2019 (3) TMI 982 - AT - Customs

Misdeclaration and undervaluation of imported goods - Timber - rejection of declared value - enhancement of value - reliability on statements - demand of differential duty - Held that - In the present case the Appellant has imported goods on correct transactional value and the allegation of undervaluation are not supported by any cogent evidence. Further the goods by other importers are also on same price. Hence, the declared value cannot be doubted. It is also found from the data submitted by the Appellant that the contemporaneous imports of such or like goods were allowed to be cleared only at the same price or comparable price, but in fact at price lower than those declared by the Appellant. There is no reference of any excess payment made to any of the suppliers, the mode of such payment, manner of payment or person through whom such payments were made. In absence of same, it cannot be held that the Appellant has under-valued the imported goods. Even though the other importers were importing same quality, quantity of goods at the same prices, no question has been raised against such importers. The case of the Appellant is squarely covered by the Tribunal s order in case of Vijay Leather Stores 2007 (2) TMI 498 - CESTAT, BANGALORE as the same and similar goods were also imported on same price and the allegation of undervaluation thus would not sustain. The records of contemporaneous imports and the data have not been considered by the adjudicating authority and in such cases, we find that there is no case of demand against the Appellant. The goods at the time of importation were physically examined by Customs authorities and were found as per the declared description. Thus, in absence of any contrary evidence, the value of rejected grade timber cannot be enhanced on the basis of good quality timber. Reliability on statements - Held that - The burden to prove under-valuation lies upon the Revenue by bringing credible and cogent evidence, whereas the submissions made by the Appellant clearly shows that in the present case, except third party documents and statements, no evidence has been brought by the Revenue on record - The statements of Shri Avinash Jindal and Shri Rajendra Agarwal and their employee corroborated which was corroborated with their own record is not a tangible and cogent evidence and cannot form the basis of under-valuation in respect of value declared by the Appellant. Demand do not sustain - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Allegation of mis-declaration and under-valuation of imported timber.
2. Reliance on third-party documents and statements.
3. Rejection of transaction value and enhancement of value.
4. Application of Customs Valuation Rules.
5. Burden of proof on the Revenue.

Issue-wise Detailed Analysis:

1. Allegation of mis-declaration and under-valuation of imported timber:
The appellant, engaged in the import and trading of timber, was accused of mis-declaring and undervaluing imported timber from various countries. The Revenue alleged that the appellant declared lower prices than the actual value, leading to a demand for differential duties and penalties. The show cause notice was based on documents and emails retrieved from third parties, which allegedly showed higher actual prices and cash payments.

2. Reliance on third-party documents and statements:
The case against the appellant heavily relied on documents and emails retrieved from third parties, specifically Shri Rajendra Agarwal and Shri Avinash Jindal. Both individuals retracted their statements during cross-examination, claiming coercion and lack of knowledge about the documents. The Tribunal noted that the documents were not shown to the appellant, and no incriminating evidence was found directly from the appellant’s premises. The Tribunal emphasized that third-party documents and statements without corroborative evidence from the appellant's end could not substantiate the allegations.

3. Rejection of transaction value and enhancement of value:
The Revenue rejected the declared transaction value of the imported timber and proposed an enhanced value based on third-party documents. The Tribunal found that the enhancement of value was not supported by tangible evidence. It was noted that the declared value was within the parameters of the sale value of suppliers and that the enhancement proposed by the Revenue was arbitrary and impractical.

4. Application of Customs Valuation Rules:
The Tribunal highlighted that the rejection of the declared value must be sequentially followed by the Customs Valuation Rules, which was not done in this case. The declared value should be accepted unless it falls under exceptions provided in the rules. The Tribunal found that the Revenue did not follow the proper valuation rules and relied on uncorroborated third-party documents.

5. Burden of proof on the Revenue:
The Tribunal emphasized that the burden of proving under-valuation lies with the Revenue. The Revenue failed to provide credible and cogent evidence to support the allegations. The Tribunal noted that the appellant provided substantial evidence, including contemporaneous imports at similar prices, insurance documents, and sales prices in the domestic market, which were not refuted by the Revenue.

Conclusion:
The Tribunal concluded that the demand and penalties imposed on the appellant were not sustainable due to the lack of credible evidence and improper application of valuation rules. The appeal was allowed, and the impugned order was set aside, providing consequential relief to the appellant.

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