2011 (3) TMI 91 - AT - Customs

Demand - Penalty u/s 114A - Valuation of goods - The Revenue also submitted that the investigation was got conducted by the Hong Kong Authorities and the Deputy Head of Trade Licensing Investigation Bureau vide letter dated 21.04.99 informing Consulate General of India - In the present case as the Customs Authorities made detailed investigation with the Customs Authorities of Hong Kong and Russia and obtained invoices and export declarations to show that the actual price of the goods imported by the appellants and the declarations were procured through official channels Regarding penalty of Rs.5 lakhs will meet ends of justice on Shri M.L.Gupta, Managing Director - Therefore, the penalty in respect of Managing Director is reduced to Rs.5 lakhs otherwise the appeals are dismissed

Summary

Issues:
- Confirmation of demand of differential duty and penalties imposed under Customs Act, 1962
- Reliance on confessional statement by Revenue
- Discrepancies in export declarations and import dates
- Rejection of transaction value declared by the appellants
- Detailed investigation by Customs Authorities of Hong Kong and Russia
- Penalty imposed on Managing Director and firm

Confirmation of demand of differential duty and penalties imposed under Customs Act, 1962:
The appellants appealed against an adjudication order confirming a demand of differential duty and penalties under the Customs Act, 1962. The appellants were involved in importing photographic products from Hong Kong and Russia between October 1996 and June 1998. The investigation revealed undervaluation of goods to evade duty payment, leading to the issuance of a show cause notice and subsequent adjudication order by the Revenue.

Reliance on confessional statement by Revenue:
The appellants contested the reliance on a confessional statement, pointing out inconsistencies between the statement and the Revenue's case. They argued that the Revenue could not base its case on a statement that differed significantly from their position. The appellants emphasized the need for cogent reasons before rejecting invoice prices, citing a Supreme Court decision on the matter.

Discrepancies in export declarations and import dates:
The appellants raised concerns about the gap between export declarations and import dates, highlighting the lack of incriminating documents during premises searches. They questioned the authenticity of export declarations, especially as original documents were not obtained. Additionally, they pointed out the absence of evidence regarding investigations from the suppliers of the goods.

Rejection of transaction value declared by the appellants:
The Customs Authorities rejected the transaction value declared by the appellants, citing investigations from Hong Kong and Russia. The Revenue obtained information through official channels, indicating that the appellants undervalued goods. Reports from Enforcement Authorities in Russia and Hong Kong revealed discrepancies in values declared during export and import transactions.

Detailed investigation by Customs Authorities of Hong Kong and Russia:
The Customs Authorities conducted a thorough investigation with their counterparts in Hong Kong and Russia. They obtained invoices and export declarations through official channels, uncovering that the exporters received understated values in cash. The investigation supported the Revenue's position that the appellants had undervalued goods intentionally.

Penalty imposed on Managing Director and firm:
A penalty was imposed on the Managing Director and the firm, with the Tribunal reducing the penalty on the Managing Director to Rs. 5 lakhs for the sake of justice. The Tribunal upheld the penalties imposed on the firm and the confiscation of goods, finding no errors in the impugned order.

This comprehensive analysis outlines the key issues addressed in the judgment by the Appellate Tribunal CESTAT, New Delhi, providing a detailed overview of the case and the Tribunal's decision on each issue raised.