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2015 (4) TMI 112 - AT - CustomsValuation of goods - Redemption fine - Penalty - whether the declared value of goods can be accepted in terms of the provisions of Section 14 of the Customs Act, 1962 - Difference of opinion - Majority order - Held that - The declared transaction of the value of the goods is ₹ 10,13,256/- and the Department wants to reject the same and enhance it to ₹ 20,13,120/- based on the Chartered Engineer s report on the ground that as per the NIDB data the declared value is too low. In my view for determining the value of the old and used capital goods, which are of obsolete models, the NIDB data is not relevant at all as no two consignments of second hand goods and that too of obsolete models would be comparable. The value of a consignment of second hand machines would depend upon the years for which the machinery has been used, present condition and also whether the model is obsolete or whether such machines are still being manufactured. In this case as per the facts recorded in the impugned order-in-original, market inquiry indicated that the models of the photocopiers are obsolete models and the manufacturers have discontinued the manufacture of these models. If this is so, a supplier may sell such old and used goods of obsolete model even at throw away price. It is not the allegation of the Department that the appellant and the foreign supplier were related person or that there were circumstances as enumerated in the proviso to sub-Rule (2) of Rule 3 of the Customs Valuation Rules, 2007 on account of which the declared transaction value cannot be accepted. Another situation in which the declared transaction value can be rejected is that covered by Rule 12 of the Cenvat Valuation Rules when the proper officer has reason to doubt the correctness of the declared transaction value. But Rule 12 of the Cenvat Valuation Rules also provides that if after inquiry by the proper officer, the proper officer doubts the correctness of the declared transaction value and rejects the same, he is required to intimate the importer about rejection of the declared value after giving reasonable opportunity of being heard. But no such inquiry has been done in this matter. Merely on the basis of NIDB data which, as discussed above, is not relevant in this case, the declared transaction value could not be rejected. As regards of quantum of redemption fine and penalty, it is settled law in the cases of import of restricted goods without import licence, the quantum of redemption fine should be sufficiently high to neutralin the entire margin of profit. Member (Judicial) has reduced the fine to 10%. According to the Department it should be 50% of the declared value. However, if the Department seeks imposition of higher redemption fine, the evidence of higher profit margin should be produced in form of landed cost of the goods and the market price of the goods but no such evidence has been produced. In view of this, I agree with the decision of Member (Judicial) regarding reduction of redemption fine and penalty and in my view the redemption fine of 10% of the value and penalty of 5% of the value is sufficient. - Decided partly in favour of assessee.
Issues Involved:
1. Valuation of imported goods. 2. Mis-declaration of goods. 3. Requirement of import license under EXIM Policy. 4. Imposition of redemption fine and penalty. Comprehensive, Issue-wise Detailed Analysis: 1. Valuation of Imported Goods: The appellant imported 105 old and used photocopier machines, declaring a value of Rs. 10,13,256/-. The Revenue rejected this value, citing NIDB data showing a higher value of Rs. 19,59,937/-. The Commissioner enhanced the value to Rs. 20,13,120/- based on a Chartered Engineer's certificate. The Tribunal noted that the declared value was accompanied by invoices from the overseas supplier and emphasized that transaction value should be accepted unless there is substantial evidence to prove it incorrect. The Tribunal cited various precedents, including the case of CCE (Preventive), Amritsar vs. Bhawana Spinning Mills [2013 (289) ELT 504 (Tri-Del)], which held that enhancement of value is not acceptable without evidence. The Tribunal found no tangible evidence to discard the declared value and set aside the enhancement. 2. Mis-declaration of Goods: During examination, it was found that two machines were mis-declared with incorrect model numbers. The Revenue argued that this mis-declaration indicated a deliberate attempt to undervalue the consignment. The Tribunal acknowledged this mis-declaration but focused on the valuation issue, ultimately deciding that the lack of evidence to reject the transaction value outweighed the mis-declaration. 3. Requirement of Import License under EXIM Policy: The appellant did not have the necessary import license for the old and used photocopier machines, violating EXIM Policy. The Tribunal upheld the confiscation of the goods under Section 111(d) and 111(m) of the Customs Act, 1962, due to this violation. The Tribunal referred to various cases, including Navpad Enterprises vs. CC, Cochin [2009 (235) ELT 376 (Tri-Bang)], where the redemption fine and penalty were reduced to 10% and 5% of the value, respectively, even in cases of repeated violations. 4. Imposition of Redemption Fine and Penalty: The Commissioner imposed a redemption fine of Rs. 5 lakhs and a penalty of Rs. 2.50 lakhs under Section 112(a) of the Customs Act, 1962. The appellant argued for a reduction based on precedents where fines and penalties were reduced due to the non-availability of import licenses for old and used goods. The Tribunal agreed, reducing the fine to 10% and the penalty to 5% of the value of the goods, citing consistency with previous judgments and the need for judicial discipline as emphasized by the Hon'ble Bombay High Court in the case of Tejus Proprietary concern of Tejus Rohitkumar Kapadia [2012 (275) ELT 175 (Bom)]. Conclusion: The Tribunal set aside the enhancement of the value of the imported goods due to the lack of evidence to reject the declared transaction value. However, it upheld the confiscation due to the violation of the EXIM Policy, reducing the redemption fine to 10% and the penalty to 5% of the value of the goods. The decision was based on consistency with previous judgments and the principle that the transaction value should be accepted unless proven otherwise.
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