2013 (1) TMI 438 - AT - Customs

Undervaluation of imported consignments - Appellants were importing zinc skimming and zinc ash for using it as a raw material Declared the value of such goods to be US 380 per MT DG Revenue Intelligence got information that the actual value paid by the appellants for such goods were much higher than the value declared at the time of import for paying customs duty - Penalty challenged is imposed u/s 112 of Customs Act - Penalty u/s 114A of Customs Act. Held that - Goods imported from USA there is clear evidence of mis-declaration of value and for that reason the goods were liable for confiscation and penalties were to be imposed on the importer for that reason. In favour of revenue Prices for zinc skimming imported from USA cannot be applied for prices of such goods or zinc ash imported from other countries because value of these goods depends on the percentage of zinc contents in this material. Basically the items in question are goods of which quality can vary and therefore it is difficult to agree to any addition in value, based on the fact that the appellants have suppressed value of goods imported from another country. There is no reason to adopt a different standard for the appellant in cases where clear evidence of remittance of extra consideration is not adduced by Revenue. Therefore, imports from countries other than USA the benefit of doubt should go to the appellants. In favour of assessee Their contention that they should not be asked to pay any additional Countervailing duty or consequent SAD element, is to be accepted. However, the plea that Countervailing duty and SAD initially paid should be adjusted against shortfall in other types of customs duty paid at the time of import is not maintainable. There is a mechanism for getting relief of CVD and SAD paid through Cenvat credit. Therefore we not able to agree with the contention that the excess CVD and SAD paid should be adjusted against Customs duty short paid at the time of import. In favour of revenue We uphold the demand for differential customs duty (other than CVD and consequent difference in SAD) on account of value difference demanded in respect of consignments imported from USA. The demand for differential duties on account of imports from other countries and differential duty on account of CVD from USA are not maintainable. Differential SAD will have to be calculated on the basis that CVD is not leviable. So the question of differential duty on this count is not likely to arise. In favour of assessee Adjudicating authority had confiscated goods which were not available for confiscation. Even the bond executed for another reason namely to wait for test reports, had been discharged prior to adjudication. So we hold that the confiscation of goods and consequent redemption fine to be not maintainable

Summary

Issues:
Undervaluation of imported consignments, imposition of penalties, contestation of countervailing duty, misdeclaration of value, confiscation of goods, imposition of fines, adjustment of duties, issuance of Show Cause Notice, imposition of penalties on partners, reduction of penalties, differential customs duty, differential SAD calculation.

Undervaluation of Imported Consignments:
The case involved two sets of appeals by a firm and its partner regarding undervaluation of imported zinc skimming and zinc ash. The Revenue alleged that the appellants undervalued the goods and remitted the balance consideration through separate invoices. Show Cause Notices were issued based on evidence of undervaluation, and the appeals contested these adjudication orders.

Imposition of Penalties:
Penalties were imposed on the firm and its partner for importing consignments with suppressed values. The appeals challenged the penalties, arguing against the imposition of separate penalties on the partner once the firm was penalized.

Contestation of Countervailing Duty and Misdeclaration of Value:
The appellants contested the imposition of countervailing duty on the imported goods, claiming they had paid it under a mistaken impression of the law. They argued against the calculation of Special Additional Duty based on the contested countervailing duty. The issue of misdeclaration of value and quantity was also raised, particularly in imports from the USA.

Confiscation of Goods and Fines:
Confiscation of goods and imposition of fines were contested, with the Tribunal finding the confiscation not maintainable due to procedural issues and lack of specific acts attributed to the partner for imposing penalties.

Adjustment of Duties and Differential Customs Duty:
The Tribunal upheld the demand for differential customs duty on undervalued imports from the USA but deemed the demands for imports from other countries and countervailing duty not maintainable. It was decided that excess countervailing duty and SAD paid could not be adjusted against customs duty shortfalls at the time of import.

Show Cause Notice and Penalties on Partners:
The Tribunal disagreed with the argument that a Show Cause Notice could not be issued post-finalized assessment. It held that penalties on partners should not be imposed separately if penalties were already levied on the firm.

Reduction of Penalties and Final Decision:
The penalties imposed were reduced in one appeal, and penalties in another were linked to the differential duty amount. The Tribunal partially allowed the appeals by the firm and fully allowed the appeals by the partner, setting aside the penalties imposed on him.

This detailed analysis covers the various issues addressed in the judgment, including undervaluation, countervailing duty, penalties, confiscation of goods, and the adjustment of duties, providing a comprehensive overview of the legal proceedings and decisions made by the Tribunal.