2019 (7) TMI 970 - AT - Customs

Valuation of imported goods - Acetonitrile - undervaluation - rejection of declared value - provisional release of goods - Appellants have raised the issue in respect of two bill of entries i.e. B/E No 702642 dated 1.10.2009 and 704506 dated 3.10.2009 the assessments are provisional and hence the proceedings for seizure, confiscation and demand of duty premature - HELD THAT - We are not able to appreciate the argument advanced by the appellant. The Bond executed by the appellant on 20.11.2009 is titled Bond With Security to be executed by the person seeking release of goods seized pending investigation. - the case in hand is of provisional release of seized goods and not the case of provisional assessment as claimed by the appellants. Release of goods which is not at all seized - Appellants have contended that goods covered by the B/E s other than B/E No 702642 and B/E No 704506 were never seized and there is no question for the release of the same against Bond or Bank Guarantee - HELD THAT - only those goods which were seized and provisionally released to the appellants could have been held liable for confiscation and confiscated. - Since these goods are not available for seizure or confiscation, the order of Commissioner the goods imported against these Bill of Entries is bad in law. Misdeclaration of value - admissibility of exemption under notification No 94/96-Cus - HELD THAT - There is no merits in the submissions of the Appellant s in respect of admissibility of exemption under Notification No 94/96-Cus. Also there are no merits in the submissions of the Appellant in respect of the value of the goods, which has been determined on the basis of value of contemporaneous imports of the same goods. Demand made on the basis of facts admitted during the statement - HELD THAT - The fact about undervaluation of the goods need not be again established as the same has been admitted by the Appellant themselves in their statements recorded under Section 108. However the fact of undervaluation is further corroborated by the value of contemporaneous imports made by the other importers at or about the same time. The appellants have misdeclared the value of the imported goods with intention to evade payment of duty - the extended period of limitation as provided by proviso to sub section (1) section 28 of Customs Act, 1962 is applicable for making the demands. Since the demand of duty as determined by the Commissioner is upheld, the demand of interest under Section 28AB is also upheld. Penalty - HELD THAT - The order of Commissioner, is modified to hold that penalty imposed under Section 114A, to be equivalent to the duty demanded. It is settled law that in case where duty demand has been determined by invoking the proviso to Section 28(1) of Customs Act, 1962 penalty under Section 114A will get attracted - Penalties imposed on Appellant 2, 3 and 4 are dropped. Appeal allowed in part.

Summary

Issues Involved:

1. Provisional Assessment and Seizure
2. Invoking Extended Period of Limitation
3. Confiscation and Redemption Fine
4. Misdeclaration of Value and Eligibility for Exemption under Notification No. 94/96-Cus
5. Demand of Differential Duty and Interest
6. Imposition of Penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962
7. Role and Liability of CHA (Custom House Agent)

Issue-wise Detailed Analysis:

1. Provisional Assessment and Seizure:
The appellants argued that the assessments for Bill of Entry (B/E) No. 702642 dated 1.10.2009 and 704506 dated 3.10.2009 were provisional, making the proceedings for seizure, confiscation, and demand of duty premature. However, the tribunal clarified that the case involved provisional release of seized goods, not provisional assessment. The bond executed by the appellant was for provisional release pending investigation, thus the argument regarding provisional assessment was not applicable.

2. Invoking Extended Period of Limitation:
The appellants contended that the show cause notice was issued beyond the six-month period prescribed by Section 110 of the Customs Act, 1962, making it invalid. The tribunal noted that the goods were provisionally released within the prescribed time, and thus, the six-month limit did not apply. Therefore, the extended period of limitation was rightly invoked due to the suppression of facts.

3. Confiscation and Redemption Fine:
The tribunal held that only the goods covered by B/E No. 702642 and B/E No. 704506, which were seized and provisionally released, could be confiscated. The redemption fine imposed was reduced from ?25,00,000 to ?1,00,000, considering the recession in the international market and the decline in the price of acetonitrile.

4. Misdeclaration of Value and Eligibility for Exemption under Notification No. 94/96-Cus:
The appellants claimed that the goods were re-imported and sought exemption under Notification No. 94/96-Cus. The tribunal found that the goods were not in the same packing as when exported, and the appellants could not certify that the imported goods were the same as those exported. The tribunal upheld the Commissioner’s decision that the goods were purchased at the prevailing market rate, and the exemption was not applicable.

5. Demand of Differential Duty and Interest:
The tribunal upheld the demand for differential duty amounting to ?27,45,081.90, as determined by the Commissioner, based on contemporaneous imports. The demand for interest under Section 28AB of the Customs Act, 1962, was also upheld, following the precedent that interest is payable even if duty is paid before the issuance of a show cause notice.

6. Imposition of Penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962:
- Appellant 1: The penalty under Section 114A was modified to be equivalent to the duty demanded, i.e., ?27,45,081.90, instead of the aggregate of duty and interest.
- Appellant 2 and 3: Penalties under Section 112(a) and 114AA were set aside. The tribunal found no evidence that the directors committed any act rendering the goods liable for confiscation or made any false declarations.
- Appellant 4 (CHA): The penalty under Section 112(b) was set aside, as there was no evidence that the CHA had knowledge or reason to believe that the goods were liable for confiscation.

7. Role and Liability of CHA (Custom House Agent):
The tribunal found that the CHA (Appellant 4) was performing duties as per the Custom House Agent Licensing Regulation, 2004, and there was no evidence of knowledge or reason to believe that the goods were liable for confiscation. Penalties imposed on the CHA were unjustified and were set aside.

Summary of Findings:
- Goods covered by B/E No. 702642 and 704506 were liable for confiscation, with a reduced redemption fine of ?1,00,000.
- The value of the goods was determined to be US$ 4 per kg based on contemporaneous imports.
- The demand for differential duty and interest was upheld.
- The penalty under Section 114A was modified to be equivalent to the duty demanded.
- Penalties on Appellant 2, 3, and 4 were set aside.

Conclusion:
The appeal by Appellant 1 was partly allowed, while the appeals by Appellant 2, 3, and 4 were fully allowed.