2013 (10) TMI 244 - AT - Customs

Valuation - Import of turtle shells - import of restricted / prohibited items - penalty - Held that - department has arrived at the value of the shells on the basis of value of live turtles and have assumed the value to be 50% of the value of live turtles. The department does not seem to have made any efforts to ascertain the value of turtle shells. If turtle shells are tradable items, the department could have easily found out what is the price prevalent in the international market for such turtle shells. In the absence of any such efforts made by the department, the valuation of Rs.1,50,000/- arrived at by the department without any sound basis is not sustainable in law. Therefore, the plea of the appellant that the consignment which they got free-of-cost from the foreign supplier is of value of Rs.3500/- only in the international market has to be accepted. If this is done, the imposition of penalty of Rs. 25,000/- on the appellant cannot be justified. Nevertheless, since the item imported is a restricted item and is prohibited for the purpose of imports into India and is governed by CITES agreement, the appellant needs to be penalized for violating the provisions of law - Decided partly against assessee.

Summary

Issues:
- Valuation of confiscated turtle shells for penalty imposition under Customs Act, 1962
- Applicability of CITES agreement on restricted import items
- Justification of penalty amount imposed on the appellant

Analysis:
1. Valuation of Confiscated Turtle Shells: The appellant imported a sample consignment of turtle shells without the required permit under the CITES agreement. The Customs authorities valued the shells at Rs.1,50,000 based on the value of live turtles, which the appellant contested as illogical. The Tribunal noted the lack of effort by the department to ascertain the actual value of turtle shells in the international market. Consequently, the Tribunal accepted the appellant's claim that the consignment's value was only Rs.3500 in the international market. The valuation by the department without a sound basis was deemed unsustainable, leading to a reduction in the penalty imposed on the appellant.

2. Applicability of CITES Agreement: The Tribunal acknowledged that the item imported, turtle shells, was a restricted item under the CITES agreement and prohibited for importation into India. Despite the appellant receiving the consignment free-of-cost from the foreign supplier, the violation of the CITES agreement warranted a penalty. Therefore, the Tribunal reduced the penalty imposed on the appellant from Rs.25,000 to Rs.2500, considering the nature of the restricted item and the violation of import provisions.

3. Justification of Penalty Amount: The appellant argued that the penalty of Rs.25,000 was unjustified, given the low value of the sample consignment. The Tribunal agreed with the appellant's valuation of the consignment and reduced the penalty amount to Rs.2500, considering the restricted nature of the imported item and the violation of import regulations. The appeal was disposed of accordingly, with the stay petition also being resolved in the same terms.

This judgment by the Appellate Tribunal CESTAT MUMBAI highlights the importance of accurately valuing confiscated goods for penalty imposition under the Customs Act, 1962, and the significance of complying with international agreements like CITES concerning restricted import items.