2011 (2) TMI 1055 - AT - Customs

Undervaluation - Penalty on CHA - appellants submits that the adjudicating authority has noted that there is nothing on record about the involvement of the CHA with regard to the offence & after the importer directed the CHA to file regular bill of entry, they have filed it - Held that - Initial value declared by the importer was not in accordance with the Customs Valuation Rules. The details of the royalty/ licence fee paid and the contract were produced only when they were asked for it by the department. The valuation done by the adjudicating authority has not been challenged by the importer. Therefore, as regards the issue of undervaluation, it stands established in respect of the goods involved in these cases. As find that S.M.Enterprises was having the knowledge that the consignment was detained by the customs for valuation purposes. So before filing the regular Bill of Entry, the CHA should have enquired with the importer about all valuation details. Without doing so, they filed the regular Bills of Entry by declaring the same material value of the goods - therefore, agree with the order passed by the Commissioner(Appeals) however reduce the penalty to Rs. 5,000/- in each case.

Summary

Issues:
1. Undervaluation of imported goods.
2. Liability of Customs House Agent (CHA) in case of undervaluation.
3. Applicability of penalty and redemption fine in valuation matters.

Analysis:
Issue 1: The case involved the import of goods by M/s. IOL Broadcast Ltd. through their authorized courier, which were initially declared at a lower value than required by Customs Valuation Rules. The importer provided additional details only after being prompted by the customs department, and the adjudicating authority found the undervaluation to be established. The tribunal upheld this finding, emphasizing that the declared value did not comply with the rules.

Issue 2: The Customs House Agent (CHA), S.M. Enterprises, filed the regular Bill of Entry on behalf of the importer without verifying the correct valuation details. The tribunal noted that the CHA should have inquired with the importer about the valuation specifics before filing the entry. As the CHA failed to do so and filed the entry with the same undervalued amount, they were found to have knowledge of the customs valuation issue. Consequently, the tribunal agreed with the lower authorities' decision to hold the CHA accountable for not ensuring accurate valuation details.

Issue 3: The appellant's counsel argued that penalty and redemption fine should not be imposed in valuation matters, citing previous tribunal decisions. However, the tribunal distinguished the facts of those cases from the present one and upheld the penalty imposed by the Commissioner (Appeals). The tribunal acknowledged the procedural errors by the CHA but reduced the penalty amount to Rs. 5,000 in each case as a mitigating measure.

In conclusion, the tribunal disposed of the appeals by affirming the undervaluation finding, holding the CHA responsible for inadequate due diligence, and reducing the penalty amount while upholding its imposition in the context of valuation matters.