2013 (1) TMI 589 - AT - Customs

Stay petition - Import goods like Smart Cards and Cards from parent company Valuation of imported goods Purchase from related party Held that - The transaction between the appellant-company and the parent company were at arms length and the supplies made to the Indian buyers were of personalised Sim Cards / Smart Cards. Differential duty would come out to Rs. 6.42 crores of which a sum of Rs. 5.2 crores stands deposited during the earlier proceedings including a sum of Rs. 2 crores paid during the course of investigation. We do not find any justification to waive pre-deposit of the balance of Customs duty demanded from the assessee. In favour of revenue

Summary

Issues:
1. SVB order reducing loading on imported goods
2. Investigation revealing manipulation of market prices
3. Show-cause notices proposing differential duty and penalties
4. Appeal for waiver of pre-deposit
5. Confirmation of duty and penalties by the Commissioner
6. Justification for penalties on other appellants
7. Disposition of stay petitions

SVB Order and Loading Reduction:
The appellant, an Indian subsidiary, imported goods from its parent company, and a SVB order had initially loaded the import value by 20%. On appeal, the loading was reduced to 17.83% by the Commissioner (Appeals). The Tribunal, in a Final Order, set aside the loading based on findings that the relationship between the appellant and the foreign supplier did not influence prices, and the appellant operated as a trader while independent buyers were actual users.

Investigation and Manipulation:
An investigation in 2007 by the DRI revealed manipulation of market prices by the appellant regarding personalization of imported Smart Cards. The company stopped supplying to independent buyers to show prices were at arm's length. Former officials confirmed manipulation and providing false information to authorities, leading to show-cause notices proposing a demand for differential duty and penalties.

Confirmation of Duty and Penalties:
The impugned order confirmed a duty demand of approximately Rs. 12.48 crores, along with interest and penalties under the Customs Act. The appellant argued for a lower confirmed amount based on previous deposits and financial hardships faced by terminated employees. The Additional Commissioner asserted under-valuation and suppression of facts, seeking pre-deposit of dues as per the order.

Decision and Disposition:
The Tribunal found justification for loading despite a previous order in favor of the appellant. It agreed with reducing the differential duty to Rs. 6.42 crores, considering previous deposits. The Tribunal decided not to waive the balance of duty and penalties, except for showing leniency in determining the penalties for the other appellants. Specific deposit amounts were set for each party, with a deadline for compliance, and failure to deposit would result in dismissal of the appeal.

Conclusion:
The stay petitions were disposed of with specific deposit requirements for the appellant and other appellants, with a deadline for compliance. The Tribunal emphasized the importance of pre-deposit and compliance, warning of dismissal for non-compliance. The decision balanced the need for payment with considerations of financial hardship and past deposits.