2007 (11) TMI 127 - AT - Customs

Billing of the invoices in unit measurement of jumbo rolls done with a tacit understanding to discharge less customs duty statement of supplier confirms this arrangement under-valuation established - value must be enhanced - penalty in lieu of redemption fine & redemption fine cannot be imposed on same goods twice - penalty imposed in lieu of fine is liable to be set aside - fine reduced from 10 to 2 lac amount recovered in investigation can t adjusted to amt. deposited refund allowed

Issues Involved:

1. Allegation of under-invoicing the value of imported goods.
2. Confiscation of goods under Section 111(d), (m) & (o) of the Customs Act, 1962.
3. Imposition of penalties under Section 112 & 114A of the Customs Act, 1962.
4. Recovery of differential duty.
5. Appropriation of amounts paid during the investigation.
6. Validity of retraction of statements by the appellant.

Issue-wise Detailed Analysis:

1. Allegation of Under-invoicing:

The appellant, M/s Photokina, was accused of under-invoicing the value of imported unexposed sensitized film from M/s Autotype International. The investigation revealed that the appellant imported goods in jumbo rolls, which were then cut and packed for sale at higher prices in the local market. The authorities enhanced the declared value to US$ 1.80/sq.m for M/s Autotype products and US$ 1.50/sq.m for M/s H & H Exports. The adjudicating authority found that the appellant had a tacit understanding with the supplier to under-invoice the goods to evade customs duty, as confirmed by the proprietor's statements.

2. Confiscation of Goods:

The adjudicating authority ordered the confiscation of goods under Section 111(d), (m) & (o) of the Customs Act, 1962. However, since the goods were not available for confiscation, a penalty of Rs. 10,00,000 was imposed on M/s Photokina under Section 112(2) of the Customs Act, 1962. Additionally, a redemption fine of Rs. 10,00,000 was imposed on goods valued at Rs. 11,20,150, which were released against a bond.

3. Imposition of Penalties:

Penalties were imposed on M/s Photokina, M/s Deal Fine Exim, and M/s Gold Coin Impex under Section 112(a) of the Customs Act, 1962. The adjudicating authority imposed a penalty of Rs. 40,00,000 on M/s Photokina and Rs. 5,00,000 each on M/s Gold Coin Impex and M/s Deal Fine Exim. The penalties were deemed disproportionate to the duty confirmed and were subsequently reduced to Rs. 8,75,000 for M/s Photokina.

4. Recovery of Differential Duty:

The adjudicating authority confirmed the demand for Rs. 8,72,129 out of a total demand of Rs. 1,21,64,904 under Section 28(2) of the Customs Act, 1962. The voluntary payment of Rs. 64,30,250 was ordered to be adjusted against the balance amount of the total demand, considering the duty as legally due but time-barred.

5. Appropriation of Amounts Paid:

The adjudicating authority's decision to appropriate Rs. 50,00,000 deposited by the appellant during the investigation and Rs. 14,30,250 recovered during the raid was challenged. The Tribunal held that if the duty demand is time-barred, it cannot be enforced, and the amount paid cannot be considered as duty payable. The Tribunal set aside the order directing the adjustment of the amount and ordered its return to the appellant after adjusting the duty and penalty upheld.

6. Validity of Retraction of Statements:

The appellant's proprietor initially admitted to under-invoicing in his statement dated 1st August 1996. The subsequent retraction of this statement on 6th October 1997 was deemed an afterthought and not credible. The Tribunal found that the initial confession and subsequent statements were true and supported by evidence. The retraction was not accepted, and the allegation of under-valuation was upheld.

Conclusion:

The appeals were disposed of with modifications to the penalties and the order for the return of the amount paid during the investigation. The Tribunal upheld the findings of under-invoicing and confirmed the duty liability for specific bills of entry, while reducing the penalties and setting aside the order for the appropriation of amounts paid during the investigation.

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