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2008 (10) TMI 537 - AT - Central Excise
Issues Involved:
1. Allegation of misdeclaration of value by the Appellant company. 2. Confirmation of duty demand under Section 28(1) of the Customs Act. 3. Confiscation of goods under Section 111(d) and 111(m) of the Customs Act. 4. Imposition of penalties under Section 114A and 112 of the Customs Act. Issue-Wise Detailed Analysis: 1. Allegation of Misdeclaration of Value: The primary issue was whether the Appellant company misdeclared the value of imported silk fabrics. The Department alleged that the Appellant, in connivance with the supplier M/s. Zhejiang, declared lower transaction values to evade customs duty. The Department's suspicion arose from the supplier's history of issuing dual invoices and the Appellant's past record of duty evasion. However, the Tribunal noted that no incriminating documents were found during the searches of the Appellant's premises. The Tribunal emphasized that mere suspicion based on past records or the supplier's reputation was insufficient to reject the declared transaction values under Rule 10A of the Customs Valuation Rules, 1988. 2. Confirmation of Duty Demand: The duty demand of Rs. 1,00,66,346/- was confirmed under Section 28(1) of the Customs Act, based on the alleged misdeclaration. The Appellant argued that the assessments of the bills of entry were finalized and could not be reopened without being reviewed or modified in appeal. The Tribunal disagreed, stating that the proviso to Section 28(1) allows for duty demands based on wilful misdeclaration. However, the Tribunal found no concrete evidence to support the allegation of under-invoicing, as the declared transaction values varied and were not uniformly lower than contemporaneous imports. 3. Confiscation of Goods: The goods were confiscated under Section 111(d) and 111(m) of the Customs Act, with an option for redemption on payment of a fine. The Tribunal noted that the Department sought to value the imports based on a few instances without considering price fluctuations or differences in import quantities. The Tribunal held that the imports with a time gap of six to twelve months could not be considered contemporaneous, and the declared transaction values could not be rejected without concrete evidence. 4. Imposition of Penalties: Penalties were imposed on the Appellant company and its Director under Sections 114A and 112 of the Customs Act. The Tribunal found that the evidence did not support the Department's allegations of misdeclaration and under-invoicing. The Tribunal emphasized that the declared transaction values should be accepted unless exceptions under Rule 4(2) of the Customs Valuation Rules apply, which was not demonstrated in this case. Conclusion: The Tribunal concluded that the rejection of declared transaction values, confirmation of duty demand, and confiscation of goods were without basis. The impugned order was set aside, and the appeals were allowed. The Tribunal emphasized the need for concrete evidence to reject declared transaction values and highlighted that mere suspicion or past records were insufficient to substantiate allegations of misdeclaration.
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