2011 (10) TMI 424 - AT - Customs

Valuation - re-determining the value of parts of wrist watches - Held That - Bill of entry is dated 15-1-2006, whereas the applicants had imported watch dials throughout the period 2002 onwards. Watch dials are not standard items, and vastly vary based on number of factors like brand, size, finishing, quality etc. The price of one solitary consignment cannot be adopted to reject the transaction value of all the consignments imported by the applicants. Decoded in favour of assessee. Pre-deposit - Bank Guarntee of Rs 2 Crore during Investigation - Held That - Further deposits to cause undue hardship. We direct the applicants to keep the bank guarantee alive during the pendency of the appeals.

Summary

Issues:
Re-determining the value of imported watch parts, confirmation of duty, interest, penalties, and fines.

Analysis:
The judgment by the Appellate Tribunal CESTAT, New Delhi involved the disposal of stay petitions with a common order due to identical issues in the appeals. The primary issue revolved around re-determining the value of parts of wrist watches imported by the applicants, leading to the confirmation of duty, interest, penalties, and fines on both the applicants and individuals involved. A total of 889 consignments of watch parts were imported, with a significant portion imported from a specific company in Hong Kong. The duty demanded amounted to approximately Rs. 14.49 crores, with Rs. 5.12 crores confirmed for undervaluation based on a calculative method alleging an average undervaluation of 60%.

The methodology adopted by the Commissioner for confirming undervaluation was strongly contested by the applicants' advocate. It was argued that the average undervaluation was based on items not forming part of specific serial numbers, and the methodology was against established legal principles. The Tribunal found that the Commissioner's methodology lacked proper justification and evidence specific to the goods in question. Reference was made to a previous Tribunal decision to support the contention that the appellants had a strong case against pre-deposit of duty.

Regarding specific demands, the Tribunal analyzed the confirmation of demands based on invoices and letters from associations. Discrepancies were found in the pricing information provided, leading to doubts about the justification for enhancing the assessable value. The Tribunal also scrutinized demands related to watch cases and dials, highlighting inconsistencies in the evidence presented and emphasizing the need for a more thorough comparison and evaluation of the imported items.

In a separate issue concerning a demand related to leather straps, the Tribunal considered the financial circumstances of the appellants, noting the existing bank guarantee and mortgaged premises. Due to the undue hardship that further deposit would cause, the Tribunal directed the applicants to maintain the bank guarantee during the appeal process, waiving the pre-deposit of the remaining amount and staying the recovery of duty, interest, and penalties until the appeals were disposed of.

In conclusion, the judgment addressed various issues related to the valuation of imported watch parts, duty demands, and the financial implications for the appellants, providing detailed analysis and considerations for each aspect before reaching a decision on the stay petitions.