2010 (10) TMI 231 - AT - Customs

Confiscation - Undervaluation - Penalty - the Valuation Rules in force at the time of import - the inspection report furnished by the Chartered Engineer, M/s. SGS India Pvt. Ltd., was given to the appellants before they agreed to accept the value appraised by M/s. SGS and communicated the same to the Department under their letter dated 6-6-2003 - In the present case, we find that the declared value was very low compared to the appraised value determined as per the inspection report of the Chartered Engineer based on various factors including comparison with value of similar machines inspected in the past and sales prices obtained from the internet etc., which was not challenged by the appellants at the time of appraisement despite having full opportunity to do so, but was actually accepted Regarding fine and penalty - Lower appellate authority has already reduced the redemption fine to the level of about 25% of the appraised value and the penalty to the level of less than 10% of the same while upholding the order of confiscation and imposition of penalty on account of unauthorized import without valid import licence - Appeal is dismissed

Issues:
1. Enhanced valuation of imported goods
2. Confiscation and redemption fine
3. Penalty imposition

Issue 1: Enhanced Valuation of Imported Goods
The appellants imported used printing machinery without the necessary import license and failed to provide crucial information like the manufacturer's invoice and year of manufacture. An inspection report estimated the machinery's value at Rs. 13,40,159, significantly higher than the declared value of Rs. 3,80,000. The Order-in-Original enhanced the value, leading to confiscation and a redemption fine of Rs. 5.25 lakhs, with an additional penalty of Rs. 2,60,000. The lower appellate authority upheld the value enhancement but reduced the redemption fine and penalty. The appellants contested the enhancement, arguing that the transaction value should have been accepted under Customs Valuation Rules, citing relevant Supreme Court judgments.

Issue 1 Analysis:
The Tribunal noted that the Customs Valuation Rules had been amended before the imports in question, requiring the value of imported goods to be the transaction value subject to specific rules. The authorities invoked Rule 10A to reject the low declared value, as the appellants waived the requirement of a show-cause notice and personal hearing. The inspection report by a Chartered Engineer was provided to the appellants before they agreed to the appraised value. The appellants did not challenge the report's basis but accepted the higher value, justifying the authorities' decision to rely on the report for valuation.

Issue 2: Confiscation and Redemption Fine
The appellants did not contest the confiscation but sought a reduction in the redemption fine and penalty, claiming to be actual users. The lower appellate authority had already reduced the redemption fine to Rs. 3.25 lakhs and the penalty to Rs. 1.25 lakhs, considering the unauthorized import without a valid license. The Tribunal found no grounds for further reduction in the fine and penalty amounts.

Issue 2 Analysis:
The Tribunal upheld the lower appellate authority's decision on the redemption fine and penalty, emphasizing the substantial reduction already granted. Considering the unauthorized import and the penalties imposed, the Tribunal deemed the existing fine and penalty amounts appropriate, denying the appellants' plea for further reduction.

Issue 3: Penalty Imposition
The penalty imposed on the appellants was upheld by the lower appellate authority, with the Tribunal finding no justification for additional reduction. The appellants' argument for a penalty reduction was dismissed, affirming the lower authority's decision on penalty imposition.

Issue 3 Analysis:
The Tribunal concurred with the lower appellate authority's decision on the penalty, emphasizing that the penalty amount had already been significantly reduced. The Tribunal found no basis for further reducing the penalty, concluding that the imposed penalty was appropriate given the circumstances of unauthorized import without a valid license.

In conclusion, the Tribunal dismissed the appeal, upholding the enhanced valuation of imported goods, the redemption fine, and the penalty imposed on the appellants. The decision was based on the application of relevant Customs Valuation Rules, the acceptance of the higher appraised value by the appellants, and the adequacy of the reduced redemption fine and penalty amounts.

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