2016 (3) TMI 513 - AT - Customs

Proper authority for issuing show cause notice - Whether DRI is or not - Held that - as per CESTAT order in the case of Bhagwati Components Manufacturing Co. vs. Commissioner of Customs 2016 (1) TMI 875 - CESTAT NEW DELHI , the show cause notice issued by DRI is valid. Tenability of comparison of the value of contemporaneous import - Done without regard to the quality and quantity - Also the invoices used for comparing the value were of the period 2005 to 2006 whereas its imports were during the period 2003 to 2006 and the goods imported by it were out of stock lot - Held that - None of the goods imported by the appellant or by other importers had any brand names/ trade names. There is nothing to show that the goods imported by other importers with which the comparison of value of the impugned goods has been made had any higher reputation or were any superior quality or that the goods imported by the appellant were out of the so-called stock lot. Also, the goods imported by others were at a much higher commercial level as has been mentioned by the appellant itself in its appeal. Therefore comparison with the price of such imports cannot cause any prejudice to the appellant because it can be nobody s case that the price would be higher for imports of larger quantities of such goods. Imposition of redemption fine - Goods not available - Held that - the goods which had been cleared without any bond and were not available for confiscation, no redemption fine can be imposed. Only goods which were seized can be confiscated and redemption fine can be imposed thereon. Therefore, the goods which are seized here are liable for imposing redemption fine. - Decided partly in favour of appellant

Summary

Issues:
1. Valuation of imported goods under Customs Act, 1962
2. Confiscation and redemption fine for undervalued goods
3. Differential Customs duty and interest payment
4. Imposition of penalty under Customs Act, 1962
5. Authority to issue show cause notice
6. Comparison of contemporaneous imports for valuation
7. Consideration of quality, quantity, and period of imports
8. Similarity of goods for valuation purposes
9. Imposition of redemption fine on seized goods
10. Applicability of case laws in the judgment

Valuation of Imported Goods under Customs Act, 1962:
The Commissioner of Customs re-determined the assessable value of imported goods under Section 14 of the Customs Act, 1962. The original declared value was rejected, and a higher value was assessed based on Rules of Customs Valuation. This led to the imposition of differential Customs duty, interest payment, and penalties on the importer.

Confiscation and Redemption Fine for Undervalued Goods:
The Commissioner ordered the confiscation of imported artificial flowers due to undervaluation, imposing a redemption fine in lieu of confiscation. The decision was based on the re-determined CIF value of the goods and provisions of Sections 111(d) and (m) of the Customs Act, 1962.

Differential Customs Duty and Interest Payment:
An additional Customs duty amount was demanded from the importer under Section 28(2) of the Customs Act, 1962. The order included the recovery of interest on the duty amount until payment. The appellant was also directed to pay the differential duty and interest, with provisions for appropriation of deposited amounts.

Imposition of Penalty under Customs Act, 1962:
A penalty was imposed on the importer under Section 114A of the Customs Act, 1962. The penalty amount was determined based on the findings of undervaluation and non-compliance with Customs regulations, with a specific focus on the firm's liability.

Authority to Issue Show Cause Notice:
The issue of the authority to issue a show cause notice by the Directorate of Revenue Intelligence (DRI) was raised. The Tribunal cited a previous judgment affirming the validity of show cause notices issued by DRI, establishing the legal basis for the notice in this case.

Comparison of Contemporaneous Imports for Valuation:
The Tribunal analyzed the comparison of contemporaneous imports for valuation purposes. It considered the characteristics, quality, and commercial interchangeability of the goods imported by different firms. The judgment emphasized the applicability of Rules for determining the value of similar goods.

Consideration of Quality, Quantity, and Period of Imports:
The Tribunal addressed the appellant's contentions regarding the quality, quantity, and period of imports. It clarified that the declining trend in prices and the similarity of goods allowed for a valid comparison despite variations in import timelines and supplier differences.

Similarity of Goods for Valuation Purposes:
The Tribunal discussed the definition of "similar goods" under Customs Valuation Rules and established the criteria for determining similarity. It concluded that the imported goods had characteristics enabling them to perform the same functions as those used for comparison, justifying the valuation methodology applied.

Imposition of Redemption Fine on Seized Goods:
The Tribunal recognized the limitation on imposing redemption fines on seized goods only. It adjusted the redemption fine based on the availability of goods for confiscation, reducing the amount to align with the market value of the seized goods.

Applicability of Case Laws in the Judgment:
The Tribunal reviewed the case laws cited by the appellant regarding transaction value rejection, valuation enhancement, and comparison principles. It found the judgment consistent with the legal principles established in the cited cases, upholding the impugned order with a specific adjustment to the redemption fine.

This detailed analysis of the judgment highlights the key issues addressed by the Tribunal regarding the valuation, confiscation, duty payment, penalty imposition, authority jurisdiction, comparison methodology, and legal precedents applied in the case.