2020 (2) TMI 1260 - AT - Customs

Levy of penalty and redemption fine - Acceptance of enhanced value then declared value of imported goods - crystal melamine - enhancement of value - confiscation - redemption fine - penalties - HELD THAT - No evidence has been placed on record by the appellants herein that the value adopted does not represent that which the supplier offered goods for sale to India including to the original importer. The sole counter of Learned Counsel is that the negotiated price at which the goods were offered to the appellant is the sole consideration. The decision of the Hon ble Supreme Court in M/S CHAUDHARY SHIP BREAKERS VERSUS COMMISSIONER OF CUSTOMS, AHMEDABAD 2010 (10) TMI 18 - SUPREME COURT was rendered in the context of the agreement between the shipper and the importer being conditional upon the damage to the vessel before landing and, hence, cannot be disassociated from its acceptability as being at the time and place of importation. There is no evidence on record that the negotiated price has been contrived to evade duties of customs. In the circumstances of being close to a distress sale, the absence of willing buyers for goods under investigation and there being no evidence of additional consideration, the finding of misdeclaration cannot be sustained. The reason for confiscation under Section 111(d), to be invoked for importer prohibited goods, has not been disclosed by either of the lower authorities and, on the basis of our findings supra, there is no scope for confiscation under Section 111(m) of Customs Act, 1962. Consequently, the imposition of redemption fine set aside and penalty under Section 112 of Customs Act, 1962 fails. The concurrence obtained from the shipping agent in India has nothing to do with assessment under Section 17 or Section 18 of Customs Act, 1962. There is no allegation that the amendment to the line in the Import General Manifest has been obtained by submission of any fraudulent documents; indeed, there is no dispute on the propriety of filing a bill of entry by the appellant-firm. There is, thus, no scope for invoking Section 114AA of Customs Act, 1962. The impugned order only to the extent of enhancement of value upheld - other part set aside - appeal allowed in part.

Summary

Issues:
Appeal against Order-in-Appeal enhancing value of imported goods, confiscation, redemption fine, and penalties.

Analysis:
1. Enhancement of Value: The appellant-firm procured goods for another entity but ended up accepting the consignment at a reduced value after the original buyer refused it. The declared value was enhanced during assessment, leading to increased duty liability. The appellant argued that the negotiated value should be accepted as the transaction value under Section 14 of the Customs Act, citing relevant legal precedents. However, the Tribunal upheld the enhanced value, emphasizing the application of Customs Valuation Rules and lack of evidence to refute the supplier's offered price.

2. Confiscation and Penalties: The original order imposed penalties under various sections of the Customs Act, which were modified on appeal. The Tribunal set aside the penalty under Section 114A and substituted it with a lower penalty under Section 112. The redemption fine and penalties on individuals were also reduced. The appellant challenged the penalties and confiscation, arguing lack of evidence for misdeclaration and evasion of duties. The Tribunal found no grounds for confiscation under Section 111 and set aside the redemption fine and penalties under Section 112.

3. Procedural Issues: The Tribunal examined the circumstances of filing the bill of entry after the original consignee failed to do so. It was noted that there was no evidence of pre-arranged mechanisms to avoid duty liability, and the transaction seemed to be a result of commercial considerations. The Tribunal also addressed the lack of evidence supporting the invocation of certain sections of the Customs Act, such as Section 114AA, emphasizing the absence of fraudulent practices or misrepresentation in the filing process.

4. Final Decision: The Tribunal upheld the enhanced value of the imported goods but set aside other penalties and confiscation. The judgment highlighted the importance of complying with Customs Valuation Rules, lack of evidence for misdeclaration or duty evasion, and the need for clear grounds for confiscation and penalties under the Customs Act. The decision was announced on June 13, 2019, disposing of the appeals filed against the original order.

This detailed analysis covers the issues raised in the legal judgment, providing a comprehensive overview of the Tribunal's decision and the arguments presented by the appellant and the authorities involved.