officer refused to grant any further adjournments and proceeded to make a best judgment assessment, it could not be said that he acted in violation of the rules of naturaljustice. The question whether another adjournment should have been granted or not was within the discretion of the Sales Tax Officer and wasia Page 51 of 83 ‘eg

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her adjournment should have been granted or not was within the discretion of the Sales Tax Officer and wasia Page 51 of 83 ‘eg

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matter which could properly be raised only an appeal under Section 23(1) of the Act and that the Act provided for a complete machinery to challenge an order of assessment and the orders of assessment in the case could only be challenged by the mode prescribed by the Act and not by a petition under Article 226 of the Constitution.”

20.6. Hence, | proceed with the ex-parte finalization of the adjudication proceedings with respect to two noticees namely M/s Mamta Exim Services (M/s MES), and M/s C.G. International (M/s CGI) of the present SCN, based on the facts and evidence available on record and in case of the other two noticees, who have submitted their written and oral submissions, will be discussed before reaching at any conclusions.

21. Issues to be decided:

21.1. | find that the present Show Cause Notice by the DRI alleges that M/s K.K. Enterprises (M/s KKE), Secunderabad, was grossly undervaluing used excavators and spare parts imported from suppliers in Malaysia, Singapore, Korea, China, etc. It was further claimed that imports were also being routed through two other Mumbai based firms—M/s Mamta Exim Services (M/s MES) and M/s C.G. International (M/s CGI)— which were allegedly name-lending/dummy firms created only to facilitate undervalued imports for KKE. The investigation concluded that these three firms had deliberately misdeclared values, suppressed actual prices, used dummy importers, and remitted differential amounts illegally to evade payment of legitimate customs duty. The seized goods are proposed to be liable for confiscation, and the noticees are held liable for differential duty, interest, confiscation, and penalties under the Customs Act, 1962. The issues before me to be decided are as under:

(i) Whether the imported used excavators and spare parts were deliberately undervalued to evade legitimate Customs duty;

(ii) Whether the declared assessable values in the Bills of Entry of all three firms are liable to be rejected in terms of Rule 12 of Customs Valuation Rules, 2007 and are required to be re-determined with higher reassessed values in terms of Rule 3 and Rule 9 of Customs Valuation Rules, 2007;

o be rejected in terms of Rule 12 of Customs Valuation Rules, 2007 and are required to be re-determined with higher reassessed values in terms of Rule 3 and Rule 9 of Customs Valuation Rules, 2007;

Name of the Importer	Declared Value	Re-determined Value
	(in Rs.)	(in Rs.)
M/s K.K. Enterprises (M/s KKE)	16,50,148/-	37,27,195/-
M/s Mamta Exim Services (M/s	3,10,89,107/-	6,49,45, 132/-
MES)
M/sC.G.International(M/sCGI)	61,44,973/-	1,29,10,209/-

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(iii) Whether the differential customs duty on the re-assessed value is recoverable from the noticees under Section 28(1) of the Customs Act, 1962

==> picture [345 x 69] intentionally omitted <==

----- Start of picture text ----- Name of the Importer Differential Duty in Rs. M/s K.K. Enterprises ( M/s KKE 6,25, 124/- M/s Mamta Exim Services ( M/s MES 96,98, 165/- M/s C.G. International ( M/s CGI 19,37,564/- ----- End of picture text -----

(iv) Whether Interest on the above differential duty is required to be recovered under Section 28AB of the Customs Act, 1962:

(v) Whether all consignments imported in the names of M/s KKE, M/s MES, M/s CGl, including seized goods listed in the Panchanama of 10.12.2008, are liable for confiscation under Section 111(m) for misdeclaration of value;

ents imported in the names of M/s KKE, M/s MES, M/s CGl, including seized goods listed in the Panchanama of 10.12.2008, are liable for confiscation under Section 111(m) for misdeclaration of value;

(vi) Whether all the three importers i.e. M/s KKE, M/s MES, M/s CGI are liable for penalty under Section 114A of the Customs Act, 1962; (vii) Whether Shri K. Rama Swamy, Proprietor of M/s KKE are liable for penalty under Section 112(a) of the Customs Act, 1962 for resorting to undervaluation of the goods imported in the names of M/s KKE, M/s MES and M/s CGI; (viii) Whether the amount of Rs. One Crore voluntarily paid by M/s KKE during the course of Investigation, is required to be adjusted towards the amounts of duties demanded above;

(ix) Whether M/s KKE is required to be treated as the real importer of the goods imported in the name(s) of M/s MES and M/s CGI and therefore jointly responsible for the duty liabilities of M/s MES and M/s CGI.

22. Evaluation of defence submissions on their merits:

_ 22.1 I, at first, am going to evaluate the defense submissions based on their merit, and will assess their arguments and evidence presented in a fair and impartial manner, considering their relevance, validity, and strength:

22.2. adjudication proceedings cannot be adjourned in absence of any injunction by the higher judicial forum:

M/s KKE and Shri K. Rama Swamy, Proprietor of M/s KKE submitted that the said SCN is pending for adjudication for a very long period of 15 years and the Noticees have already filed a Writ Petition before the Hon’ble High Court of Bombay for quashing and setting aside this SCN on this grounds of long pendency in adjudication of the present SCN. This Writ Petition is subject to the outcome of similar matters clubbed in a Special Leave Petition pending before the Hon’ble Supreme Court of India. Therefore, they

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prayed for adjournment of adjudication proceedings in this matter till the pendency of the case in the Hon’ble Supreme Court of India.

22.3. In this regard, | find that, prior to the amendment, which was carried out with effect from 29.03.2018, Section 28(9) of the Customs Act, 1962 did not provide for strict timelines for determining duty under Section 28(8) of the Customs Act. In terms of the unamended Section 28(9) of the Customs Act, 1962 the concerned authority was required to determine the amount of duty or interest within the period of six months or one year as the case may be, only if it was possible to do so. Section 28(9) of the Customs Act, 1962 as in force prior to 29.03.2018 read as under:

"[28. Recovery of[duties not levied or not paid or short-levied or short-paid] or erroneously refunded.

o so. Section 28(9) of the Customs Act, 1962 as in force prior to 29.03.2018 read as under:

"[28. Recovery of[duties not levied or not paid or short-levied or short-paid] or erroneously refunded.

XXXX XXXX XXXX XXXX (9) The proper officer shall determine the amount of duty or interest under sub-section (8),--

(a) within six months from the date of notice, [where it is possible to do so], in respect of case falling under clause (a) of sub- section (1);

(b) within one year from the date of notice, [where it is possible to do so] in respect of cases falling under sub-section (4):"

22.4. Section 28(9) and 9(A) of the Customs Act pursuant to amendment read as under:

"[28. Recovery of[duties not levied or not paid or short-levied or short-paid] or erroneously refunded.

XXXX XXXX XXXX (9) The proper officer shall determine the amount of duty or interest under sub-section (8),--

(a) within six months from the date of notice, [xxx], in respect of case falling under clause (a) of sub- section (1);

(b) within one year from the date of notice, [xxx] in respect of cases falling under subsection (4):

[PROVIDED that where the proper officer fails to so determine within the specified period, any officer senior in rank to the proper officer may, having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year:

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nterest under sub-section (8), extend the period specified in clause (a) to a further period of six months and the period specified in clause (b) to a further period of one year:

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PROVIDED FURTHER that where the proper officer fails to determine within such extended period, such proceeding shall be deemed to have concluded as if no notice had been issued. ]

(9A) Notwithstanding anything contained in sub-section (9), where the proper officer is unable to determine the amount of duty or interest under sub-section (8) for the reason that--

(a) an appeal in a similar matter of the same person or any other person is pending before the Appellate Tribunal or the High Court or the Supreme Court; or

(b) an interim order of stay has been issued by the Appellate Tribunal or the High Court or the Supreme Court; or

(d) the Settlement Commission has admitted an application made by the person concerned, the proper officer shall inform the person concerned the reason for nondetermination of the amount of duty or interest under sub-section (8) and in such case, the time specified in sub-

section (9) shall apply not from the date of notice, but from the date when such reason ceases fo exist.]..."

f duty or interest under sub-section (8) and in such case, the time specified in sub-

section (9) shall apply not from the date of notice, but from the date when such reason ceases fo exist.]..."

22.5. From a bare perusal of amended Sub-sections (9) and (9A) of Section 28 of the Customs Act, it is evident that the proper officer is bound to pass an order within six months or one year from the date of notice as the case may be, in cases of duties not paid or short-levied or short-paid or erroneously refunded. The said period can be extended for a further period of six months or one year in the cases specified in clause (a) and (b) of Section 9, respectively, by an officer, senior in rank to the proper officer having regard to the circumstances under which the proper officer was prevented from determining the amount of duty or interest within the prescribed period.

22.6. Further, if the proper officer is unable to determine the duty or interest for the reasons mentioned in Sub-section (9A), the proper officer is required to inform the assessee concerned, the reason for non-determination of the duty or interest, and in such case, the time prescribed in Sub-section (9) apply not from the date of Show Cause Notice but from the date when such reason ceases to exist.

non-determination of the duty or interest, and in such case, the time prescribed in Sub-section (9) apply not from the date of Show Cause Notice but from the date when such reason ceases to exist.

22.7. From the above, it is, therefore, clear that, with effect from 29.03.2018, it is mandatory for the proper officer to adjudicate the Show Cause Notices that are issued after the amendment to Section 28(9) of the Customs Act within a period of six months or one year of the date of issuance as the case maybe. The same can be extended for a

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further period of one year by an officer senior in rank to the proper officer, after considering the circumstances under which the proper officer was prevented from passing an order within the prescribed period.

22.8. Itis significant to note that the provisions of Section 28(9) of the Customs Act were amended by the Finance Act, 2018 (Act, 2013 of 2018). The same came into effect from 29.03.2018. The amended and unamended provisions of Section 28(9) of the Customs Act have been referred above.

ere amended by the Finance Act, 2018 (Act, 2013 of 2018). The same came into effect from 29.03.2018. The amended and unamended provisions of Section 28(9) of the Customs Act have been referred above. Pursuant to the said amendment, the words "where it is possible to do so" were deleted from Section 28(9) of the Customs Act and a proviso was inserted, which provided that where a proper officer fails to determine the amount of duty within the specified period any officer senior in the rank to that of the proper officer may extend the period to a further period of six months or one year as the case may be on being satisfied of the existence of the circumstances under which the proper officer was prevented from determining the duty within the specified period. Sub-section (9A) was also inserted by the Finance Act, 2018.

22.9. It is also significant that an Explanation 4 was inserted by the Finance Act, 2018, which clarified that the show cause notices issued prior to the date on. which Finance Bill, 2018 receives the ascent of the President shall continue to be governed by the provisions of unamended Section 28 of the Customs Act. By Finance, Act, 2020, the Explanation 4 to Section 28 of the Customs Act was substituted and the same reads as under :

be governed by the provisions of unamended Section 28 of the Customs Act. By Finance, Act, 2020, the Explanation 4 to Section 28 of the Customs Act was substituted and the same reads as under :

"Explanation 4: For the removal of doubts, it is hereby declared that notwithstanding anything to the contrary contained in any judgment, decree or order of the Appellate Tribunal or any Court or in any other provision of this Act or the rules or regulations made thereunder, or in any other law for the time being in force, in cases where notice has been issued for non- levy, short-levy, non-payment, short-payment or erroneous refund, prior to the 29th day of March, 2018, being the date of commencement of the Finance Act, 2018 (13 of 2018), such notice shall continue to be governed by the provisions of section 28 as it stood immediately before such date."

The intention of the Explanation 4 to Section 28 of the Customs Act, 1962, thus, is apparent that the show cause notices which were issued prior to the Finance Act coming into force the Finance Act, 2014 were required to be governed by unamended Act of Section 28(9) of the Customs Act. Thus, the unamended Section 28(9) of the Customs Act, specifically provides that the proper officer ‘shall’ determine the amount of duty within six months or within one year, as the case may be, from the date of notice. It provides a certain degree of inbuilt flexibility by incorporating the words 'where it is possible to do so.

uty within six months or within one year, as the case may be, from the date of notice. It provides a certain degree of inbuilt flexibility by incorporating the words 'where it is possible to do so.

22.10. The long pendency of the SCN is not a ground for adjournment at the stage of adjudication. The Noticee themselves repeatedly sought adjournments, avoided hearings, and chose litigation; they cannot now claim prejudice. Prolonged delay in adjudication has no direct bearing on the merits of alleged undervaluation, duty evasion, Page 56 of 83 f *

forged invoices, hawala payments, etc. All the Noticees were given full opportunity to file written submissions, present evidence, and attend hearings in adjudication proceedings. Therefore, adjudication does not prejudice their rights.

22.11. Of course, Section 28(9) of the Customs Act, 1962 fixes a timeline to adjudicate the case and determine the duty under Section 28(8) within one year from the date of issuance of SCN under section 28(4) ibid. However, the said provision came into effect from the year 2018, but SCN in this case was issued in the year 2009. | also pay attention on Para 1 and Para2 of the letter F. NO 275/1 1/2022-CX BA dated 21.7.2023 issued by Commissioner (Legal), Ministry of Finance, Deptt. Of Revenue, Legal Cell (CBIC): issued to M/s Swati Menthol & Allied Chemicals Ltd, Rampur were quashed on the ground of delay in adjudication.

d by Commissioner (Legal), Ministry of Finance, Deptt. Of Revenue, Legal Cell (CBIC): issued to M/s Swati Menthol & Allied Chemicals Ltd, Rampur were quashed on the ground of delay in adjudication.

“ The department has filed SLP (C) No. 20072/2021 (Converted into CA No. 4320/2023) before Hon'ble Supreme Court against the Order dated 17.5.2021 passed by Hon'ble High Court of Punjab & Haryana in CWP No. 9340/2021, whereby2 SCNs issued to M/s Swati Menthol & Allied Chemicals Ltd., Rampur were quashed on the ground of delay in adjudication.

Pid The Hon'ble Supreme Court has disposed the aforesaid SLP vide Order dated 10.7.2023 (Copy available on the website of Hon’ble SC) whereby, aforesaid Order dated 17.5.2021 of the Hon'ble Court has been set aside and the matter has been remanded back to the Commissioner of GST(adjudicating authority) with a direction to conclude the proceedings within the time-period specified in the Order.”

Considering the cited judgment, the legal department letter and statutory provisions under the Customs law wherein the then section 28(1) of the Customs Act, 1962 changed into section 28(4), | find no merit in the contention of the Noticees that delay in adjudication is itself a ground of rejection of the present SCN.

reassessment is permissible on the basis of evidence showing higher transaction values:

ntention of the Noticees that delay in adjudication is itself a ground of rejection of the present SCN.

reassessment is permissible on the basis of evidence showing higher transaction values:

23.1. The submission of the Noticee that the second-hand machinery had already been examined, assessed and cleared for home consumption on the basis of a Chartered Engineer's Certificate, and therefore the value cannot be re-assessed, is wholly untenable. A Chartered Engineer's Certificate is merely an opinion for assisting the assessing officer and does not possess any statutory finality. The original assessment in the present case was based on the declared invoice values and particulars supplied by the Noticee, which have subsequently been found to be incorrect and suppressed, as evidenced by the recovery of dual invoices, email communications, GEQD-extracted documents and records showing higher actual transaction values. It is a settled position of law that where suppression of facts, misdeclaration or fraud is discovered, the Customs authorities are empowered and duty-bound to invoke Section 28 of the Customs Act, 1962 and re-determine the correct assessable value under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, irrespective of clearance of the goods for home

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1962 and re-determine the correct assessable value under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, irrespective of clearance of the goods for home

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consumption. Physical examination of the goods at the time of import cannot and does not validate the misdeclared financial value, nor does it preclude post-clearance reassessment when credible evidence establishes undervaluation. Accordingly, the argument of the Noticee that reassessment is impermissible without rejecting the original assessment is devoid of merit and is hereby rejected. Further, | rely on the judgment of the Hon’ble Apex Court in the case of Jain Shudh Vanaspati Ltd., which clearly held that a demand can be raised under Section 28 of the Customs Act, 1962 even after assessment and clearance of the goods under section 47 of the Customs Act, 1962.

Proforma invoices supported by reliable corroborative evidence can be relied upon: 24.1 The submission of the Noticee that the proposed re-valuation cannot rely upon proforma invoices or email communications recovered during the search is devoid of merit. It is observed that the reassessment was based on a comprehensive set of contemporaneous evidences including supplier correspondence, dual invoices, price negotiations, GEQD-authenticated electronic records and other documents recovered from the Noticee’s own devices. These records clearly indicate that the declared invoice values did not reflect the actual price paid or payable for the imported machinery.

other documents recovered from the Noticee’s own devices. These records clearly indicate that the declared invoice values did not reflect the actual price paid or payable for the imported machinery. It is settled law that under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007, Customs is empowered and obligated to determine the true transaction value and may rely on any credible evidence revealing the genuine commercial arrangement between the parties. Further, electronic records recovered and authenticated under Section 138C are admissible and carry strong evidentiary value. In these circumstances, the proforma invoices and email communications form reliable corroborative evidence of the actual negotiated prices, whereas the declared invoices stand vitiated by suppression and misdeclaration. Accordingly, the contention of the Noticee is rejected.

The contention of the Noticee that the Department ought to have considered the value of similar goods of contemporary imports while re-determining the assessable value is misconceived and unsustainable. It is observed that in the present case, the investigation has brought on record substantial primary evidence of the actual transaction value, including dual invoices, contemporaneous supplier correspondence, GEQDauthenticated electronic records, price negotiation emails and other documents recovered from the Noticee’s own devices.

n value, including dual invoices, contemporaneous supplier correspondence, GEQDauthenticated electronic records, price negotiation emails and other documents recovered from the Noticee’s own devices. When reliable evidence of the true price paid or payable is available, Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007 mandates reliance on such primary evidence, and resort to valuation based on identical or similar goods under Rules 4 and 5 arises only where authentic transaction value information is not available. Further, the nature of secondhand machinery—varying in age, condition, usage hours, repairs and depreciation— renders comparison-based valuation inherently unreliable and inappropriate. In these circumstances, the DRI’s determination of value on the basis of contemporaneous

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transaction documents related to the very consignments imported is both lawful and accurate. Accordingly, the objection of the Noticee regarding non-consideration of value similar goods for the purpose of valuation of impugned goods is devoid of merit and is hereby rejected.

and accurate. Accordingly, the objection of the Noticee regarding non-consideration of value similar goods for the purpose of valuation of impugned goods is devoid of merit and is hereby rejected.

The contention of the Noticee that cash payments of 10-20 lakhs and hawala transactions cannot substantiate an alleged undervaluation of %6-8 crores is factually incorrect and legally unsustainable. The Department has not relied on these payments in isolation. The undervaluation stands established primarily through contemporaneous documentary evidence such as dual invoices, price negotiation emails, GEQDauthenticated electronic records, supplier worksheets and statements of involved persons, all of which demonstrate the true price paid or payable. The cash and hawala payments corroborate the illegal remittance mechanism adopted by the Noticee to settle differential amounts outside the banking channel. Accordingly, the Noticee’s argument is rejected.

hawala payments corroborate the illegal remittance mechanism adopted by the Noticee to settle differential amounts outside the banking channel. Accordingly, the Noticee’s argument is rejected.

| find no merit in the Noticee’s objection against the reliance on the GEQDauthenticated electronic records recovered during the search. The said records, comprising emails, proforma invoices, price negotiation worksheets and other digital files, were retrieved from the Noticee’s own computers, storage media and communication devices and have been duly examined and certified by the Government Examiner of Questioned Documents (GEQD), a statutory forensic authority. Under Section 138C of the Customs Act, 1962, electronically stored information that is authenticated in the manner prescribed is fully admissible and carries substantive evidentiary value. The GEQD report confirms the genuineness, integrity and contemporaneity of the digital records, thereby eliminating any doubt regarding their authorship or reliability. These records reflect real-time commercial negotiations, the true transaction values, the practice of dual invoicing and the mechanism of remitting differential amounts outside the banking channel. In the presence of such direct primary evidence, the argument of the Noticee seeking to discard these documents is misconceived.

chanism of remitting differential amounts outside the banking channel. In the presence of such direct primary evidence, the argument of the Noticee seeking to discard these documents is misconceived. | therefore hold that the GEQDauthenticated electronic records constitute credible, admissible and decisive evidence for the purposes of valuation and determination of duty liability, and the objection raised by the Noticee is hereby rejected.

The request of the Noticee for cross-examination of the forensic expert from the Government Examiner of Questioned Documents (GEQD) is found to be unwarranted and is hereby rejected. The GEQD report relied upon in this case is a technical expert opinion prepared by a statutory forensic authority in the course of its official duties, and not a statement of a witness of fact. The expert has no personal knowledge of the commercial transactions, import practices or valuation issues involved in the present proceedings; his role is confined solely to the scientific authentication of the electronic records recovered from the devices of the Noticee. Under Section 138C of the Customs _.-Act, 1962, electronically stored information authenticated in the prescribed manner is . |

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8C of the Customs _.-Act, 1962, electronically stored information authenticated in the prescribed manner is . |

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admissible as substantive evidence without the requirement of oral examination of the expert. The Noticee has also failed to point out any specific infirmity, inconsistency or procedural irregularity in the forensic analysis that would justify cross-examination. A vague or general desire to cross-examine an expert cannot be permitted, particularly when the request appears intended only to delay adjudication of a matter already pending for long. The Noticee retains full opportunity to rebut the electronic evidence through written submissions or by producing any contrary material. In these circumstances, the demand for cross-examination is neither necessary for the ends of natural justice nor relevant to the determination of the issues at hand, and is accordingly rejected.

. In these circumstances, the demand for cross-examination is neither necessary for the ends of natural justice nor relevant to the determination of the issues at hand, and is accordingly rejected.

The evidentiary value of the statements recorded under Section 108 of the Customs Act, 1962, in the present case is substantial and cannot be brushed aside. These statements were recorded by duly empowered Customs officers in exercise of statutory powers, and the persons examined were legally bound to state the truth. The statements of Shri K. Rama Swamy, Smt. K. Padmavathi, Shri A. Viswanadham, Shri Girish Hindelkar, Shri Charudutt Hindelkar, and others are detailed, voluntary, and mutually corroborative. At no stage have any of these individuals retracted or alleged coercion. Their depositions clearly explain the modus operandi of undervaluation, dual invoicing, negotiation of actual prices with suppliers, remittance of differential amounts through informal channels, and the use of dummy IEC holders. These statements are further corroborated by extensive documentary evidence, including GEQD-authenticated electronic records, proforma invoices, account statements, made-up files, worksheets and seized materials. In view of their voluntary nature, internal consistency, and strong corroboration from independent evidence, the statements recorded under Section 108 constitute credible and reliable evidence and are accordingly relied upon for determination of the issues in this adjudication.

from independent evidence, the statements recorded under Section 108 constitute credible and reliable evidence and are accordingly relied upon for determination of the issues in this adjudication.

In his statement, Shri K. Rama Swamy unequivocally admitted that he was the principal operator and beneficial controller of the import activities ostensibly conducted in the names of MES and CGI, which functioned merely as surrogate IEC entities. He stated that all negotiations with foreign suppliers were undertaken by him and that the actual prices of the second-hand machinery procured were substantially higher than the values declared before Customs. He further admitted to the deliberate use of dual invoicing, wherein the genuine higher-value invoices were retained internally, while undervalued invoices were fabricated and submitted for Customs assessment with the intention of suppressing the true transaction value. He additionally admitted that the differential amounts, representing the gap between the actual transaction value and the declared value, were settled through cash payments and hawala remittances facilitated by intermediaries. He acknowledged maintaining internal electronic records—including emails, worksheets, and proforma invoices—accurately reflecting the true values, many of which were recovered during search proceedings and later authenticated by GEQD.

}

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His statement forms the core evidentiary foundation of the undervaluation modus operandi and stands corroborated by extensive documentary and digital evidence seized.

QD.

}

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His statement forms the core evidentiary foundation of the undervaluation modus operandi and stands corroborated by extensive documentary and digital evidence seized.

30.1. In her statement, Smt. K. Padmavathi admitted that she was responsible for preparing import-related documentation, coordinating with customs brokers, and maintaining communication with foreign suppliers vis-a-vis shipment details. She confirmed her knowledge of the undervaluation practice and admitted that the invoices submitted to Customs did not represent the actual price negotiated with the suppliers. She further acknowledged that the true values were recorded separately in digital and physical formats, which were subsequently seized during the investigation. She also admitted to organising domestic cash flows necessary for effecting hawala payments through intermediaries for remitting the differential amounts abroad. Her statement substantiates the internal coordination exercised within the M/s KKE group and provides corroborative value to the documentary and digital evidence collected during the investigation.

Her statement substantiates the internal coordination exercised within the M/s KKE group and provides corroborative value to the documentary and digital evidence collected during the investigation.

30.2. Shri A. Viswanadham admitted that he was regularly engaged in communication with foreign suppliers regarding negotiations, shipment conditions, and the actual prices of the goods procured. He confirmed that the invoices presented before Customs were intentionally undervalued and did not reflect the true transaction value. He further stated that internal records, including emails and spreadsheets recovered from seized devices, accurately captured the genuine values discussed with suppliers. He admitted his involvement in monitoring logistics and in aligning genuine internal communications with the fabricated documentation filed for Customs clearance. His statement reinforces the authenticity of the GEQD-verified electronic records and confirms the deliberate manipulation and suppression of value.

cated documentation filed for Customs clearance. His statement reinforces the authenticity of the GEQD-verified electronic records and confirms the deliberate manipulation and suppression of value.

30.3. Shri Girish Hindelkar admitted in his statement that M/s MES and M/s CGI were only front entities used for the purpose of facilitating imports, and that the actual control over procurement, valuation, and payment rested entirely with the M/s KKE group. He stated that he had no role in negotiating prices, scrutinising invoices, or arranging payments, and that his IEC was allowed to be used solely for a fixed monetary consideration. He further confirmed that all decisions related to the importation of secondhand machinery—including procurement, declaration of value, documentation, and financial settlement—were taken exclusively by Shri K. Rama Swamy and his associates. His statement conclusively demonstrates that M/s MES and M/s CGI had no genuine commercial existence and were merely conduits deployed for the illicit import operations of the M/s KKE group.

30.4. Shri Charudutt Hindelkar stated that he assisted in providing signatures and basic documentation required for imports undertaken in the name of M/s MES/ M/s CGI. He admitted that he had no dealings with foreign suppliers and no knowledge of the negotiations or actual valuation of the machinery imported. He clarified that he acted

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He admitted that he had no dealings with foreign suppliers and no knowledge of the negotiations or actual valuation of the machinery imported. He clarified that he acted

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solely on instructions issued by the primary controllers of the import operations and had no role in determining the value declared before Customs. His statement supports the conclusion that the IEC holders were merely nominal facilitators, with no substantive involvement, and that the real control rested with the M/s KKE group.

30.5. Shri Sunny and Shri Murthy admitted that they routinely facilitated hawala remittances at the behest of the M/s KKE group for settling the differential amounts payable to foreign suppliers. They stated that they received cash in instalments of 710— 20 lakhs and ensured the corresponding remittances abroad through informal, unregulated channels. They confirmed that these payments were specifically intended to bridge the difference between the actual price of the imported machinery and the undervalued amount declared before Customs. Their statements provide the essential financial linkage in the undervaluation chain and lend independent corroboration to the documentary and digital evidence seized during the investigation. 31. Searches conducted at the premises of M/s KKE, M/s MES and M/s CGI resulted in the seizure of a large number of import-related documents, including Bills of Entry, supplier invoices, packing lists, purchase files, internal ledgers, correspondence files, shipping documents, and value comparison sheets.

umber of import-related documents, including Bills of Entry, supplier invoices, packing lists, purchase files, internal ledgers, correspondence files, shipping documents, and value comparison sheets. These records covered imports apparently made in the names of M/s MES and M/s CGI but physically received, stored and refurbished at the workshop of M/s KKE.

31.1. The presence of consolidated import files at M/s KKE’s premises, coupled with the absence of any operational infrastructure of M/s MES/ M/s CGI, demonstrates that KKE exercised complete beneficial ownership over the goods. The internal documents show that the values recorded in M/s KKE’s files were significantly higher than those declared before Customs, establishing a deliberate pattern of undervaluation. This documentary evidence establishes both misdeclaration of value and misuse of dummy IECs for import of machinery.

31.2. Five laptops, two hard disks and four mobile phones were seized from the key persons controlling the import operations. Forensic analysis by GEQD conclusively authenticated:

i) email correspondences with foreign suppliers, ii) alternative (higher) “actual” and (lower) “Customs” invoices, iii) | proforma invoices and price negotiations, iv) internal spreadsheets showing the “difference in cash”, v) supplier account statements, vi) — shipping instructions and remittance trails.

ices, iii) | proforma invoices and price negotiations, iv) internal spreadsheets showing the “difference in cash”, v) supplier account statements, vi) — shipping instructions and remittance trails.

The forensic authentication of these electronic data provides direct, primary evidence of the true transaction value, the suppressed value declared before Customs, and the financial arrangements for off-record payments. Since the evidence originates from

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devices used by the noticees themselves, it is admissible under Sections 138C and 139 of the Customs Act and strongly corroborates the admissions recorded under Section 108.

31.3. The seized electronic records and hard-copy worksheets contain dual sets of invoices for the same machinery, namely internal invoices showing the actual higher prices, and invoices filed with Customs showing lower declared values. Internal worksheets list item-wise: “actual buying invoice value”, “customs invoice value”, and “difference in cash” payable to suppliers. Dual invoicing constitutes direct evidence of wilful misdeclaration, leading to goods are liable for confiscation under Section 111(m) of the Customs Act, 1962. The consistent and deliberate maintenance of two separate value sets establishes intention — a crucial element for invoking extended period under Section 28(1) and penalty under Section 114A of the Customs Act, 1962. The worksheets quantifying “difference in cash” clearly demonstrate that the suppressed amount was never remitted through authorised banking channels.

y under Section 114A of the Customs Act, 1962. The worksheets quantifying “difference in cash” clearly demonstrate that the suppressed amount was never remitted through authorised banking channels.

31.4. GEQD-verified emails show foreign suppliers quoting actual CIF/FOB prices, confirming receipt of higher payments, and discussing deferred remittances through thirdparty channels. Supplier account statements from Finbond, Kian Ann, and other exporters show receipt of amounts from entities unrelated to the import documents (e.g., “Murali A/c’, “Singapore party”, etc.). These communications establish the true nature of the transaction between M/s KKE and the suppliers. The suppliers’ own records corroborate that the price actually paid or payable was far higher than the declared value. Under Rule 3 and Rule 4 of CVR 2007, trans

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