2006 (7) TMI 74 - AT - Customs

Valuation (Customs)- Contemporaneous import Transaction value not to be discarded Department doesnot provide any evidence in support of the value of import is misdeclared - Misdecleration of import not sustainable.

Issues Involved:
1. Valuation of imported goods.
2. Misdeclaration of the country of origin.
3. Liability for confiscation and penalties under the Customs Act, 1962.
4. Reliability of evidence (Internet quotations).

Detailed Analysis:

1. Valuation of Imported Goods:
The primary issue was the valuation of the Fusion Splicer Machines imported by M/s. Eastern Exports and Imports Co. The declared value was USD 1875 per unit, but the Department alleged gross undervaluation based on Internet quotations suggesting prices ranging from USD 3000 to USD 20950. The Commissioner rejected the declared value under Rule 10A of the Customs Valuation Rules, 1988, and determined the value to be USD 41900 for two machines, leading to a duty demand of Rs. 10,35,100.07 and equivalent penalty under Section 114A of the Customs Act.

2. Misdeclaration of Country of Origin:
The goods were declared as of Singapore origin, but upon examination, they were found to be manufactured by Aurora Instruments Inc., USA. The Commissioner held that there was a gross misdeclaration at the time of filing the Bill of Entry, and no manufacturer's invoice was furnished in terms of Rule 10 of the 1988 rules. This misdeclaration was considered deliberate to evade duty.

3. Liability for Confiscation and Penalties:
The Commissioner ordered the confiscation of the goods under Section 111(m) of the Customs Act, 1962, with a redemption fine of Rs. 5 lakhs. Penalties were imposed under Section 112(a) and 112(b) on M/s. Eastern Exports and Imports Co., its proprietor, and associated individuals, including the Managing Director of M/s. Tirumala Seven Hills (P) Ltd., and the Customs House Agent, M/s. Shaikh and Pandit.

4. Reliability of Evidence (Internet Quotations):
The appellants argued that Internet quotations are not reliable evidence for valuation, citing precedents like Aggarwal Distributors and Laxmi Colour Lab. The Tribunal agreed, noting that Internet quotations are not authenticated and do not bear signatures, making them unreliable. The Commissioner's reliance on such quotations without considering the appellants' arguments about varying machine qualities and specifications was deemed inappropriate.

Tribunal's Findings:
- Valuation: The Tribunal found no cogent, reliable material to support the undervaluation claim. The declared transaction value was not challenged effectively, and the unsigned Internet quotations were deemed unreliable. The Tribunal held that the transaction value should not be discarded based on such evidence.

- Misdeclaration of Country of Origin: The Tribunal noted that the invoice from the Singapore supplier clearly indicated the goods were of USA origin, and this was presented to the Customs officer. The misdeclaration on the Bill of Entry was considered a technical mistake rather than a deliberate attempt to evade duty.

- Confiscation and Penalties: Since the undervaluation and misdeclaration charges were not upheld, the Tribunal set aside the confiscation order and the penalties under Sections 112(b) and 114A. The Tribunal also noted inconsistencies in the Commissioner's application of penalties under Section 112(a).

Conclusion:
The Tribunal allowed the appeals, setting aside the Commissioner's order, including the duty demands, confiscation, and penalties. The Tribunal emphasized the unreliability of Internet quotations for valuation purposes and found that the transaction value declared by the importer should be accepted. The appeals were pronounced allowed in court on 4-7-2006.

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