2005 (4) TMI 525 - AT - Customs

Penalty - Separate penalty on proprietary firm and its proprietor - Natural justice - Cross-examination refusal of - Confiscation - Misdeclaration of value

Issues Involved:
1. Demand of Custom Duty due to mis-declaration of values and country of origin.
2. Confiscation of seized goods.
3. Imposition of penalties under Section 114A and other provisions of the Customs Act, 1962.
4. Denial of natural justice due to refusal of cross-examination of a key witness.
5. Reliability and authenticity of evidence, including witness statements and documents.

Issue-wise Detailed Analysis:

1. Demand of Custom Duty due to mis-declaration of values and country of origin:
The adjudicator confirmed the demands of duty based on alleged mis-declaration of values and country of origin. However, the tribunal found that the case built on the basis of photocopies of alleged export declarations filed by suppliers could not be sustained. The corroboration brought in by the witness, Puri, and his statements were found unreliable as he was not cross-examined. The tribunal also noted the lack of authenticated or certified copies of the declarations from Hong Kong Customs. The law, as laid down by the Apex Court in the case of Collector of Customs v. East Punjab Traders, mandates that the authenticity of such photocopies must be established, which was not done in this case. Consequently, the tribunal rejected the demand of Custom Duty.

2. Confiscation of seized goods:
The adjudicator ordered the confiscation of AT&T Cable rolls. However, the tribunal found that since the valuation/imports from Pearl could not be impeached, there was no reason to not uphold the transaction value. The tribunal also noted that the declaration of the country of origin on the Bills of Entry should have been objected to by the dock staff and appraising officers if there was any discrepancy, which was not done. Therefore, the tribunal set aside the proceedings of confiscation.

3. Imposition of penalties under Section 114A and other provisions of the Customs Act, 1962:
The tribunal found that the imposition of penalty on both the proprietary firm and its proprietor showed a lack of application of mind as a proprietary firm is not a separate legal entity from its proprietor. Additionally, since the duty and confiscation were not upheld, the penalties imposed were also set aside.

4. Denial of natural justice due to refusal of cross-examination of a key witness:
The tribunal upheld the plea of denial of natural justice due to the refusal of cross-examination of Shri K.M. Puri. It was noted that the credibility of Puri's statements and his role were questionable. The tribunal highlighted inconsistencies in Puri's status and function as mentioned in the show cause notice and found that without cross-examination, his deposition could not help the department's case.

5. Reliability and authenticity of evidence, including witness statements and documents:
The tribunal found that the photocopies of export declarations relied upon by the department were not authenticated or certified by Hong Kong Customs. The tribunal referred to previous judgments, including Taito Watch Manufacturing Inds. and V.K. Impex v. Commissioner, which held that such photocopies could not be relied upon to enhance values. The tribunal also noted the failure of investigators to bring on record the alleged other invoices with different higher values, despite Puri being a willing collaborator. Consequently, the tribunal concluded that there was no material evidence to prove the alleged mis-declaration and under-valuation.

Conclusion:
The tribunal allowed the appeals, setting aside the orders of the adjudicator. The demands of duty, confiscation of goods, and imposition of penalties were all set aside due to lack of reliable evidence and denial of natural justice.

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