2022 (4) TMI 948 - AT - Customs

Recovery of differential duty - Levy of penalty u/s 112 and section 114AA of Customs Act, 1962 - Confiscation of used Cranes - HELD THAT - The acceptance of the voluntary payment is beyond the framework of the proceedings as determined by the proposals in the show cause notice and, with that having been set aside, the Tribunal lacks jurisdiction to address retention of such amount for any purpose, including as restitution towards duty that has been short-paid. Nonetheless, the finding in the impugned order that this payment of duty was voluntary, and even despite being beyond the period of limitation and in the absence of any threat or coercion from customs authorities, does throw some light on the bona fides of the importer who, indeed, was not under legal obligation to do so. The prevailing practice of assessment on the basis of weight which has seemingly been followed by M/s Crown Lifters is also on record. There has been no ascertainment of the actual purchase price of each of the nine used cranes , which surely must be available considering that these were sourced at auctions, by the adjudicating authority. The initiation of proceedings for confiscation under section 111(m) of Customs Act, 1962 and penalties under section 112 and section 114AA of Customs Act, 1962 must be viewed through that prism. Clearance of goods for home consumption, in exercise of authority under section 47 of Customs Act, 1962 and subject to satisfaction of proper officer that the goods are not prohibited and that the correct duties have been levied, attains a finality thereby that can be disturbed only upon subsequent finding that the goods are prohibited or that short-payment of duty has occurred with the latter to be re-opened only within the stipulated time-frame. There is no allegation of the goods being prohibited and, indeed, recourse to confiscation under section 111(m) of Customs Act, 1962 repudiates that contingency. The discharge of correct duty liability is a determination of rate of duty, under section 12 of Customs Act, 1962, and value determined in the manner prescribed in section 14 of Customs Act, 1962 - it would appear that confiscation is disproportionate detriment and without any justification to cause such detriment. Consequently, confiscation of nine used cranes imported by M/s Crown Lifters fails along with the penalties arising therefrom. However, as recovery of differential duty has been proposed for the subsequent imports, M/s Crown Lifters Pvt Ltd is not immune to consequence of evasion of duty liability in the event of undervaluation being established. The sole evidence of misdeclaration of value appears to be the admission in the statement of Shri Karim Jaria and the confessional statement of the illicit fund mover, Shri Brijesh Gala. As in the case of the earlier imports, the actual price of each of the five used cranes has not been ascertained. Reliance on statements alone is too fragile a foundation to build a case of undervaluation; such depositions are reliable only with corroborative support. In the absence of corroboration, test of cross-examination is of essence, as mandated by section 138B of Customs Act, 1962, for relevancy. There are no reason to disapprove the rejection of request for cross-examination of some investigating officials and of persons whose statements had not been relied upon for initiation of proceedings, the finding of the adjudicating authority that the statement of Shri Brijesh Gala, despite being corroborative of the confessions in the statements of the noticees, was not of such relevance as to warrant cross-examination is unacceptable - The re-assessment, recovery of differential duty and confiscation of used cranes imported by M/s Crown Lifters Pvt Ltd in the impugned order fails. The order for confiscation of the used cranes imported by both entities under section 111 (m) of Customs Act, 1962 along with the consequential penalties under section 112 of Customs Act, 1962, is set aside - the penalties imposed on the noticees under section 114AA of Customs Act, 1962 as also the recovery of differential duty under section 28 of Customs Act, 1962 from M/s Crown Lifters Pvt Ltd., are set aside - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Confiscation of imported cranes.
2. Recovery of differential duty.
3. Imposition of penalties under Section 112 and Section 114AA of the Customs Act, 1962.
4. Valuation of imported goods.
5. Compliance with procedural directions from the Tribunal.
6. Validity of voluntary payment towards duty.
7. Cross-examination of witnesses.

Issue-wise Detailed Analysis:

1. Confiscation of Imported Cranes:
The appeals challenged the confiscation of nine "used cranes" imported between 2005 and 2007 by M/s Crown Lifters and five consignments imported between 2008 and 2010 by M/s Crown Lifters Pvt Ltd. The Tribunal found that the confiscation was disproportionate and without justification. The goods were not prohibited, and the correct duty liability was not re-assessed within the stipulated time-frame. Consequently, the confiscation of the nine "used cranes" imported by M/s Crown Lifters was set aside.

2. Recovery of Differential Duty:
The Tribunal noted that the recovery of differential duty was proposed for the subsequent imports by M/s Crown Lifters Pvt Ltd. However, the sole evidence of misdeclaration was the admission in the statement of Shri Karim Jaria and the confessional statement of Shri Brijesh Gala. The Tribunal held that reliance on statements alone, without corroborative support, was insufficient to establish undervaluation. The re-determination of assessable value by resort to rule 3 of the Customs Valuation Rules was not in accordance with law, leading to the failure of the re-assessment and recovery of differential duty.

3. Imposition of Penalties under Section 112 and Section 114AA:
The penalties imposed under Section 112 and Section 114AA were challenged. The Tribunal found that the initiation of proceedings for confiscation and penalties must be viewed through the prism of the prevailing practice of assessment based on weight. The absence of actual purchase price ascertainment and the reliance on statements without cross-examination led to the conclusion that penalties were unjustified. Consequently, the penalties imposed on the noticees were set aside.

4. Valuation of Imported Goods:
The valuation dispute arose from the re-determination of assessable value by recourse to rule 3 of the Customs Valuation Rules. The Tribunal found that the adjudicating authority had not ascertained the actual purchase price of each crane and relied solely on statements. The Tribunal held that the re-determination of value was not in accordance with law, leading to the failure of the re-assessment and recovery of differential duty.

5. Compliance with Procedural Directions from the Tribunal:
The Tribunal had previously directed that the acceptability of inculpatory statements be predicated upon challenge in cross-examination. The adjudicating authority's failure to comply with this direction, particularly in denying cross-examination requests without recording specific reasons, was highlighted. The Tribunal emphasized that the remand order's unambiguous direction was not followed, leading to a breach of procedural discipline.

6. Validity of Voluntary Payment Towards Duty:
The Tribunal noted that the voluntary payment of ?1,50,00,000 made during investigations was beyond the proposal in the show cause notice. The adjudicating authority's inclusion of this payment in the order was set aside for having traveled beyond the proposal. The Tribunal found no reason to disapprove the rejection of the request for cross-examination of some investigating officials and persons whose statements were not relied upon for initiation of proceedings.

7. Cross-examination of Witnesses:
The Tribunal found that the adjudicating authority's rejection of the request for cross-examination of Shri Brijesh Gala and others was improper. The remand order had placed the onus on the adjudicating authority to justify the denial of cross-examination, which was not adhered to. The Tribunal held that the denial of cross-examination without recording reasons violated the principles of natural justice.

Conclusion:
The Tribunal set aside the order for confiscation of the "used cranes" imported by both entities under Section 111(m) of the Customs Act, 1962, along with the consequential penalties under Section 112 and Section 114AA. The recovery of differential duty under Section 28 from M/s Crown Lifters Pvt Ltd was also set aside. The judgment emphasized the importance of adherence to procedural directions and the necessity of corroborative evidence in establishing undervaluation.

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