2002 (7) TMI 501 - AT - Customs

Summary

Issues Involved:
1. Valuation of imported goods.
2. Declaration of goods as new or used.
3. Alleged undervaluation and misdeclaration.
4. Confiscation and penalty under Sections 111(m) and 112 of the Customs Act, 1962.
5. Violation of principles of natural justice and fair play.
6. Applicability of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

Detailed Analysis:

1. Valuation of Imported Goods:
The appellant filed a Bill of Entry for the clearance of 68 units of video games, with an invoice value of USD 10,156. Market inquiries suggested the value of similar goods ranged from Rs. 20,000/- to Rs. 30,000/-. A Chartered Engineer assessed the value at Rs. 14.91 lakhs after deductions, indicating undervaluation. The Tribunal found no infirmity in the proceedings conducted and upheld the Chartered Engineer's valuation, noting the appellant did not produce material to support the declared value.

2. Declaration of Goods as New or Used:
The appellant did not declare whether the imported video games were new or old/used. Examination revealed a mix of new and used goods. The Commissioner considered this a deliberate attempt to undervalue the goods by misdeclaring their condition. The Tribunal upheld this finding, referencing the Supreme Court's decision in Pine Chemical Suppliers, which supports confiscation and penalty for misdeclaration.

3. Alleged Undervaluation and Misdeclaration:
The Tribunal agreed with the Commissioner that the misdeclaration of the goods' condition (new/used) and undervaluation rendered the goods liable for confiscation under Section 111(m) and penalty under Section 112 of the Customs Act. The Tribunal rejected the appellant's arguments against liability for confiscation and penalty.

4. Confiscation and Penalty under Sections 111(m) and 112:
The Tribunal upheld the confiscation of the goods and the imposition of a penalty, citing the Supreme Court's decision in Pine Chemical Suppliers, which supports penalties for improper importation due to misdeclaration. The Tribunal found that the Commissioner had correctly followed the legal provisions for confiscation and penalty.

5. Violation of Principles of Natural Justice and Fair Play:
The appellant argued that the impugned order violated principles of natural justice and fair play, as they were not informed about the confiscation and penalty. The Tribunal found no merit in this argument, noting that the appellant had waived the show cause notice and had the opportunity to present their case during the personal hearing. The Tribunal referenced the Supreme Court's decision in CC, Mumbai v. Virgo Steels, which supports the proceedings' validity.

6. Applicability of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:
The Tribunal noted that the impugned order did not clearly indicate how the valuation was determined under the Customs Valuation Rules. The Chartered Engineer's valuation was based on market inquiries in India, which is not an approved method under the Valuation Rules. The Tribunal set aside the order and remitted the matter back to the Commissioner to re-determine the valuation according to the Customs Valuation Rules, allowing the appellant to present evidence from their own experts.

Conclusion:
The appeal was allowed as a remand to re-determine the valuation of the imported goods. The Commissioner was directed to clearly indicate the valuation method under the Customs Valuation Rules and to determine the quantum of fine and penalty based on the re-determined valuation. The appellant was granted the opportunity to present evidence from their own experts during the remand proceedings.