2017 (6) TMI 926 - AT - Customs

Valuation of imported item - Digital Coiling Machine - two set of Assembling machine - undervaluation - Held that - in his statement under Section 108 of the Customs Act the appellant who is a Director of the company has accepted the under-invoicing done by him - once the company has admitted the undervaluation and has paid the penalty the appellant who is the Director of the company and also looking after the affairs of the company is equally responsible and therefore imposing the penalty on the appellant is absolutely lawful. Appellant placed reliance in the case of Bosch Chassis Esystems India Ltd. Vs. CC New Delhi (ICD TKD) 2015 (11) TMI 549 - CESTAT NEW DELHI where it was held that there was no wilful mis-statement on the part of M/s Bosch Chassis Ltd. The representatives of the CHA have merely relied on the invoice handed over by M/s Bosch Chassis Ltd./ Importer - this case is not applicable in the facts and circumstances of present case and is distinguishable. Appeal dismissed - decided against appellant.

Summary

Issues Involved:
Undervaluation of imported goods, imposition of penalties under Sections 112(a) and 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Undervaluation of Imported Goods:
The case involved M/s. Pyarelal Foams Pvt. Ltd. importing machinery from China, suspected of undervaluation. The investigation revealed discrepancies in the declared value compared to the actual value of the goods. The appellant, a Director of the company, was found involved in the under-invoicing scheme. The Customs Act, 1962, mandates true declaration of goods' value under Section 46(4), which was violated in this case.

2. Penalties Imposed under Sections 112(a) and 114AA:
The Joint Commissioner adjudicated the show-cause notice, confirming undervaluation, demanding differential customs duty, confiscating the goods, and imposing penalties. A penalty of ?1,00,000/- was imposed on the importer-company under Section 112(a), and a penalty of ?2,00,000/- was imposed on the appellant, who is a Director, under Section 114AA. The appellant challenged the penalties imposed under Section 114AA, arguing that it was inserted to address improper export of goods, not import.

3. Legal Arguments and Defenses:
The appellant's counsel contended that Section 114AA does not apply to imports and that the appellant, as a Director, was not directly involved in ordering the consignment or personally benefiting from the undervaluation. On the contrary, the AR defended the penalties, citing the appellant's admission of under-invoicing and involvement in payment methods. The Commissioner (Appeals) upheld the penalties, emphasizing the appellant's responsibility as a Director and the company's history of misdeclaration.

4. Judicial Analysis and Decision:
The Commissioner rejected the appellant's appeal, relying on the findings of undervaluation, the appellant's involvement, and the company's past misdeclarations. The Commissioner distinguished a previous case cited by the appellant, emphasizing the specific circumstances of the present case. Ultimately, the impugned order imposing penalties under Section 114AA was deemed valid, and the appeal was dismissed, upholding the penalties imposed on the appellant.

In conclusion, the judgment addressed issues of undervaluation of imported goods and the imposition of penalties under Sections 112(a) and 114AA of the Customs Act, emphasizing the accountability of company Directors in cases of misdeclaration and undervaluation, ultimately upholding the penalties imposed on the appellant.