2018 (5) TMI 67 - HC - Customs

Undervaluation - it was alleged that the petitioner has been indulging in deliberate undervaluation to mislead the Department by way of concealing the facts with loss to the Government - Held that - the Commission did not undertake any exercise to find out as to whether the plea raised by the petitioner that there was calculation error is correct or not. In fact, sub-section (5) of Section 127 of the Act, empowers the Commission to do so. The Commission did not do such exercise, nor it called for any report from the jurisdictional Commissionerate. If the Commission was of the opinion that for some reason the application cannot be entertained on account of non-cooperation by the assessee, etc., the case should have been sent back to the appropriate officer under Section 127-I of the Act. This was also not done by the Commissioner, rather he admitted the case. Matter requires re-examination - appeal allowed by way of remand.

Summary

Issues:
Challenge to Settlement Commission's order on undervaluation of imported goods.

Analysis:
The petitioner, engaged in importing glassware, was alleged to have undervalued their goods, leading to a demand for differential duty. The Settlement Commission entertained the petitioner's application but ultimately directed payment of the full duty demanded. The petitioner contended a calculation error, which the Commission noted but still ordered full payment. The High Court observed a fax message received after the hearing, stating lack of documentary evidence supporting the petitioner's application. The Commission's order accused the petitioner of deliberate undervaluation to mislead, without addressing the plea of a calculation error.

The High Court found flaws in the Commission's conclusion. Firstly, the Commission did not verify the petitioner's claim of a calculation error as empowered by the Customs Act. Secondly, if non-cooperation was an issue, the case should have been sent back for appropriate action. However, the Commission admitted the case without proper examination. Therefore, the High Court deemed the reasons in the order as flawed, requiring a fresh examination.

Consequently, the High Court allowed the writ petition, quashed the order, and remanded the matter for reconsideration. The respondent was instructed to review the correctness of the petitioner's claim, provide a hearing opportunity, and issue new orders in compliance with the law. The decision left all issues open for further discussion, including penalty levy, with no costs imposed.