2016 (4) TMI 882 - AT - Customs

Misdeclaration - Undervaluation - Import of Hitachi Z-ONE-D Camera System and accessories - Held that - the value of the goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation, in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or offer for sale. In the present case the company itself had produced a copy of the quotations received by them from M/s. Shun Hing Technology Ltd., Hongkong in respect of the copiers and other items imported alongwith their application for approval of their phased manufacturing programme. The company itself having produced these quotations, they cannot dispute the correctness of the prices mentioned therein. The company has not only not disputed the correctness of these quotations but has not produced any other material on record to show that the value mentioned in the invoices was the correct market value of the goods imported at the relevant time. The adjudicating authority in these circumstances was perfectly justified in taking the prices mentioned in the quotations as a basis for determining the correct value of the imported goods. Period of limitation - Appellant contended that declaration regarding the intended re-export was made in the first bill of Entry and the Invoice itself at the time of assessment - Held that - it is a fact that the Bill of Entry contained the endorsement that it was intended for the purpose of display in exhibition and return thereafter. However it was found to be a misdeclaration as the documents recovered did not show any such intent. Furthermore the fact that it was at a special and highly discounted price was not declared. It is not apparent from the declaration that the import is at a discount of over 80% to the list price. The misdeclaration is alleged, not merely on the basis of the misdeclaration that the goods were for exhibition and return thereafter, but on the basis of the fact that a specially discounted price was declared for the said purpose but not disclosed. It is apparent from the documents recovered that the price negotiated and the discounts offered during the tripartite meeting were different from those declared at the time of import. They had not shown the correct price negotiated in the tripartite agreement with the manufacturer and its export agent. - Decided against the appellant

Summary

Issues Involved:
1. Rejection and re-fixing of transaction value.
2. Determination of value under Rule 8.
3. Demand of differential duty invoking extended period and interest thereon.
4. Confiscation of imported goods.
5. Penalty on two firms under Section 114A.
6. Penalty on the individual involved.

Detailed Analysis:

1. Rejection and Re-fixing of Transaction Value:
The appellant imported broadcasting equipment and declared them as "Products for display at Broadcast India 95 exhibition...to be returned after the exhibition." The declared prices were significantly lower than the manufacturer's price lists. The Customs authorities alleged that the goods were underpriced and misdeclared to avoid higher duty. The Tribunal found that the imports were at a special price for exhibition purposes, which is not the ordinary price available to every importer. This justified the rejection of the declared transaction value under Rule 4 of the Customs Valuation Rules, 1988.

2. Determination of Value under Rule 8:
Due to the rejection of the declared transaction value, the Customs authorities proceeded to determine the value under Rule 8 of the Customs Valuation Rules, 1988. The Tribunal noted that the contemporaneous imports of similar or identical goods were not available, and thus, the authorities were justified in using the manufacturer's price lists dated 6/2/95 and 18/12/95 to determine the actual prices of the imported goods. This method was consistent with the principles and general provisions of the Customs Valuation Rules and Section 14 (1) of the Customs Act.

3. Demand of Differential Duty Invoking Extended Period and Interest Thereon:
The Customs authorities demanded differential duty based on the re-determined value of the goods. The Tribunal upheld this demand, noting that the appellants had misdeclared the value and nature of the imports. The extended period for demand was invoked due to the misdeclaration and underpricing of the goods, which was not disclosed at the time of import.

4. Confiscation of Imported Goods:
The Tribunal upheld the confiscation of the imported goods under the relevant provisions of the Customs Act, as the goods were found to be misdeclared and undervalued. This action was in line with the legal provisions governing the import and valuation of goods.

5. Penalty on Two Firms under Section 114A:
Penalties were imposed on the two importing firms under Section 114A of the Customs Act for their involvement in the misdeclaration and undervaluation of the imported goods. The Tribunal found sufficient evidence of the firms' complicity in the scheme to evade customs duty.

6. Penalty on the Individual Involved:
A penalty was also imposed on the individual involved, Mr. Nitin Shah, for his role in the misdeclaration and undervaluation. The Tribunal noted that the documents recovered during the investigation showed his active participation in the scheme to evade customs duty.

Conclusion:
The Tribunal dismissed the appeals, upholding the rejection of the declared transaction value, the re-determination of the value under Rule 8, the demand for differential duty with interest, the confiscation of the imported goods, and the penalties imposed on the firms and the individual involved. The decision emphasized the importance of accurate declaration and valuation in customs procedures and the consequences of attempting to evade duty through misdeclaration and underpricing.