2010 (4) TMI 634 - AT - Customs

Enhance the unit price Air conditioner imported - notice proposed to confiscate the goods - investigations was proposed to be appropriated towards the demand of duty based on the new assessable value - The assessee had also imported another consignment - declared as US 330 per piece. At the time of assessment, the unit price was enhanced to US 360 per piece - accordingly, the assessee paid duty - show-cause notice was issued to the assessee on the basis of the results of DRI s investigations, for enhancing the assessable value in the same manner as in the earlier case and for recovery of differential duty, penalty etc - recovery of any additional amount of duty without attempting any revision of the assessment by resorting to the process of law provided under Section 130 of the Act - quotations were not the sole evidence for the Commissioner to enhance the assessable value of the goods - Even without reference to the quotations, the Commissioner could have arrived at the same findings against the assessee on the basis of the formidable evidence otherwise noted by him Held that - assessable value determined by the Commissioner in either of the cases is upheld, and consequently, the demands of differential duty is sustained - misdeclaration of value by the assessee, a fact tacitly admitted by them - the goods were not available for confiscation, any fine was not liable to be imposed - demands of duty and penalties in all these cases are upheld, while the redemption fine is set aside.

Issues Involved:
1. Legality of issuing a show-cause notice under Section 28 of the Customs Act for recovery of additional duty without revising the initial assessment.
2. Sustainability of the enhancement of the assessable value of imported goods.
3. Legitimacy of the penalties and fines imposed under Sections 114A and 125 of the Customs Act.

Detailed Analysis:

1. Legality of Issuing a Show-Cause Notice under Section 28:

The primary issue was whether the department could issue a show-cause notice under Section 28 of the Customs Act for recovery of additional duty without revising the initial assessment under Section 130. The assessee argued that the assessments should have been challenged through the due process of law, relying on decisions in Hitaishi Fine Kraft Indus. Pvt Ltd. and Shimnit Machine Tools & Equipment Ltd. The Revenue, however, cited the Supreme Court's judgment in UOI v. Jain Shudh Vanaspati Ltd. and the Madras High Court's decision in Venus Enterprises, which supported the issuance of show-cause notices under Section 28 post-clearance under Section 47.

Judgment:
The Tribunal held that the department was within its rights to issue show-cause notices under Section 28 for recovery of differential duty, even without revising the initial assessment under Section 130. This decision was based on the Supreme Court's ruling in Jain Shudh Vanaspati Ltd., which clarified that show-cause notices for duties not levied or short-levied could be issued post-clearance. The Tribunal also noted that the Venus Enterprises case involved repeated enhancement of assessable value, yet the proceedings under Section 28 were upheld.

2. Sustainability of the Enhancement of Assessable Value:

The second issue was whether the enhancement of the assessable value of the imported goods was legally sustainable. The importer admitted in statements that the actual negotiated prices were higher than those declared in the Bills of Entry (Bs/E). The assessee contested the voluntariness of these statements and the reliance on quotations for price enhancement.

Judgment:
The Tribunal found the importer's statements consistent and credible, indicating clear admission of undervaluation. The Tribunal rejected the assessee's claim that the first statement was coerced, noting that the second statement did not retract the first but rather clarified and supplemented it. The Tribunal also upheld the Commissioner's decision to load 21.125% to the assessable value under Rule 9(2) of the Customs (Valuation) Rules, 1988, as the assessee did not provide ascertainable freight and insurance charges. The reliance on quotations was deemed non-essential as the Commissioner had other substantial evidence to support the enhancement.

3. Legitimacy of Penalties and Fines:

The final issue was the legitimacy of the penalties and fines imposed under Sections 114A and 125 of the Customs Act. The Commissioner imposed penalties equal to the duty and a redemption fine of Rs. One lakh in lieu of confiscation.

Judgment:
The Tribunal upheld the penalties under Section 114A, correlating the grounds for penalty with those for invoking the extended period of limitation due to misdeclaration of value. However, the Tribunal set aside the redemption fine, as the goods were not available for confiscation, referencing the Tribunal's Larger Bench decision in Shiv Kripa Ispat Pvt. Ltd. v. Commissioner of C. Ex. & Cus. Nasik.

Conclusion:
The Tribunal upheld the demands of duty and penalties while setting aside the redemption fine. The appeals were disposed of accordingly.

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