2014 (3) TMI 422 - AT - Customs

Valuation of goods - Under valuation of goods - Confiscation u/s 111 - Penalty u/s 112 - Held that - There is no evidence on record available to prove that the goods under seizure were imported by mis-declaring the value. On the other hand, invoices available on record for the purchase and sale of the goods clearly show that the goods have been purchased from Spices Trading Corporation Ltd. and there is no allegation that the said Corporation has mis-declared the value. Therefore, we set aside the confiscation and fine in lieu of confiscation on the goods which were seized and provisionally released. We also set aside the penalties imposed on M/s. Lalji & Sons, M/s. Radha V. Company and M/s. Poonam Trading Company as there is no evidence to show any involvement on their part in undervaluing the goods which have been imported by Spices Trading Corporation - penalty on Shri Bhumish Shah also will not sustain in the instant case for the reason that the goods under supply were imported by M/s. Spices Trading Corporation and obviously he cannot be a party to mis-declaration in respect of the impugned transactions - Decided in favour of assessee.

Summary

Issues:
- Seizure of cloves due to mis-declaration of value
- Confiscation of goods under Section 111(m) of the Customs Act, 1962
- Imposition of penalties under Sections 112(a) and 112(b) of the Customs Act, 1962
- Legitimacy of transactions and involvement of various parties

Analysis:
The judgment involves four appeals stemming from an Order-in-Original issued by the Commissioner of Customs, Mumbai, regarding the seizure of 300 bags of cloves due to alleged mis-declaration of value. The notice proposed confiscation of goods under Section 111(m) of the Customs Act, 1962 and imposition of penalties under Sections 112(a) and 112(b) of the same Act. The appellants contested the charges, emphasizing the legitimacy of their transactions supported by proper documentation and payments made through cheques.

The counsel for M/s. V. Lalji & Sons argued that the purchase of cloves from specific companies did not indicate undervaluation, as these companies dealt with both indigenous and imported cloves. They stressed the lawful nature of the transactions backed by valid invoices and payment proofs. Similarly, the defense for M/s. Radha V. Company and M/s. Poonam Trading Company highlighted their purchases from a Government of India undertaking, negating undervaluation claims and presenting supporting documents.

The Tribunal scrutinized the transaction details and invoices. It was observed that the cloves in question were procured from Spices Trading Corporation Ltd., a government entity, indicating their foreign origin. As the purchases were supported by proper documentation and payments were made through legitimate channels, the Tribunal concluded that there was no evidence of mis-declaration of value. Consequently, the confiscation of goods, fines, and penalties imposed on the appellants were set aside due to the lack of proof implicating them in undervaluation practices.

Regarding Shri Bhumish Shah's involvement, the Tribunal noted that since the goods were imported by Spices Trading Corporation, he could not be held accountable for any mis-declaration. Therefore, the penalty on Shri Bhumish Shah was deemed unsustainable. Ultimately, all four appeals were allowed, providing consequential relief as necessary.