2014 (10) TMI 552 - AT - Customs

Undervaluation of goods - Demand of differential duty - Held that - As regards the e-mail offers, price/value cannot be determined on the basis of offer. As regards contemporaneous import, it is settled law and as per Valuation Rules also, when contemporaneous import are considered and country of origin is to be same, the supply quantity should be comparable and period should be as best as possible. From the statement of the proprietor, contemporaneous imports submitted would emerges as the price declared by the appellant was not allowed when contemporaneous import price was not very low. - in this case the adjudicating authority had resolved the valuation under best judgment rule. It is admitted by the adjudicating authority in the impugned order that the imports were made by other importers and contemporaneous import price available but the only reason for denial is that the grade or colour difference was not found but on these cases description is the same as shown by the appellant. Moreover no examination report has been placed by the adjudicating authority to reject the price of the contemporaneous imports. Further no evidence except the statement of the proprietor has been brought on record for flow of money by the appellant. It is settled law that when the price of the contemporaneous import is available then the least of the same is to be adopted as transaction value. We have examined all the contemporaneous imports made by other importers during the import period which shows that description as shown by the appellant and all the imports are more or less of the same value. Therefore, impugned order is not sustainable in the eyes of law - decided in favour of assessee.

Issues Involved:
1. Demand of customs duty along with interest and penalty.
2. Allegation of undervaluation of imported goods.
3. Rejection of transaction value declared in Bills of Entry.
4. Determination of value using best judgment rule.
5. Consideration of contemporaneous imports for valuation.
6. Allegation of suppression of actual price and specifications.

Detailed Analysis:

1. Demand of Customs Duty Along with Interest and Penalty:
The appellants were challenged with an impugned demand of customs duty amounting to Rs. 1,90,47,614/- along with interest and an equivalent amount of penalty. This arose from the alleged undervaluation of imported embroidery film, leading to the evasion of customs duty.

2. Allegation of Undervaluation of Imported Goods:
The investigation revealed that the appellants were allegedly involved in undervaluing the imported Spangle Film to evade customs duty. The Department of Revenue Intelligence (DRI) conducted searches and seized relevant documents, which led to the confirmation of differential duty demand with interest and a penalty equal to the duty amount.

3. Rejection of Transaction Value Declared in Bills of Entry:
The transaction value declared in the Bills of Entry was rejected on the grounds that the appellant's family members in Hong Kong were negotiating prices with suppliers, leading to suppressed cost prices and undervalued invoices. The adjudicating authority found that the actual price varied from US$ 33 to US$ 40 per 500 meters of 150-micron film, which contradicted the declared values.

4. Determination of Value Using Best Judgment Rule:
The Commissioner determined the value using the best judgment rule, as the transaction value could not be ascertained. The Commissioner rejected contemporaneous imports and relied on a solitary import instance by M/s. Sunflower Embroidery Pvt. Ltd. and e-mail offers from suppliers, which were not actual transactions. The adjudicating authority's reliance on best judgment was criticized for lacking concrete evidence and proper basis.

5. Consideration of Contemporaneous Imports for Valuation:
The appellants argued that the adjudicating authority ignored contemporaneous imports that had similar declared values. They provided data of contemporaneous imports which matched their declared values, but the adjudicating authority dismissed this evidence without justification. The Tribunal found that the Commissioner failed to justify the valuation under the best judgment rule and did not consider contemporaneous imports properly.

6. Allegation of Suppression of Actual Price and Specifications:
The appellants were accused of suppressing the actual price and specifications of the imported goods. However, the Tribunal noted that the department did not insist on proper declarations from any importers, including the appellants. The Tribunal found no concrete evidence of suppression or flow of additional money by the appellants.

Conclusion:
The Tribunal concluded that the adjudicating authority did not justify the valuation under the best judgment rule and failed to consider contemporaneous imports properly. The impugned order was set aside, and the appeal was allowed with consequential relief.

Outcome:
The appeal was allowed, setting aside the impugned order, and providing consequential relief to the appellants.

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