2013 (1) TMI 619 - HC - Customs

Maintainability of WRIT Petition - Valuation - Under invoicing Rejecting the invoice price - Under valuation of imported goods - Assessee engaged in the imported furniture business - Declaration filed by the exporters which shows different declared values in the country from where import made - Whether the petitioner was entitled for waiver of pre deposit of the entire amount of duty and penalty Held that - The remedy of appeal is provided under the Act which is evident from a reading of Section 130 itself, on a substantial question law. It is therefore clear that an efficacious remedy of appeal is guaranteed under the Act In favour of revenue

Issues Involved:
1. Waiver of pre-deposit of duty and penalty.
2. Consideration of undue hardship.
3. Validity of the investigation and evidence.
4. Prima facie case and Tribunal's findings.
5. Maintainability of the writ petition under Article 226.

Issue-wise Detailed Analysis:

1. Waiver of Pre-deposit of Duty and Penalty:
The petitioner's application for waiver of pre-deposit of duty amounting to Rs.1,20,79,765/- with interest and an equal amount of penalty was partially granted by the Customs, Excise, and Service Tax Appellate Tribunal, which directed the petitioner to deposit Rs.60 lakhs within six weeks. The Tribunal waived the pre-deposit of the balance dues and stayed recovery until the appeal's disposal. The petitioner contended that the Tribunal's order was passed without considering the undue hardship caused and the merits of the case.

2. Consideration of Undue Hardship:
The petitioner argued that the Tribunal did not adequately consider the undue hardship caused by the pre-deposit order. The petitioner relied on balance sheets (Ext.P12 (a) and P12(b)) to support the claim of financial hardship. The Tribunal noted that the balance sheets might not reflect the true picture due to the petitioner's involvement in transferring money illegally for importing furniture. Despite the petitioner's business closure in 2008, the Tribunal directed a pre-deposit of Rs.60 lakhs, waiving the rest.

3. Validity of the Investigation and Evidence:
The Department initiated proceedings based on intelligence reports of under-invoicing, conducting searches and issuing a show cause notice (Ext.P1). The investigation revealed under-invoicing in 129 consignments, later confined to 86 consignments. The Department relied on documents from Malaysian and Chinese Customs, which showed different declared values. The petitioner argued that the Department did not rely on contemporaneous records to prove the price and failed to discharge the burden of proof, as required by the Apex Court's decision in Commissioner of Customs, Calcutta v. South India Television (P) Ltd. The Tribunal, however, found the investigation results and documents from Malaysian Customs credible.

4. Prima Facie Case and Tribunal's Findings:
The Tribunal found a prima facie case of gross undervaluation of imported goods by the petitioner, corroborated by proforma invoices, L.C. and T.T. amounts, and Malaysian Customs documents. The Tribunal held that the decisions relied upon by the petitioner were not prima facie applicable, given the clear evidence of extra payments made to suppliers. The Tribunal's order (Ext.P13) was criticized by the petitioner for being mechanical, but the Court found that the Tribunal had considered the findings and arrived at a prima facie conclusion of undervaluation.

5. Maintainability of the Writ Petition under Article 226:
The respondents argued that the writ petition was not maintainable under Article 226, as the petitioner had an effective remedy under Section 130 of the Customs Act by filing an appeal. The Court considered whether the Tribunal's order needed modification or fresh consideration. The Court noted that it was not exercising appellate jurisdiction and emphasized that the Tribunal had considered the contentions prima facie. The Court found no failure on the Tribunal's part in considering the materials at the pre-deposit stage and dismissed the writ petition, granting the petitioner six weeks to comply with the Tribunal's order.

Conclusion:
The Court upheld the Tribunal's order directing the petitioner to pre-deposit Rs.60 lakhs, finding that the Tribunal had considered the prima facie case and undue hardship adequately. The Court dismissed the writ petition, emphasizing the availability of an appellate remedy under Section 130 of the Customs Act and granting the petitioner six weeks to comply with the Tribunal's order.

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