2013 (4) TMI 32 - Commission - Customs

Undervaluation - Import of Whey Protein - The applicant has further submitted that he has deposited the entire amount prior to issue of demand and prays that the case may be admitted and settled as a whole once and for all, grant of immunity from imposition of any fine, penalty & prosecution under Customs Act, 1962. Held that - Considering cooperation extended by the applicant and co-applicant during settlement proceedings and willingness of the applicant to accept duty liability as worked out by Revenue coupled with real possibility of getting lower negotiated price, the Bench finds it a fit case for settlement. However, considering the attitude and conduct of the applicants in totality, the Bench is inclined to consider the request for immunities favorably. Order is passed for paying differential amount of custom duty, interests and penalties. The Applicant and co-applicant are granted immunities from prosecution under the Customs Act, 1962, in so far as this case is concerned. order of settlement shall be void in terms of Section 127C(8) of the Act, if the Settlement Commission subsequently finds that it has been obtained by fraud or mis-representation of facts.

Summary

Issues Involved:
1. Undervaluation and misclassification of imported goods.
2. Differential customs duties and interest.
3. Confiscation and redemption fine.
4. Penalty imposition.
5. Immunity from prosecution.

Issue-wise Detailed Analysis:

1. Undervaluation and Misclassification of Imported Goods:
The case arose from an intelligence report indicating undervaluation and misclassification of a consignment of "Whey Protein" imported by M/s. Ganapati S.R.J Associates. The goods were found to match the description in the Bill of Entry but were significantly undervalued. Market enquiry revealed that the market price was nearly thirty times the declared CIF value. The goods were also misclassified under CTH 3502 90 00 instead of 2106 10 00. The importer and associated individuals accepted the market value determined by customs and paid a part of the differential duty.

2. Differential Customs Duties and Interest:
A show cause notice demanded differential customs duties amounting to Rs. 13,04,165/- due to undervaluation. The applicant had already paid Rs. 10,00,000/- during the investigation and later deposited the balance amount along with interest of Rs. 1,60,660/-. The applicant accepted the assessable value arrived at by the department and paid the differential duty and interest in the spirit of settlement.

3. Confiscation and Redemption Fine:
The goods were provisionally released after the importer submitted a Bank Guarantee and Bond. The goods were found liable for confiscation under Section 111(m) of the Customs Act due to undervaluation and mis-declaration. The bench fixed an amount of Rs. 2,50,000/- towards redemption of the goods under Section 125(1) of the Customs Act, granting immunity from redemption fine in excess of this amount.

4. Penalty Imposition:
Penalties were imposed on both the applicant and the co-applicant. Shri Navin Ghai, the proprietor, was fined Rs. 20,000/-, while Shri Jaidev Kukreja, who played a more culpable role, was fined Rs. 50,000/- under Section 112(a) of the Customs Act. The bench granted immunity from penalties in excess of these amounts.

5. Immunity from Prosecution:
The applicant and co-applicant sought immunity from prosecution under the Customs Act. Considering their cooperation and the circumstances, the bench granted immunity from prosecution under the Customs Act, 1962, for this case.

Findings and Final Order:
The bench declared the adjudication order dated 12-1-2012 as non-est, allowing the case to be settled. The differential customs duty was settled at Rs. 13,04,165/-, which had already been paid. The applicant was directed to pay any difference in statutory interest. A redemption fine of Rs. 2,50,000/- was fixed, and penalties of Rs. 20,000/- and Rs. 50,000/- were imposed on Shri Navin Ghai and Shri Jaidev Kukreja, respectively. Immunities from prosecution were granted, and the order emphasized that it would be void if obtained by fraud or misrepresentation.