2015 (5) TMI 159 - AT - Customs

Waiver of pre deposit - Demand of differential duty - Undervaluation of goods - Held that - Revenue has been able to show that the actual transaction value i.e. the payment made for the consignments received to the exporter abroad is more than what was declared and excess amounts were transferred by other means. The fact that there was no evidence to show that exporter had received the money or the methodology followed for transfer of money and there is no evidence for that, does not mean that appellant had not paid excess amount in addition to what was declared to the customs department. If all the transactions were to be recorded and kept available for recovery, by the officers, investigating officers work would have been very simple. The evidence can never be 100% accurate or there can never be 100% proof. In our opinion, the department has been above to show that transaction value was more than what was declared by producing supporting evidences and by applying principle of preponderance of probability it can be definitely stated that the transaction value was more than what was declared. Invoice value has been under-declared and payments are in black, the profit earned within India if properly accounted increases and therefore the financial position indicated can not be totally disbelieved. In any case when such malafide actions are undertaken, accounts are also not properly maintained and therefore the submissions with regard to financial difficulty have to be taken with a spoon of salt. Moreover, the income tax returns do not show the assets but only the income liable to tax. - Partial stay granted.

Summary

Issues Involved:
1. Differential customs duty demand due to undervaluation of imported betel nuts.
2. Penalty imposition on the appellant.
3. Time-barred claims for certain Bills of Entry.
4. Validity of evidence and documents used to support the undervaluation claim.
5. Financial difficulties of the appellant and the requirement for pre-deposit.

Detailed Analysis:

1. Differential Customs Duty Demand:
The appellant was demanded a differential customs duty of Rs. 1,96,57,499/- with interest on the grounds of undervaluation of betel nuts imported under 14 Bills of Entry during 2006-07. The investigation revealed manipulation of the Bill of Lading to circumvent port restrictions imposed by the DGFT. Incriminating documents were recovered during the search of the appellant's office and residence, indicating undervaluation and parallel payments through Dubai.

2. Penalty Imposition:
A penalty of more than Rs. 1,72,00,000/- was imposed on the appellant. The learned counsel contended that there was no evidence of extra payments or separate invoices for higher prices. However, the tribunal found that the evidence presented, including computer printouts and diary entries, supported the claim of undervaluation and parallel payments.

3. Time-Barred Claims:
The appellant argued that the demand in respect of 5 Bills of Entry was time-barred. These Bills of Entry were filed between 24.11.2005 and 12.04.2006, involving a total revenue of Rs. 31,17,580/-. The tribunal noted that the issue of limitation was contentious and would be considered at the final hearing stage.

4. Validity of Evidence:
The tribunal examined the evidence presented by the Commissioner in paragraphs 57 to 62 of the impugned order. It included computer printouts and diary entries showing expenses incurred, payments made through Dubai, and mis-declaration of the value and nature of goods. The tribunal found that the evidence, though not 100% accurate, was sufficient to establish undervaluation by applying the principle of preponderance of probability. The appellant's arguments regarding the inadmissibility of documents under Section 138 c (2) of the Customs Act, 1962, were not accepted.

5. Financial Difficulties and Pre-Deposit:
The appellant claimed financial difficulties and presented income tax returns showing negligible income. The tribunal acknowledged the financial difficulties but noted that the appellant's accounts might not reflect the true financial position due to the nature of illegal transactions. Considering the circumstances, the tribunal ordered the appellant to deposit Rs. 50,00,000/- within twelve weeks and report compliance for the appeal to be heard. The requirement for pre-deposit of the balance dues was waived, and a stay against recovery was granted during the pendency of the appeal.

Conclusion:
The tribunal found a strong case in favor of the Revenue for the differential customs duty demand and penalty imposition. The issue of time-barred claims would be considered at the final hearing. The evidence presented was deemed sufficient to establish undervaluation. The appellant was directed to deposit Rs. 50,00,000/- to proceed with the appeal, considering the claimed financial difficulties.