2021 (6) TMI 171 - AT - Customs

Valuation - transaction value of food supplements imported - undervaluation and mis-declaration of goods - rejection of declared value - fake invoices in the name of firm owned / controlled by him showing lower value - HELD THAT - The valuation of imported goods is required to be done in terms of section 14 of the Customs Act 1962 read with Customs Valuation Rules 2007 which provides that transaction value of the goods shall be the price actually paid or payable for the goods when sold for export to India where the buyer or the seller of goods are not related and the price is the sole consideration for the same subject to such other conditions as may be specified under the Rules made in this behalf. The Valuation Rules have been framed in exercise of powers conferred by section 14 of the Customs Act and in normal course the declared value i.e. the price which is actually paid for importing the goods has to be treated as the transaction value. In the present case no doubt arose on the basis of comparable quantities in comparable commercial transaction nor it was observed at the time of clearance at the very port. But it is apparent that doubt arose on the basis of intelligence whereafter searches were conducted and recovery of documents and impugned imported food supplements got effected. Apparently no data or evidence is collected by the department after the said intelligence and during investigation as is otherwise required under Rule 4 5 and 6 of the CVD Rules 2007 and is also required under Rule 12 - the present is the case where importer has admitted the entire allegations of alleged manipulation / forgery in the invoices as far as the price of imported goods are concerned At the stage of redetermination of value during investigation the appellant himself had opted to pay the assessed differential duty. The voluntary payment is sufficient corroboration to his admitted manipulation for evading the duty. Such payment also amounts to the admission of appellant about re-determining value of the imported goods at lower prices. Though the learned Counsel has placed reliance upon the decision wherein it has been held that payment of duty at the stage of investigation does not amount to the admission of guilt. But in the present case the fact is that the guilt has not merely been admitted once but it has been admitted in corroboration at six number of times with no single retraction of either of these admissions nor there is any protest recorded while making payment in lieu of re-determined value - Tribunal Mumbai also in the case of SACCHA SAUDHA PEDHI VERSUS COMMISSIONER OF CUS. (IMPORT) MUMBAI 2014 (9) TMI 1039 - CESTAT MUMBAI has held that once the witnesses admitted to undervaluation and accepted actual price of imported goods mentioned in the purchase orders messages of supplier then the said admitted price becomes transaction value in which case there is no need to resort to contemporaneous import. In the present case it is observed that Sunny Gujral has categorically admitted for having discussed with the Foreign suppliers about the actual price and that the said actual prices were mentioned on the invoices received from the foreign suppliers. It is thereafter that Shri Sunny Gujral used to prepare fake invoices in his computer reducing the price of the invoices of foreign supplier to the extent of almost 50% thereof so as to file the same along with Bill of Entry - there remained no burden upon the Department to prove the allegations against the appellants nor the department was required to comply with section 138 C of the Customs Act with respect to the documents being the computer print outs the data whereof has dully been acknowledged to have been filled in by Shri Sunny Gujral himself. It is apparent fact on record that there is no admission of Shri Sunny Gujral about involvement of the importing firms and the proprietors of the other importing firms nor of any of his dealers in manipulating invoices with an intent to evade duty. The department also has not produced any document with respect to any one else. The only document for doubting the transaction value is the price list. The law is settled that the price list cannot be the proof of transaction value. In the absence thereof and in view of no admission on part of the remaining importers then Shri Sunny Gujral who is the proprietor of M/s. Jaskaran Enterprise we see no reason for imposition of penalty and demand of differential duty from rest of the appellant firms and their respective proprietors. The order under challenge is upheld only about Shri Sunny Gujral the proprietor of M/s Jaskaran Enterprise. However the order of demand and imposition of penalty on other importing firms and their respective proprietors is hereby set aside. Since the amount of Rs. 12.95 lakh has already been deposited by Shri Sunny Gujral the same is hereby ordered to be set off - Appeal allowed in part.

Summary

Issues Involved:

1. Allegation of undervaluation and mis-declaration of imported 'Food Supplements'.
2. Legality of the show cause notice based on limitation.
3. Validity of the evidence and statements obtained during investigation.
4. Admissibility of computer-generated documents under Section 138C of the Customs Act, 1962.
5. Imposition of penalties on importing firms and their proprietors.

Detailed Analysis:

1. Allegation of Undervaluation and Mis-declaration of Imported 'Food Supplements':

The Department alleged that several Delhi-based importers, controlled by one individual, were involved in undervaluation and mis-declaration of 'Food Supplements' to evade customs duty. Searches conducted at various premises led to the recovery of documents, CPUs, laptops, and imported food supplements. The investigation revealed manipulated invoices reflecting lower values than the actual prices, leading to the issuance of a show cause notice proposing the demand of duty along with interest and penalties.

2. Legality of the Show Cause Notice Based on Limitation:

The appellants argued that the show cause notice was barred by limitation as it was issued in 2008 and adjudicated only in 2016, taking more than 8 years. They relied on Section 28(a) of the Customs Act, 1962, and the case of Siddhi Vinayak Syntex Pvt Ltd. vs Union of India. The Department contended that fraud vitiates everything, and the plea of limitation was not available due to amendments in the provisions fixing limitation and the appellants' deliberate avoidance of personal hearings.

3. Validity of the Evidence and Statements Obtained During Investigation:

The appellants argued that the statements of Shri Sunny Gujral were extracted under threat and lacked corroborative evidence. They emphasized that the burden of proving undervaluation rested on the Department, which failed to conduct a market inquiry or produce evidence of contemporaneous import prices. The Department countered that the statements were voluntarily made and corroborated by other evidence, including the recovery of original invoices and manipulated MRP stickers.

4. Admissibility of Computer-Generated Documents Under Section 138C of the Customs Act, 1962:

The appellants contended that the computer-generated documents did not comply with Section 138C of the Customs Act, 1962, and could not be read against them. The Department argued that the documents were admissible as the appellant had admitted to their manipulation and the data was filled in by him. The Tribunal observed that the admission of guilt by the appellant negated the need for further evidence under Section 138C.

5. Imposition of Penalties on Importing Firms and Their Proprietors:

The Tribunal held that the admission of guilt by Shri Sunny Gujral could not be read against other importers and proprietors. It was observed that there was no evidence of involvement or knowledge of the other importers in the manipulation of invoices. The imposition of penalties on the importing firms and their proprietors, except for Shri Sunny Gujral and his firm M/s. Jaskaran Enterprises, was not sustainable. The Tribunal also noted that imposing penalties on both the proprietorship firm and its proprietor amounted to double jeopardy.

Conclusion:

The Tribunal upheld the order of the adjudicating authority regarding Shri Sunny Gujral and M/s. Jaskaran Enterprises. However, it set aside the demand and penalties imposed on the other importing firms and their proprietors due to the lack of evidence and the inadmissibility of Shri Sunny Gujral's admission against them. The amount already deposited by Shri Sunny Gujral was ordered to be set off, and no further recovery was required. The appeals were partly allowed, modifying the order under challenge accordingly.