2006 (7) TMI 376 - AT - Customs

Summary

Issues Involved:
1. Undervaluation of imports of 'Digital Satellite Receiver (Set Top Box)'.
2. Non-declaration of Country of Origin on the imported goods.
3. Confiscation of goods under Section 111(m) of the Customs Act, 1962.
4. Imposition of penalties under Section 112(a) of the Customs Act, 1962.

Detailed Analysis:

1. Undervaluation of Imports:
The central issue was the alleged undervaluation of imported 'Digital Satellite Receiver (Set Top Box)' covered by two Bills of Entry. The department argued that the declared prices of USD 7.5 and USD 8 per piece were significantly lower than the values found in the Directorate of Valuation (DOV) data, which showed much higher prices for similar goods. The department proposed to re-determine the value based on the lowest available evidence, which was USD 22.5 per piece, citing instances of similar goods being cleared at higher values.

The Commissioner upheld the undervaluation charge, ordering the loading of value to USD 22.5 per piece and the subsequent confiscation of the goods, along with penalties. However, the Tribunal found that the Commissioner did not independently apply his mind and failed to address all issues raised by the importers, including the admissibility and applicability of the evidence. The Tribunal noted that the Commissioner rejected the importers' evidence on the grounds of being unauthenticated photocopies but did not verify the data available on his desk. The Tribunal held that the valuation process should not be based on a predetermined pick-and-choose method and must follow prescribed rules. Consequently, the valuation as determined by the Commissioner was not upheld.

2. Non-declaration of Country of Origin:
The department raised the issue that the imported goods did not bear any mark of the country of origin, which was contrary to the declaration made in the Bills of Entry that the country of origin was China. The Tribunal found that the goods were exported by a supplier in China, shipped from a port in China, and accompanied by a certificate of origin. There was no material evidence to challenge the declared country of origin. The Tribunal held that the non-mention of the country of origin on the goods could not be a reason to uphold the charge of misdeclaration.

3. Confiscation under Section 111(m):
Based on the undervaluation and non-declaration of the country of origin, the department proposed confiscation of the goods under Section 111(m) of the Customs Act, 1962. The Tribunal, however, found that the undervaluation charge was not substantiated, and the declared transaction value was to be accepted. Therefore, the charge of misdeclaration of value and the resultant confiscation under Section 111(m) could not be upheld. The Tribunal set aside the confiscation orders.

4. Imposition of Penalties under Section 112(a):
The department imposed penalties on the importer under Section 112(a) of the Customs Act, 1962, for omissions and commissions that rendered the goods liable to confiscation. Since the Tribunal did not uphold the charges of undervaluation and misdeclaration of the country of origin, the basis for penalties under Section 112(a) was also invalidated. The Tribunal set aside the penalties.

Conclusion:
The Tribunal concluded that the orders impugned were violative of the principles of natural justice and lacked independent application of mind. The Tribunal set aside the orders of undervaluation, confiscation, and penalties, and allowed the appeals. The declared transaction values were accepted, and no short payment of duty was found. Consequently, the appeals were allowed, and the impugned orders were set aside.