2014 (8) TMI 769 - AT - Customs

Waiver of pre deposit - Undervaluation of goods imported - Suppression of facts - Misdeclaration of goods - Difference of opinion - Majority order - Held that - Though, I (third member) have held that prima facie there is a strong case for the appellant, since I am disposing the issue as a referred member, I have no other option as a third Member, but either to agree with one of the deferring views. - stay granted partly.

Summary

Issues Involved:
1. Whether the transaction value can be rejected without circumstances under Rule 4(2) of the Customs Valuation Rules, 1988.
2. Whether the confessional statement of Shri Arun Kapoor can be relied upon despite its retraction.
3. Whether the contract price or contemporaneous import prices should be adopted for customs valuation.
4. Whether the reliance on prices quoted in Public Ledger, insurance documents, and parallel invoices for valuation is legally valid.
5. The extent of pre-deposit required for the stay of recovery during the pendency of the appeal.

Issue-wise Detailed Analysis:

1. Rejection of Transaction Value:
The appellant argued that the transaction value should not be rejected unless circumstances under Rule 4(2) of the Customs Valuation Rules, 1988, exist. They cited the Supreme Court's decision in Eicher Tractors Vs. Commissioner of Customs, asserting that the transaction value should have been accepted. The Tribunal found that the Revenue enhanced the value based on contemporaneous import values and incriminating documents, indicating gross undervaluation by the appellant. Thus, the rejection of transaction value was upheld.

2. Reliance on Confessional Statement:
The appellant contended that the confessional statement of Shri Arun Kapoor, admitting to undervaluation and hawala payments, was retracted and thus unreliable. The Tribunal noted the retraction but found it was not made before the officer who recorded the statement, deeming it an afterthought. The Tribunal cited K.I. Pavunny Vs. Asstt. Collector (HQ), emphasizing that a voluntary confessional statement can form the sole basis for conviction if corroborated by other evidence. The Tribunal found corroborative evidence of undervaluation, thus rejecting the retraction.

3. Contract Price vs. Contemporaneous Import Prices:
The appellant argued that the contract price, registered with the Central Bureau of Narcotics, should be relevant for valuation. The Tribunal held that under Section 14 of the Customs Act, the value for customs duty is the price at which such goods are sold or offered for sale at the time of importation, not the contract price. The Tribunal relied on the Supreme Court's decisions in Ispat Industries Ltd. and Rajkumar Knitting Mills (P) Ltd., affirming that contemporaneous import prices should be adopted.

4. Reliance on Prices Quoted in Public Ledger, Insurance Documents, and Parallel Invoices:
The appellant contended that prices quoted in Public Ledger and insurance documents are not reliable for valuation. The Tribunal found that the Public Ledger prices were used only for part of the period and that contemporaneous import values were primarily relied upon. The Tribunal noted that parallel invoices from other importers, though not recovered from the appellant, had evidentiary value as they were signed by authorized suppliers and matched the description and price of goods. Thus, the reliance on these documents was upheld.

5. Extent of Pre-deposit Required:
The Tribunal considered the appellant's financial hardship and the prima facie case. The Member (Technical) directed a pre-deposit of Rs. 1 crore, citing the absence of undue financial hardship. The Member (Judicial) disagreed, finding a strong prima facie case for the appellant and directed a pre-deposit of Rs. 15 lakhs. The third Member concurred with the Member (Judicial), directing the appellant to pre-deposit Rs. 15 lakhs within four weeks for the stay of recovery during the appeal's pendency.

Conclusion:
The Tribunal upheld the rejection of the transaction value and reliance on contemporaneous import prices and corroborative evidence of undervaluation. The confessional statement, despite retraction, was deemed reliable. The Tribunal directed a pre-deposit of Rs. 15 lakhs for the stay of recovery, considering the appellant's prima facie case and financial hardship.