2009 (3) TMI 777 - AT - Customs

Summary

Issues:
1. Application for waiver of pre-deposit of penalty for deliberate misdeclaration of imported goods.
2. Dispute regarding the value of the goods and inclusion of design charges.
3. Allegation of misdeclaration and intent to evade payment of duty.
4. Interpretation of penal provisions under Section 112(a) of the Customs Act.

Analysis:

1. The case involved an application for waiver of pre-deposit of penalty amounting to Rs. 21,50,000 imposed on the importers for deliberately misdeclaring the value of imported dryer parts, heaters, and cooler parts to evade duty payment. The importers did not dispute the duty liability and were willing to pay the differential duty demand of Rs. 1,22,31,589 based on the assessable value of the goods at Rs. 4,27,09,243.

2. The finding of deliberate misdeclaration was supported by the submission of manipulated invoices with a significantly low declared value, described as "value for customs purpose only," and the goods labeled as "replacement instrumentation spare parts." The importers claimed that these declarations were made in error, and they later revised the invoice, removing the misleading terms. They argued that they were unaware of the necessity to include design charges in the total value, believing it unnecessary based on a previous Tribunal decision.

3. The Tribunal observed that the value of the goods remained unchanged, and the importers had provided documentation, including a purchase order and a letter to the foreign supplier detailing the price breakdown. Based on this evidence, the Tribunal concluded that the importers were not prima facie guilty of intentional misdeclaration to evade duty payment. Consequently, the penal provisions under Section 112(a) of the Customs Act, rendering goods liable for confiscation, were deemed inapplicable, leading to the waiver of the pre-deposit penalty and a stay on its recovery pending appeal.

4. In the absence of evidence supporting intent to evade duty and considering the documentation provided by the importers, the Tribunal decided in favor of the importers, highlighting the importance of factual evidence in determining misdeclaration and intent. The decision emphasized the necessity for clear and accurate declarations in import transactions to avoid disputes and penalties under the Customs Act.