2016 (9) TMI 124 - AT - Customs

Assessment - Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962 mis-declaration of the thickness of import of PU leather cloth waiver of the right to SCN and personal hearing Held that - It is evident that thickness of the impugned goods was found to be more than that declared and therefore rejection of transaction value is in conformity with Rule 12 of Customs Valuation Rules, 2007. Once the transaction value was rejected and as the appellant did not want any show cause notice or hearing, nothing unsustainable found in the adjudication order which determined the value on the basis of value of contemporaneous imports of similar goods enhanced value sustained. Confiscation of goods - Section 111(m) of the Customs Act, 1962 option to redeem the goods on payment of redemption fine - Section 125 of the Customs Act, 1962 - Imposition of penalty - Section 112(a)(ii) of the Customs Act, 1962 Held that - there is nothing to suggest that there was any deliberate mis-declaration of thickness. The invoice mentioned possible variation of up to 10%. There is no evidence that there was any deliberate design on the part of the appellant to mis-declare the thickness or that there was any collusion between the supplier and the appellant. Similar stand taken in the case M/s Sky International 2016 (6) TMI 67 - CESTAT NEW DELHI redemption fine and penalty set aside partly decided in favor of appellant.

Summary

Issues:
1. Assessment of PU leather thickness under Customs Valuation Rules, 2007
2. Confiscation of goods and imposition of redemption fine and penalty
3. Application of NIDB data for valuation
4. Contestation of mis-declaration and imposition of fine and penalty

Assessment of PU Leather Thickness:
The primary issue in the case was the assessment of PU leather thickness under the Customs Valuation Rules, 2007. The appellant had declared the thickness as 0.5 mm and 0.9 mm, but during examination, it was found to be 0.65 mm and 1.2 mm, respectively. The adjudicating authority determined the value based on the actual thickness found, leading to enhanced assessable value and subsequent penalties.

Confiscation and Imposition of Fine and Penalty:
The adjudicating authority ordered the confiscation of the goods under Section 111(m) of the Customs Act, 1962, due to mis-declaration of thickness. The appellant was given the option to redeem the goods by paying a fine of ?3.50 lakhs and a penalty of ?70,000 under Sections 125 and 112(a)(ii) of the Customs Act, respectively. The appellant contested these penalties, arguing lack of deliberate mis-declaration and citing the possibility of thickness variation as per supplier invoices.

Application of NIDB Data for Valuation:
The appellant challenged the use of NIDB data for valuation, contending that it was not a reliable basis. However, the adjudicating authority justified the enhanced value determination based on contemporaneous imports of similar goods with the actual thickness. The tribunal found this approach in line with Rule 12 of the Customs Valuation Rules, 2007, and upheld the valuation method.

Contestation of Mis-Declaration and Penalties:
The appellant vehemently argued against the fine and penalty, claiming no deliberate intention to mis-declare and attributing the discrepancy to supplier information. The appellant's waiver of show cause notice and hearing was explained as an attempt to expedite clearance and avoid demurrage. The tribunal observed no evidence of deliberate mis-declaration and noted that similar cases had resulted in the setting aside of redemption fine and penalty.

In conclusion, the tribunal partially allowed the appeal by setting aside the redemption fine and penalty imposed on the appellant. The judgment emphasized the lack of evidence supporting deliberate mis-declaration and highlighted the appellant's reliance on supplier information regarding thickness variation.