2021 (8) TMI 999 - AT - Customs

Validity of confiscation proceedings - Rejection of value of importer - imported goods auctioned without prior notice to the appellant - HELD THAT - In the present case, since the goods have been auctioned during the pendency of the appeal before the Tribunal and the said seized goods are not available for redemption, therefore, at this stage, the question of going into the issue of undervaluation is not required as the goods being not available for assessment and home clearance, hence the question of assessment does not arise. Precisely, for this reason, the learned counsel for the appellant has even though made submissions on undervaluation but did not press the issue of undervaluation and has only confined to the restitution of value of the seized goods along with interest. It is not in dispute that the goods worth ₹ 28,26,001/- seized on the allegation of mis- declaration of the country of origin and undervaluation have been auctioned by the department for ₹ 20,000/- in a very haste manner and that too without prior notice and without seeking permission from the Tribunal when the appeal was pending before the Tribunal on the date of auction. It is a settled law that once the goods are seized or confiscated and the proceedings against the same are pending before the authority / Court then the only option available to the department is to obtain necessary permission from the court before whom the proceedings are pending and also to issue notice to the assessee from whose possession goods have been seized before auctioning the goods. This Tribunal has inherent power under Rule 41 of CESTAT (Procedural) Rules, 1982 to pass any order or direction to secure the ends of justice and that power has also been upheld by various decisions. Therefore, in view of the settled position of law, the impugned order is not sustainable in law and we set aside the same by allowing the appeal of the appellant and direct the department to pay the assessed value along with interest as prescribed under law till the date of refund - Appeal disposed off.

Issues Involved:
1. Validity of confiscation proceedings.
2. Validity of the consequent sale by the respondent.
3. Restitution of the value of goods to the appellant.
4. Allegation of undervaluation.
5. Authority of the Tribunal to order for compensation.

Detailed Analysis:

1. Validity of Confiscation Proceedings:
The appellant imported earth-moving machinery parts and filed two bills of entry. The goods were seized on the allegation that they were manufactured in Japan, not the USA, and lacked a country-of-origin certificate. The appellant filed a writ petition, and the High Court ordered the provisional release of goods upon payment of duty. However, the department did not comply, leading to the appellant's repeated requests for release. Show-cause notices were issued, and the Collector of Customs rejected the declared value, enhanced it by 50%, confiscated the goods, and imposed a penalty.

2. Validity of the Consequent Sale by the Respondent:
The respondent auctioned the seized goods without notifying the appellant and in violation of the High Court's directions. The Tribunal remanded the matter for reconsideration, but the Commissioner upheld the earlier order and increased the penalty. The appellant appealed, and the High Court remanded the case to the Tribunal to address the validity of confiscation and sale and the issue of restitution.

3. Restitution of the Value of Goods to the Appellant:
The appellant argued that the auction was conducted without notice and that the goods were under customs custody, making the duty payment irrelevant. The appellant contended that the auctioned value should be refunded, citing that the goods were not perishable and should have been auctioned at a value including duty. The department's auction for a lesser amount did not negate the appellant's right to a refund of the determined value. The Tribunal agreed, noting that the goods were auctioned during pending proceedings, without notice or permission, violating legal precedents.

4. Allegation of Undervaluation:
The appellant denied undervaluation allegations, providing documents from the supplier indicating a 60% discount for Komatsu parts. The Tribunal had earlier remanded the case to verify the country-of-origin certificate. The appellant argued that the burden of proof for undervaluation lies with the department, which failed to provide evidence. The Tribunal found that the issue of undervaluation was moot since the goods were auctioned and not available for assessment.

5. Authority of the Tribunal to Order for Compensation:
The appellant cited legal precedents and argued that the Tribunal has the power to order a refund of the auctioned goods' value under Section 129B of the Customs Act and Rule 41 of the CESTAT (Procedure) Rules. The Tribunal acknowledged its inherent power to secure justice and directed the department to refund the assessed value with interest, noting that the auction was conducted improperly during pending proceedings.

Conclusion:
The Tribunal set aside the impugned order, allowed the appellant's appeal, and directed the department to refund the assessed value of the imported goods along with interest. The department was instructed to quantify the interest within three months and return the value of the goods as determined. The appeal was disposed of accordingly.

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