2011 (11) TMI 619 - AT - Customs

Transaction value of the imported goods - Aluminium Scrap - purpose of assessment - show cause notice - Appeal against the orders of Commissioner (Appeals) - M/s. Baheti Metals Ferro Alloys Ltd. were engaged in importation of aluminium scrap. The allegation of the Revenue was that they were manipulating the actual value of the imported consignment in collusion with the supplier firms, High sea sellers and indenters in India and were declaring lower value for purpose of assessment thereby paying lesser amount of customs duty. A show cause notice was issued to the appellant demanding the differential customs duty, along with interest and proposing penalties under Sections 114A and 112A of the Customs Act, 1962.On adjudication the original adjudicating authority rejected the values declared by M/s. Baheti Metals Ferro Alloys Ltd. and held that the value should be re-determined under Section 14 of the Customs Act, 1962.He also held that the goods valued as above will be liable for confiscation and imposed redemption fine of on the goods covered by Bill of Entry. Being aggrieved with the order they filed an appeal before this Bench. HELD THAT - It is also seen that the high seas seller from whom the appellants purchased the scrap also imported the same for their individual use as well for trading. It is significant that during the period of dispute the high seas sellers had either imported scrap for their own use or sold the same to other individuals or companies at the same price as was for the appellants. In all these cases the goods were allowed to be cleared and no objection was raised by the Revenue. The contentions of M/s. Baheti Metals, therefore, are acceptable as we do not find why these assessments were resorted and the goods were allowed to be cleared. the value declared in the Bill of Entry has been correctly stated and the transaction value of the goods in question in terms of Section 14 of the Act read with Rule 4 of the Rules is correctly declared particularly when other Bills of Entry are assessed at the lower price. We find that there is no mis-declaration of the value and the allegation is unsustainable to that extent. The provisions of Section 11M of the Act therefore cannot be invoked and no penalty u/s 112 can be imposed in this case. No demand of duty as proposed in the show cause notice and confirmed by the learned Commissioner is sustainable and no penalty therefore can be imposed on the assessees or on any persons thereby. The confiscation of goods ordered also is not sustained. In short the order of Commissioner lacks support of sufficient evidence to sustain the order. The Order-in-Original of Commissioner, therefore, is set aside and appeals allowed with consequential relief if any.

Issues Involved:
1. Allegation of undervaluation of imported aluminium scrap.
2. Re-determination of value under Section 14 of the Customs Act, 1962.
3. Imposition of penalties under Sections 114A and 112A of the Customs Act, 1962.
4. Confiscation of goods and imposition of redemption fine.
5. Acceptance of declared value based on contemporaneous imports.
6. Reliance on DGOV Alert Circular and LME prices for valuation.
7. Admissibility and authenticity of evidence obtained from foreign authorities.
8. Onus of proving undervaluation on the Department.
9. Judicial consistency in assessments.

Detailed Analysis:

1. Allegation of Undervaluation:
The Revenue alleged that the appellant manipulated the actual value of imported aluminium scrap in collusion with suppliers and other parties, declaring lower values to pay lesser customs duty. A show cause notice was issued demanding differential customs duty, interest, and penalties.

2. Re-determination of Value:
The original adjudicating authority rejected the declared values and re-determined the value under Section 14 of the Customs Act, 1962, setting it at Rs. 67,88,52,051/-. The goods were held liable for confiscation, and a redemption fine of Rs. 4 lakhs was imposed.

3. Imposition of Penalties:
Penalties were imposed on various individuals and entities under Sections 114A and 112A of the Customs Act, 1962. The Managing Director and authorized signatory of the appellant company were each fined Rs. 1 crore. Personal penalties ranging from Rs. 75,000 to Rs. 65 lakhs were imposed on other associated parties.

4. Confiscation of Goods:
The aluminium scrap valued at Rs. 2,17,50,755/- was ordered to be confiscated. However, the appellant contested the basis for re-determining the value, arguing that the evidence relied upon by the Department was not directly incriminating and lacked corroboration.

5. Acceptance of Declared Value:
The appellant argued that the declared values were consistent with contemporaneous import prices and that the Department did not consider these records. They cited several judgments to support their contention that the transaction value should be accepted unless there is concrete evidence of undervaluation.

6. Reliance on DGOV Alert Circular and LME Prices:
The Department relied on DGOV Alert Circular No. 14/2005 and LME prices to re-determine the value. The appellant contended that the circular and LME prices were not applicable, as they pertained to prime metal and not scrap. They cited judgments to argue that reliance on such circulars and prices was incorrect without direct evidence of undervaluation.

7. Admissibility and Authenticity of Evidence:
The appellant challenged the admissibility of evidence obtained from HM Revenue & Customs, UK, arguing that the documents were unsigned, unstamped, and unattested. The Tribunal found that the authenticity of these documents could not be doubted as they were obtained through diplomatic channels.

8. Onus of Proving Undervaluation:
The Tribunal emphasized that the burden to prove undervaluation lies on the Department. The Department must provide credible and cogent evidence to support its case. The Tribunal found that the Department's case was based on assumptions and lacked tangible evidence.

9. Judicial Consistency in Assessments:
The appellant argued that the Department had accepted the declared values in similar cases and could not take a different stand in the present case. The Tribunal agreed, emphasizing the need for judicial consistency and setting aside the order of the Commissioner due to lack of sufficient evidence.

Conclusion:
The Tribunal set aside the order of the Commissioner, finding that the declared values were correctly stated, and the transaction value should be accepted. The penalties and confiscation orders were also set aside, and the appeals were allowed with consequential relief. The Tribunal highlighted the importance of credible evidence and judicial consistency in customs assessments.

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