2013 (9) TMI 426 - AT - Customs

Demand of differential duty - notice was issued to re-determine the value of imports in respect of nine Bills of Entry filed and to re-determine the value on the basis of MRP declared by the authorized service centres and to demand differential duty - Held that - the basis for re-determination of assessable value adopted by the adjudicating authority is the RSP at which the automobile parts of well known brands are sold by the various authorized service centres. It is seen that the parts imported by the appellant do not have brand name in many cases and have been imported from China and are duplicate in nature. Therefore, the prices of these two items i.e., the one imported by the appellants and the other sold by the various authorized service centres do not appear to be comparable, since it does not take into account, the difference in quality, brand name value and other relevant factors. The Bills of Entries were finally assessed after loading the value on the basis of comparable NIDB data. As per the data, the value loading was between 10% to 63.42%. Therefore, when NIDB data of comparable goods are available, value is to be adopted on the basis of NIDB data, not from the retail sale price of authorized service centre as discussed above. In the remaining two Bills of Entry where the goods have been provisionally released, the adjudicating authority is directed to assess both the Bills of Entry No. 953653 dated 17.06.2010 and 936753 dated 25.02.2011 finally. The assessable value of the imported goods shall be adopted on the basis of NIDB data of comparable goods. If the NIDB data are not available, the same will be assessed on the transaction value. When enhancement of assessable value of the impugned goods is based on the evidences which are not reliable therefore, penalties on the appellants are not imposable. In these terms, the penalties on the co-appellants are set aside. Order is set aside and the appeals are partly allowed and partly remanded for re-assessment decided in favour of assessee.

Summary

Issues:
Appeal against differential duty, interest, and penalties imposed under Customs Act, 1962 for under valuation. Co-appellants challenging penalties under Sections 112 and 114AA of the Customs Act, 1962.

Analysis:
The main appellant, an importer of automobile parts, challenged the differential duty, interest, and penalties imposed on them for under valuation. The investigation revealed heavy under valuation of imported automobile parts, leading to the imposition of penalties. Statements of involved parties confirmed the under valuation scheme. The adjudicating authority issued a show-cause notice proposing re-determination of import values and demanding differential duty. The impugned order confirmed all duty demands, imposed penalties, and ordered confiscation. The appellants contended that the re-determination was based on comparing prices with authorized service centers selling branded parts, neglecting the unbranded, Chinese origin nature of the imported parts. They argued that the penalties and confiscation were unjustified.

The Revenue argued that the investigation exposed the appellant's under invoicing scheme, with evidence showing significant discrepancies in declared values compared to negotiated prices. The Revenue supported upholding the impugned order based on the evidence presented.

Upon careful consideration, the Tribunal found that the re-determination of assessable value was flawed as it compared prices of unbranded, duplicate parts from China with branded parts sold by authorized service centers. The lack of evidence confirming the similarity of goods imported and sold by service centers raised doubts about the value enhancement. The Tribunal reviewed specific Bills of Entry and directed assessment based on comparable NIDB data when available, not retail prices of service centers. Penalties were deemed unjustifiable due to unreliable evidence supporting value enhancement, leading to setting aside penalties on the appellants.

In conclusion, the impugned order was set aside, and the appeals were partly allowed and remanded for re-assessment based on NIDB data for comparable goods. Penalties on the co-appellants were also set aside due to the lack of reliable evidence supporting the value enhancement.