2016 (1) TMI 97 - AT - Customs

Mis-declaration of value & description of imported goods - various goods including AB King Pro (Exercise Bench), 5 in 1 Air O Space Sofa (Inflatable Sofa Bed), Slim N Lift (Female Shorts), Sauna belt (Fat Reduce Belt), Tool Kits, Magic Bullet (Food Processors), Drill M/c and Diamond Blades from China and supplied it to Telebrand and these goods were mainly imported from /through M/s China 5 Star Products and M/s Creative Nations International. Held that - There is no tangible proof of any payment to the foreign supplier by the Appellants or by Mr. Hitesh Israni of Telebrands India P. Ltd., of any amount over and above the prices mentioned in the foreign suppliers invoices. There is no cogent material whatsoever in the Notice issued to the Appellants for proposing enhancement of the value of the said goods. - It is not in dispute that at the time of import itself, the customs authorities had enhanced the values of the similar goods imported by other importer such as M/s Rico Gems based on the available prices for contemporaneous imports of identical goods by other importers. Once it is undisputed fact that the declared value was not accepted and for the purpose of assessment valuation was done on the basis of contemporaneous price of identical or similar goods, further enhancement of value was not permissible. After detailed examination of facts and records we find that the demand of differential duty and penal action cannot sustain in the facts of the instant case. Since the undervaluation of imported goods is not established, all the other confirmation such as confiscation of the goods, fines in lieu thereof, penalties on all the appellants being consequential to demand of duty, are also not sustainable - Decided in favor of assessee.

Issues Involved:
1. Mis-declaration of value and description of imported goods.
2. Validity and admissibility of retracted confessional statements.
3. Reliance on seized documents and computer printouts.
4. Proof of remittance of differential amounts.
5. Role and liability of Telebrand India Pvt. Ltd. and its director.
6. Enhancement of value based on contemporaneous imports.
7. Admissibility of foreign investigation reports.

Detailed Analysis:

1. Mis-declaration of Value and Description of Imported Goods:
The appellants were accused of importing various goods from China and mis-declaring their value and description to evade customs duties. The investigation revealed that the appellants requested their suppliers to issue two sets of invoices: one for customs and banking purposes showing lower values, and another reflecting the actual higher values. The differential amounts were allegedly paid through unauthorized channels.

2. Validity and Admissibility of Retracted Confessional Statements:
The statements of Shri Prakashchandra Pandya and Shri Nandgopal Govindwamy Naidu, recorded under Section 108 of the Customs Act, were retracted. The tribunal held that retracted statements cannot be considered as confessional evidence unless corroborated by independent sources. The retraction was addressed to the Commissioner but reached the investigating officers, making it a valid retraction. The department did not rebut the retraction, nor did it record further statements post-retraction. The tribunal cited Supreme Court judgments emphasizing the need for corroboration of retracted confessions.

3. Reliance on Seized Documents and Computer Printouts:
The tribunal noted that the documents (pages 124 & 125) relied upon by the department were unsigned, unstamped, and lacked details such as the name of the foreign supplier and currency. The descriptions of goods in these documents did not match those in the invoices. The tribunal found that such documents could not be treated as evidence to prove undervaluation. Additionally, the computer printouts were not authenticated as required under Section 138C of the Customs Act, making them inadmissible.

4. Proof of Remittance of Differential Amounts:
The tribunal observed that there was no evidence of remittance of differential amounts to the foreign suppliers. It is a settled law that undervaluation cannot be established unless remittance is proved. The tribunal cited various judgments supporting this principle.

5. Role and Liability of Telebrand India Pvt. Ltd. and Its Director:
The tribunal found no evidence linking Telebrand India Pvt. Ltd. and its director, Shri Hitesh Israni, to the undervaluation of imported goods. Telebrand was merely a buyer and had made payments as per the invoiced amounts without any additional payments. Therefore, the penalties imposed on Telebrand and Shri Israni were deemed unjustified.

6. Enhancement of Value Based on Contemporaneous Imports:
The tribunal noted that the customs authorities had already enhanced the values of similar goods at the time of import based on contemporaneous imports. Further enhancement of value was not permissible. The tribunal cited several judgments where it was held that once the value is enhanced based on contemporaneous imports, further enhancement is not justified.

7. Admissibility of Foreign Investigation Reports:
The tribunal found that the report from the Hong Kong Trade Investigation Bureau was not reliable. The report did not mention the appellant's name, lacked authenticated copies of invoices, and bore a caveat restricting its use in legal proceedings. The tribunal held that such reports, without authenticated copies of foreign documents, cannot be relied upon for enhancement of value.

Conclusion:
The tribunal concluded that the demand for differential duty and penal actions could not be sustained. The undervaluation of imported goods was not established, and consequently, the confiscation of goods, fines, and penalties were also set aside. The appeals were allowed with consequential relief.

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