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2019 (5) TMI 1775 - AT - Customs


Issues Involved:
1. Rejection and re-determination of the transaction value of imported goods.
2. Confiscation of goods with IMEI numbers/stickers.
3. Imposition of penalties.

Detailed Analysis of the Judgment:

1. Rejection and Re-determination of the Transaction Value:
The primary issue concerns whether the transaction value declared by the importer was correctly rejected and re-determined. According to Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR), the value of imported goods should be accepted unless there are specific restrictions or non-compliance with laws. Rule 12 of CVR allows the rejection of the declared value if the proper officer has reasons to doubt its truth or accuracy. The Department sought a Government-approved Chartered Engineer/Valuer Report, which re-determined the value based on an average fair valuation amount CIF multiplied by the respective quantity of goods, arriving at ?4,96,87,859.

However, the Tribunal noted that the valuer’s report did not properly apply Rules 4 and 5, which require comparison with the value of identical or similar goods. The report was silent on such comparisons and did not mention the unit price or necessary deductions as required by Rule 7 (Deductive Value). Consequently, the Tribunal opined that the data on which the valuer’s report was based needed re-examination and remanded the matter back for a fresh decision.

2. Confiscation of Goods with IMEI Numbers/Stickers:
The second issue pertains to the confiscation of goods with IMEI numbers/stickers. The Foreign Trade Regulation Rules, 1993, Rule 11 mandates that importers must state the value, quality, and description of imported goods accurately. The import of GSM mobile handsets without valid IMEI numbers or with fake IMEI numbers is prohibited. The intercepted goods had IMEI numbers belonging to M/s. Shenzhen Yifang Communications Technology Co., China, for the brand "KGTEL," while the appellants were manufacturing "Strawberry" and "Crona" brands. The Tribunal noted that the appellants failed to provide clinching evidence to prove authorization to use the impugned IMEI numbers for their brands.

The Tribunal found that the adjudicating authorities had relied solely on the Mobile Standard Alliance India (MSAI) report and ignored the appellant's submission that they were authorized to import from TAC holders of M/s. Shenzhen Yifang Communications Technology Co., China. Hence, the issue of confiscation of goods with IMEI numbers required re-examination and a fresh decision by the Adjudicating Authority.

3. Imposition of Penalties:
The third issue involves the imposition of penalties. Initially, penalties of ?15 Lakhs on M/s. Suich Industries Pvt. Ltd. and ?5 Lakhs each on its Directors were imposed. Upon appeal, the penalties were reduced to ?8 Lakhs for the company and ?3 Lakhs for each Director under Section 112(i) of the Customs Act, while penalties under Section 114 (AA) were dropped. The Tribunal noted that the adjudicating authorities needed to re-evaluate the evidence concerning the application of Rule 7 of CVR and the issue of goods with IMEI numbers, which would also impact the imposition of penalties. Therefore, the matter was remanded for de novo adjudication of the show cause notice, including the issue of penalties.

Conclusion:
The Tribunal remanded the matter to the adjudicating authorities for re-examination of the evidence related to the re-determination of the transaction value, confiscation of goods with IMEI numbers, and imposition of penalties. The appeals were allowed by way of remand, requiring a fresh adjudication of the issues based on the proper application of the relevant rules and consideration of all evidence.

 

 

 

 

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