2013 (10) TMI 362 - AT - Customs

Import of old colour picture tubes - misdeclaration - Imposition of penalty - Valuation of goods - Stock lot goods - difference of opinion - matter referred to larger bench on the following issue Whether there was delibate misdeclaration of classification and description as well as value inviting penal provisions were section 114 of Customs Act, 1962 as held by Hon ble Member (Technical) or penalty is to be set aside as held by Member (Judicial) - referred to larger bench.

Summary

Issues Involved:
1. Classification of imported goods.
2. Valuation of imported goods.
3. Imposition of penalty and redemption fine.
4. Admissibility of NIDB data as evidence.
5. Examination reports and their reliability.

Issue-wise Detailed Analysis:

1. Classification of Imported Goods:
The appellant declared the imported goods as "stock lot of colour picture tubes" under heading 8540 4000, which attracts a nil rate of duty. However, the Deputy Commissioner observed that the goods were new and not a stock lot, suggesting reclassification under heading 8540 0090, attracting a 12.5% duty. The adjudicating authority upheld this reclassification, leading to the imposition of customs duty. The appellant argued that the goods were correctly described and classified, and any wrong classification should not attract a penalty. The tribunal found that the description of the goods was correctly provided, and thus, wrong classification should not lead to penal action.

2. Valuation of Imported Goods:
The declared value of the goods was Rs. 4.81 lakhs, which was enhanced to Rs. 15.88 lakhs based on NIDB data by the Revenue. The appellant contended that the enhancement was arbitrary and unsupported by evidence, as the goods were unbranded and the NIDB data did not specify the brand. The tribunal noted that the Revenue did not provide evidence to prove the incorrectness of the declared value and held that NIDB data alone could not justify the enhancement of value, especially for unbranded goods.

3. Imposition of Penalty and Redemption Fine:
The Additional Commissioner imposed a redemption fine of Rs. 3 lakhs and a penalty of Rs. 1.50 lakhs on the importer. The appellant argued that since the goods were not cleared and were auctioned by the Revenue, the demand for duty and imposition of redemption fine became infructuous. The tribunal agreed with the appellant regarding the penalty, stating that the sole basis for the penalty was the Deputy Commissioner's observation, which was not corroborated by other evidence. Thus, the penalty was set aside.

4. Admissibility of NIDB Data as Evidence:
The tribunal referred to previous rulings, including CCE, Kanpur vs. Asia Pacific Distributors and Neha Intercontinental P. Ltd., which held that NIDB data could not be relied upon without proof that the imports shown in the data were of identical or similar goods. The tribunal found that the Revenue failed to demonstrate that the NIDB data was applicable to the unbranded goods imported by the appellant, making the data inadmissible for enhancing the value.

5. Examination Reports and Their Reliability:
The initial examination by an officer below the rank of Deputy Commissioner indicated that the goods appeared old but unused and were a stock lot. However, the Deputy Commissioner later reported that the goods were new and not a stock lot. The tribunal noted the inconsistency between the two reports and criticized the reliance on the Deputy Commissioner's visual examination without expert opinion. The tribunal emphasized the need for expert verification in the presence of contradictory reports and found no justification for solely relying on the Deputy Commissioner's observations.

Separate Judgment by Manmohan Singh, Member (T):
Manmohan Singh disagreed with the findings of the learned Member (Judicial). He emphasized that the higher auction value of Rs. 10 lakhs compared to the declared value of Rs. 4.18 lakhs indicated deliberate misdeclaration. He supported the use of NIDB data for valuation and upheld the penalty, arguing that the Deputy Commissioner's report was valid and the goods were new and not a stock lot. He concluded that the appellant's actions constituted deliberate misdeclaration and undervaluation, justifying the penalty under Section 114 of the Customs Act, 1962.

Difference of Opinion:
The difference of opinion between the Members was on whether there was deliberate misdeclaration of classification, description, and value, warranting penal provisions under Section 114 of the Customs Act, 1962, or if the penalty should be set aside as held by the Member (Judicial). The matter was pronounced on 29.8.2013.