2015 (11) TMI 1148 - AT - Customs

Demand of differential duty - Undervaluation of goods - Confiscation of goods - Penalty u/s 117 - Misdeclaration of goods - Held that - Appellant had provided contemporary prices of goods imported from the same supplier. This fact has not been considered by the authorities below before arriving at their decision. In these circumstances resorting to Rule 8 of the Valuation Rules without considering contemporaneous prices is not correct legally in terms of the Customs Valuation Rules. Under these Rules the process of re-determining value has to be followed sequentially Rule by Rule. On the other hand, we find that the adjudicating authority has referred to contemporaneous prices extracted from certain Bill of Entry. It is seen that the evidence in the form of Bills of Entry was not provided to the appellant thus, violating the principles of natural justice. The evidence of market enquiries was also not produced before the appellant in the case of watch cells nor were the market enquiries conducted in the presence of the appellant. In this view of the matter, we find that the matter requires fresh consideration after observing principles of natural justice in terms of the observations made - Matter remanded back - Decided in favour of assessee.

Summary

Issues: Jurisdiction of Customs Preventive Officers, Confiscation of goods, Imposition of penalties, Undervaluation of imported goods.

Jurisdiction of Customs Preventive Officers:
The Customs (Preventive) officers were found to have jurisdiction to investigate suspected undervaluation of imported goods, as per Notification No. 15/2002-CUS(NT) dt. 7.3.2002. The department was deemed legally allowed to issue a show cause notice for determining the correct value, demanding duty, and proposing confiscation under relevant sections of the Customs Act. The Tribunal rejected the contention that the order of clearance on a Bill of Entry precluded further action, citing the distinction between assessment review and mis-declaration consequences.

Confiscation of goods and Penalties:
The goods were provisionally released upon bond execution, with the terms of the bond governing confiscation and redemption fines. While agreeing that penalties cannot be imposed on both the proprietorship and proprietor, the Tribunal upheld the imposition of penalties based on the bond conditions. The argument that goods not available for confiscation cannot be confiscated was dismissed based on the specific bond agreement in this case.

Undervaluation of imported goods:
The appellant provided contemporary prices of goods imported from the same supplier, which were not considered by the authorities in their decision-making process. The Tribunal found that the valuation rules were not followed sequentially and that natural justice principles were violated by not providing evidence and conducting market inquiries in the presence of the appellant. Consequently, the Tribunal set aside the impugned order, allowing the appeals to be remanded to the adjudicating authority for a fresh consideration of the valuation issue, emphasizing the need for adherence to natural justice principles.

Conclusion:
The Tribunal disposed of the appeals by remanding the case to the adjudicating authority for a reevaluation of the valuation issue and any consequent demands or penalties within a specified timeframe, emphasizing the importance of procedural fairness and adherence to legal principles in customs valuation matters.