2019 (2) TMI 972 - AT - Customs

Valuation of imported goods - enhancement of value - Polyester Knitted Fabrics, PVC Quoted Fabrics, Flock Fabrics and 100% Non-Textured Lining Fabrics from China - the entire case of the Revenue is based upon the statement of the partner of the importers, which according to the learned Advocate stands retracted by them subsequently - Held that - The allegations of under-valuation are required to be substantiated by the Revenue by production of positive evidences - In the present case, apart from recording the statement of the importer, there is not even an iota of evidence to reflect upon the factum of under-valuation. According to the learned Advocate, even such statement was retracted. The evidentiary value of such statement without there being any corroboration by other independent evidences has been the subject matter of various decisions of the judicial or quasi-judicial authorities and it stands held that the Revenue cannot entirely and solely rely upon the retracted statement, for upholding its view. In the absence of any evidence indicating that the value of the goods was actually on the higher side and there was excess payments to the foreign supplier, there are no justifiable reasons to uphold the impugned order - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Customs duty confirmation against importers and imposition of penalties.
2. Alleged under-valuation of imported goods.
3. Reliance on importer's retracted statement as evidence.
4. Comparison of net weight declarations for mis-declaration.

Issue 1: Customs duty confirmation against importers and imposition of penalties:
The judgment concerns multiple appeals arising from an impugned order passed by the Commissioner of Customs, Noida, confirming Customs duty against importers M/s. Orient Sales and M/s. General Traders. The importers declared the goods as Polyester Knitted Fabrics, PVC Quoted Fabrics, Flock Fabrics, and 100% Non-Textured Lining Fabrics from China at specific values. Customs marginally increased the values upon examination, and subsequent investigations by the DRI led to proceedings against the importers and others with proposed enhancements in values and penalties. The Revenue's case relied heavily on the statement of the importers' partner, which was later retracted. The Tribunal noted similar cases where values were enhanced by Customs but subsequently set aside on appeal, indicating lack of material to support the Revenue's claims.

Issue 2: Alleged under-valuation of imported goods:
The Revenue alleged under-valuation of Polyester Knitted Fabrics, citing the importer's admission of higher values. However, the Tribunal referenced a case where Customs officers themselves increased the value at clearance, and subsequent enhancements were deemed impermissible as a review of their own orders. The Tribunal highlighted concluded proceedings in favor of importers in similar cases, emphasizing the need for substantive evidence to support claims of under-valuation.

Issue 3: Reliance on importer's retracted statement as evidence:
The Revenue emphasized the importer's admission of higher values as a basis for confirming demands. However, the Tribunal stressed the necessity for corroborative evidence and noted that reliance solely on a retracted statement without independent verification is insufficient. Citing precedents, the Tribunal rejected the Revenue's appeal, underscoring the importance of substantiated claims in cases of alleged under-valuation.

Issue 4: Comparison of net weight declarations for mis-declaration:
The Revenue alleged mis-declaration in the quantity of net weight of goods based on discrepancies between gross and net weights. However, the Tribunal dismissed these allegations, stating that such comparisons, without physical examination or substantial evidence, cannot establish mis-declaration. The Tribunal reiterated the requirement for concrete evidence to support claims of mis-declaration, emphasizing the need for a robust evidentiary basis in Customs-related matters.

In conclusion, the Tribunal set aside the impugned order, allowing all appeals with consequential relief to the appellants. The judgment underscores the importance of substantive evidence, independent verification, and the need for a strong evidentiary basis to support claims of under-valuation in Customs matters, ultimately ruling in favor of the importers based on the lack of compelling evidence against them.