2007 (1) TMI 444 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of value.
2. Misdeclaration of the content of the goods.
3. Determination of the actual importer (Wipro GE or BHCS/RKDS).

Issue-wise Detailed Analysis:

1. Misdeclaration of Value:
The Adjudicating Authority concluded that there was a clear misdeclaration of the value of the imported goods. The purchase order and invoices were revised multiple times, and the final purchase order excluded the X-Ray tube initially mentioned. The equipment was imported under the Gold Seal scheme, indicating thorough reconditioning and refurbishment. The presence of an additional X-Ray tube and lead glass, which were not declared, led to the rejection of the transaction value. The Authority relied on precedents such as the Hon'ble Apex Court decision in Sharp Business Pvt. Ltd. v. Collector and the CEGAT's order in the case of Tirupati Granites P. Ltd., which established that misdeclaration of goods' description invalidates the invoice value as the transaction value. Consequently, the value was re-determined under Rule 8 of the Customs Valuation Rules, 1988, including the cost of the additional components, reconditioning, freight, and insurance, with a maximum depreciation allowance of 70%.

2. Misdeclaration of the Content of the Goods:
The Adjudicating Authority found that the import included an additional X-Ray tube and lead glass not declared in the documentation, constituting a misdeclaration of the content. The Gold Seal book indicated that the equipment was fully refurbished and did not require an additional X-Ray tube. This misdeclaration led to the rejection of the transaction value and the re-determination of the assessable value. The Authority concluded that the misdeclaration justified the confiscation of the goods under Section 111(d) and (m) of the Customs Act, 1962, and imposed a reasonable redemption fine.

3. Determination of the Actual Importer:
The core issue was whether Wipro GE or BHCS/RKDS were the actual importers. The Revenue argued that Wipro GE was the actual importer, as evidenced by a fax message from Shri Prapanch to Shri Girish Wardarkar indicating that the order would be placed through Wipro GE and later changed to the customer's name to comply with EXIM Policy restrictions. The High Sea Sale agreement was deemed a device to circumvent the EXIM Policy, which mandates that only actual users can import second-hand capital goods. Dr. Ramanakumar of RKDS admitted in a voluntary statement that the High Sea Sales Agreement was signed at Wipro GE's direction and that Wipro GE was the actual importer. The Adjudicating Authority's detailed investigation supported the conclusion that Wipro GE was the real importer, and the High Sea Sale agreement was not genuine. Consequently, penalties on BHCS/RKDS were set aside, and the penalties on Wipro GE were reduced from Rs. 50,000/- to Rs. 25,000/- in each case.

Conclusion:
The appeals of BHCS and RKDS were allowed, while the appeals of Wipro GE were disposed of with the penalties reduced. The judgment upheld the findings of misdeclaration of value and content, and determined Wipro GE as the actual importer, leading to the confiscation of goods and imposition of penalties under the Customs Act, 1962.