2022 (7) TMI 152 - AT - Customs

Valuation of imported goods - Brand New Azimut 68 Motor Yacht with Accessories - alleged mis-declaration of description and value of the imported goods - evasion of legitimate customs duty payable on higher import price for the actually imported goods i.e. yacht of model Azimut 68 Evolution , instead of model Azimut68 , as declared in the subject Bill of Entry - validity of declared price - rejection of the declared assessable value and re-determination of the same - HELD THAT - It is clear that all material facts have been declared to the department. Particularly, the capacity 2xMAN 1360mHP applicable for evolution type, was specifically indicated in the bill of entry. Mere non-mentioning of the words/Phrase E or Evolution would in no way constitute the suppression of a material fact more so, the details are available in the documents submitted along with the Bill of Entry. Thus, under the circumstances of the case and more particularly, the documentary evidences submitted by the appellant, there are no hesitation in holding that non-mentioning the code or word E or Evolution in the above documents is inconsequential and had no effect on the aspect of valuation of imported goods for the purpose of assessment of the correct duty liability. Thus, there is no question of any mis-declaration on the part of the appellants and that they have not connived with the overseas manufacturer in defrauding the legitimate dues of the government, as alleged by the learned adjudicating authority. Rejection the declared value and redetermination of the same - HELD THAT - The learned adjudicating authority has observed that when the purchase order is of Azimut 68, then it has to be inferred that whatever price paid is not of higher version of Azimut 68 Evolution and that the same is for the lower version - These findings in the impugned order are factually incorrect inasmuch as the purchase order had described the specification of the engine of imported yacht as 2xMAN 1360mHP , which admittedly relates to the higher version, imported by the appellant on payment of the actual price, attributable to such category of goods. The provisions for valuation of import of goods are contained in sub-section (1) of Section 14 of the Customs Act, 1962. The said statutory provisions mandate that the price actually paid or payable for the goods, when sold for export to India for delivery at the time and place of importation, should be considered as transaction value for the purpose of levy of duties of Customs - The explanation clause (1) appended to Rule 12 ibid suggests that this rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; and that where the declared value is rejected, then the value shall be determined by proceeding subsequently in accordance with rules 4 to 9 ibid. On scrutiny of the impugned order, it is found that the learned adjudicating authority has rejected the declared value solely based upon the singular fact that the negotiations with the overseas manufacturer with regard to the final price of goods were verbal. It is opined that such facts can never be a reason for rejection of the declared value under Rule 12 ibid inasmuch as the appellant had given the name and details of the officer of the supplier, with whom the price negotiation took place. It is found from the case file that the appellant had submitted and relied upon various documents and statement recorded under summon to demonstrate that there is no under valuation of goods and the circumstances under which the negotiation took place, resulting in reduction of price of goods/ offer of discount etc. The issue of rejection of transaction value and re-determination of the same was the subject matter of litigation in many cases. The common ratio of various judgments has been that the transaction value cannot be rejected on the basis of assumption and unless there is enough evidence to prove that any consideration over and above the invoice price has been paid by the importer, the declared value has to be accepted for the purpose of Section 14 of the Customs Act, 1962 - Thus, in so far as the valuation of the yacht is concerned, Revenue has not made out any case of mis-declaration and consequential undervaluation of the same. Therefore, there are no merit in the re-determination of the value of the yacht and confirmation of differential duty thereon. To this extent, we find that the impugned order is not maintainable. As the charge of mis-declaration and undervaluation of the yacht falls flat, confiscation and penalties imposed also do not survive. Accordingly, the same are set aside. Importation of goods i.e. V-SAT connection with dish antenna - HELD THAT - It is observed from the findings recorded in the impugned order that the appellant had not submitted any documentary evidences with regard to the purchase of the said goods and accordingly, the determination of the value of such goods under Rule 9 ibid is justified and thus, cannot be interfered with at this juncture. Therefore, the differential duty along with interest in the impugned order on the said goods is proper and justified and are liable for confiscation under Section 111 (l) ibid. It is also noticed that though the impugned order has imposed redemption fine on both the category of improperly imported goods, but imposed the fine combined, without bifurcating the same product-wise. Since, the assessable value determined in the impugned order was to the tune of Rs.14,78,128/-, the imposition of redemption fine on such value should be confined to 10% of such value. Accordingly, it is ordered that the appellant is liable to pay redemption fine of Rs.1,47,812/- in respect of V-SAT connection with dish antenna imported by them. However, the appellant is not exposed to the penal consequences provided under Section 114A ibid, especially for the reason that non-levy or short-levy of duty was not due to the reason of willful mis-statement or suppression of facts etc. Personal penalty imposed on the other appellants in respect of the goods V-SAT connection with dish antenna - HELD THAT - This penalty cannot also be sustained inasmuch as the impugned order has not specifically dealt with the issue regarding involvement of those persons (the other appellants herein) in importation of such goods. The impugned order is upheld to the extent of demand of duty on the V-sat antenna and redemption fine - all other demands confirmed and penalties imposed are however, set aside, along with consequential relief - Appeal allowed in part.

Summary

Issues Involved:
1. Alleged mis-declaration of the description and value of the imported yacht.
2. Rejection of declared assessable value and re-determination under Customs Valuation Rules, 2007.
3. Confirmation of differential duty demand and interest.
4. Confiscation of the yacht and imposition of penalties.
5. Importation and valuation of "V-SAT connection with dish antenna."

Detailed Analysis:

1. Alleged Mis-declaration of the Description and Value of the Imported Yacht:
The appellant, M/s Mydream Properties Pvt. Ltd, imported a yacht described as "Brand New Azimut 68 Motor Yacht with Accessories" and filed a Bill of Entry for duty assessment. The Customs department alleged mis-declaration of the yacht's model and value, claiming it was actually an "Azimut 68 Evolution." The department inferred that the declared import price of Euro 1,400,000 was not genuine, as it included a 43% discount from the initial price of Euro 2,410,300 quoted by the manufacturer. The appellant argued that the purchase order, invoice, and Bill of Entry all contained a detailed description of the higher version of the yacht, and there was no mis-declaration.

2. Rejection of Declared Assessable Value and Re-determination under Customs Valuation Rules, 2007:
The Customs department rejected the declared assessable value of Rs. 9,99,69,800 and re-determined it at Rs. 17,74,67,817, based on the initial price quoted by the supplier. The adjudicating authority observed that the value declared by the importer was for the yacht "Azimut 68" and not for the imported product "Azimut 68 Evolution." The appellant contended that the declared value should be accepted as the transaction value under Section 14 of the Customs Act, 1962, and Rule 3 of the Customs Valuation Rules, 2007. The Tribunal found that the declared value was supported by documentary evidence, and there was no reason to reject it based on verbal negotiations or assumptions.

3. Confirmation of Differential Duty Demand and Interest:
The Customs department confirmed a differential duty demand of Rs. 1,91,14,774 along with interest. The Tribunal held that the valuation provisions under Section 14 of the Customs Act, 1962, and Rule 3(1) of the Customs Valuation Rules, 2007, were applicable in this case. The Tribunal found no evidence of any additional payments made by the appellant over and above the declared value, and thus, the rejection of the declared value and re-determination of the same was not justified.

4. Confiscation of the Yacht and Imposition of Penalties:
The adjudicating authority confiscated the yacht and imposed a redemption fine of Rs. 1,00,00,000, along with penalties on the appellant and other individuals involved. The Tribunal found that there was no mis-declaration or undervaluation of the yacht, and thus, the confiscation and penalties imposed were not sustainable. The Tribunal set aside the confiscation and penalties, providing consequential relief to the appellants.

5. Importation and Valuation of "V-SAT Connection with Dish Antenna":
The adjudicating authority found that the value of the "V-SAT connection with dish antenna" was not included in the commercial invoice or declared in the Bill of Entry. The Tribunal upheld the determination of the value of the V-SAT connection at Euro 20,700 under Rule 9 of the Customs Valuation Rules, 2007, and confirmed the differential duty along with interest. However, the Tribunal reduced the redemption fine to 10% of the assessable value, amounting to Rs. 1,47,812. The Tribunal also set aside the penalties imposed on individuals related to the importation of the V-SAT connection, as there was no specific evidence of their involvement.

Conclusion:
The Tribunal partly allowed the appeal, upholding the demand of duty on the V-SAT antenna and the reduced redemption fine, while setting aside all other demands and penalties. The Tribunal provided consequential relief to the appellants as per law.