2008 (6) TMI 44 - AT - Customs

Enhancement of value undervaluation - appellants failed to produce the manufacturer s invoice appellant s contention that the relatively much lower prices, have arisen out of negotiation, is not acceptable because there is no proof that price negotiations were long drawn out and hard fought - Department has discharged the burden of proof by obtaining contemporaneous prices of identical goods of same country of origin (i.e. Philippines) differential duty demand is justified

Summary

Issues: Undervaluation of imported goods, failure to produce manufacturer's invoice, reliance on contemporaneous prices, violation of principles of natural justice, admissibility of statements under duress, justification of loading value, reduction of penalty.

Undervaluation of Imported Goods:
The case involves the import of semi-conductors by the appellants, with the allegation that the goods were grossly undervalued. The Commissioner found that the prices declared by the appellants were significantly lower compared to contemporaneous prices obtained from M/s. Phillips India Ltd. The value declared on the Bill of Entry was Rs. 1,24,227, while the contemporaneous prices showed undervaluation by 8 to 12 times. The Commissioner loaded the declared value based on the prices obtained from M/s. Phillips India Ltd.

Failure to Produce Manufacturer's Invoice:
The appellants failed to produce the manufacturer's invoice, which is obligatory under Rule 10 of the Customs Valuation Rules, 1988. Despite repeated requests from the Department, the appellants did not furnish the manufacturer's invoice. The Commissioner noted that the absence of the manufacturer's invoice affected the assessment of correct assessable value.

Reliance on Contemporaneous Prices:
The Commissioner justified loading the value based on contemporaneous prices of identical goods from M/s. Phillips India Ltd., which revealed the undervaluation by the appellants. The Commissioner found that the Department had discharged the burden of proof by obtaining these contemporaneous prices, which were crucial in determining the correct assessable value.

Violation of Principles of Natural Justice:
The appellants argued that there was a violation of natural justice as copies of letters from M/s. Phillips India Ltd. were not supplied to them. However, the records indicated that the copies of these letters were handed over to the proprietor of the appellants along with the show cause notice, contradicting the appellants' claim of a procedural violation.

Admissibility of Statements Under Duress:
The statement dated 3-1-2001 by the proprietor of the appellants was found to be voluntary and not coerced. The Tribunal noted that statements recorded under Section 108 of the Customs Act, 1962 are admissible as evidence, indicating that the statement was legally obtained and could be considered in the case.

Justification of Loading Value:
The Tribunal upheld the Commissioner's decision to load the value based on the contemporaneous prices obtained from M/s. Phillips India Ltd. The Tribunal found no infirmity in the Commissioner's order, stating that the loading of value was justified given the significant undervaluation of the imported goods.

Reduction of Penalty:
While upholding most aspects of the Commissioner's order, the Tribunal noted that the penalty imposed on the appellant seemed excessive. As a result, the penalty was reduced from Rs. 2,50,000 to Rs. 1,00,000 to ensure that justice was served. The Tribunal upheld the rest of the Commissioner's order, including the demand for differential duty, confiscation of goods, and their release on payment of redemption fine.

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