2002 (5) TMI 740 - AT - Customs

Valuation - Condenser microphones - Misdeclaration of value - Penalty - Provisional assessment

Issues Involved:
1. Mis-declaration of value of imported goods.
2. Confiscation of goods under Section 111(m) of the Customs Act.
3. Enhancement of assessable value and confirmation of differential duty.
4. Imposition of penalties on the importing firm and associated individuals.
5. Validity of the declared value for customs assessment.
6. Demand for interest.
7. Role and involvement of associated individuals in the import transaction.
8. Applicability of provisional assessment under Section 18 of the Customs Act.
9. Justification for the imposed penalties and fines.

Detailed Analysis:

1. Mis-declaration of Value of Imported Goods:
The consignment of 476753 pieces of different sub-models of Condenser Microphone WM-034 was found to be mis-declared in terms of value. The customs authorities determined that the declared value of Japanese Yen 0.75 per piece was significantly undervalued. The investigation revealed that the actual value should be US $0.1230 per piece, leading to a differential duty demand of Rs. 12,19,341/-.

2. Confiscation of Goods Under Section 111(m) of the Customs Act:
The goods were confiscated under Section 111(m) of the Customs Act due to the mis-declaration of their value. The importer was given the option to redeem the goods by paying a fine of Rs. 15 lakhs.

3. Enhancement of Assessable Value and Confirmation of Differential Duty:
The assessable value was enhanced based on the price of imports of similar sub-models by M/s. Webel Communications. The appellant contested this enhancement, arguing that the sub-models were not comparable and that the imports by Webel were not contemporaneous. However, the customs authorities justified the enhancement, stating that the value adopted was of the same model and that the declared value was unreasonably low.

4. Imposition of Penalties on the Importing Firm and Associated Individuals:
Penalties were imposed on M/s. Shri Ganesh Overseas, its Proprietor, and associated individuals for their roles in the mis-declaration and undervaluation of the goods. The penalties included Rs. 5 lakhs on Shri Ketan Vasant and Rs. 1 lakh on Tikkubhai Vasant. The Tribunal upheld these penalties, considering the deliberate nature of the offense and the market value of the goods.

5. Validity of the Declared Value for Customs Assessment:
The appellant argued for the acceptance of the declared value for customs assessment. However, the Tribunal found that the declared value was not supported by satisfactory evidence and was significantly lower than the actual value. The customs authorities' decision to reject the declared value was upheld.

6. Demand for Interest:
The appeal sought quashing of the demand for interest. The appellant argued that no occasion for demand of interest had arisen since the goods had not been cleared. However, this argument was not accepted by the Tribunal.

7. Role and Involvement of Associated Individuals in the Import Transaction:
The investigation revealed that Shri Ketan Vasant was the real importer, while Shri Tarak S. Shukla, the proprietor of the importing firm, merely filed the bill of entry as directed by Ketan Vasant. Tikkubhai Vasant assisted in obtaining the delivery order and was involved in selling the goods after customs clearance. The Tribunal found their involvement justified the imposition of penalties.

8. Applicability of Provisional Assessment Under Section 18 of the Customs Act:
The appellant argued that the goods were provisionally cleared, and therefore, fines and penalties should not be imposed. The Tribunal clarified that Section 18, which relates to provisional assessment, does not apply to cases involving deliberate mis-declaration or fraud. Hence, the provisional assessment argument was rejected.

9. Justification for the Imposed Penalties and Fines:
The Tribunal found the penalties and fines imposed to be reasonable and justified, given the market value of the goods, the duty sought to be evaded, and the deliberate nature of the offense. The redemption fine of Rs. 15 lakhs and the penalties on the individuals were upheld.

Conclusion:
The Tribunal rejected the appeals, upholding the customs authorities' actions, including the enhancement of the assessable value, confiscation of goods, and imposition of penalties. The declared value was found to be unsubstantiated and significantly lower than the actual value, justifying the customs authorities' decision to reject it. The penalties imposed on the individuals involved were deemed appropriate given their roles in the mis-declaration and undervaluation of the goods.

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