2022 (8) TMI 113 - AT - Customs

Undervaluation of goods - whether the allegation of undervaluation against the respondents is substantiated by the evidence that has been put forth by the investigation? - HELD THAT - Regarding the Evidence on the basis of Parallel invoices, we find that the Learned Commissioner enumerated differences between these invoices and held that they are not comparable. Learned Commissioner pertinently finds that the second invoice bears details of Bank, Swift code, Account number of the supplier etc, which are absent in first invoice; second invoice is the actual invoice and the first invoice looks like a Performa invoice; investigation could not find any evidence that the actual payment was made on the basis of first invoice; respondents imported only 1-2 shipments from this supplier; entire SCN is on the supplies from Mis Fujan Quanzhou Wanglong Stone Co Ltd., China and Fujian Wanlong Diamond Tools, Co Ltd China; investigation could not get any single parallel invoices in respect of imports from them; could not produce not even a single evidence of payments made over and above the price shown in the invoice submitted. It is found that the value of entire imports over a period of time cannot be arrived at on the basis of a single invoice and that as long as any differential payment is not evidenced, the value declared cannot be rejected. In the case of M/S. GLOBAL INDUSTRIES VERSUS THE COMMISSIONER OF CUSTOMS COCHIN. 2011 (2) TMI 742 - CESTAT BANGALORE it was held that in the absence of data relating to the imports of goods of same quality, quantity and commercial level with higher transaction value, contemporaneous import cannot be accepted. In this instant case, Revenue has not placed any data to evidence contemporaneous imports; rather the Adjudicating Authority found that there are no contemporaneous imports. The findings of the commissioner are correct. Antecedents cannot be an evidence for the alleged undervaluation of the goods. At best antecedents may be a reason for creating a suspicion and be a reason for causing an enquiry or Investigation. Mere propensity of the respondent is not enough proof of undervaluation - the antecedents of an importer or their propensity to violations cannot be in itself an evidence prove a contravention in a completely different proceedings. Revenue has not made out any case against the impugned order - appeal dismissed.

Issues Involved:
1. Allegation of undervaluation of imported goods.
2. Validity of evidence based on parallel invoices.
3. Comparison of import values with other importers.
4. Reliance on previous cases of undervaluation.
5. Use of evidence from a private investigator.

Detailed Analysis:

1. Allegation of Undervaluation of Imported Goods:
The respondents, M/s Granite India, were accused of undervaluing imported diamond segments and saw blanks. The investigation alleged that the respondents prepared invoices showing lesser values for customs submission and settled the difference through illegal channels. A show cause notice was issued seeking to confiscate the goods, re-determine their value, recover differential duty, and impose penalties under Sections 112(a) and 112(b) of the Customs Act, 1962.

2. Validity of Evidence Based on Parallel Invoices:
The investigation retrieved two parallel invoices from the supplier M/s. HXF Saw Co. Ltd., showing different values for the same consignment. The adjudicating authority noted significant differences between the invoices, such as the presence of bank details in the higher value invoice, which were absent in the lower value invoice. The adjudicating authority concluded that the lower value invoice appeared to be a proforma invoice and rejected it as evidence of undervaluation. The Tribunal upheld this finding, stating that the value of the entire imports cannot be based on a single invoice without evidence of differential payment.

3. Comparison of Import Values with Other Importers:
The investigation compared the respondents' import values with those of M/s. Shree Ram Granite and others, who imported similar goods at higher prices. The adjudicating authority found that the quantities imported by these other importers were significantly smaller and that the quality of goods differed. The Tribunal agreed, noting that the respondents were major buyers and their imports were not comparable to those of smaller importers. The Tribunal cited the Supreme Court's decision in Basant Industries, emphasizing that mere comparison of invoices without considering the relationship between supplier and importer and the volume of imports is insufficient to prove undervaluation.

4. Reliance on Previous Cases of Undervaluation:
The investigation referenced a previous case of undervaluation settled by the respondents in 2013. The adjudicating authority found that this reference was insufficient to establish undervaluation in the current case. The Tribunal concurred, stating that antecedents can create suspicion but are not evidence of undervaluation in a different proceeding. The Tribunal emphasized that propensity to commit an offense is not proof of the offense itself.

5. Use of Evidence from a Private Investigator:
The investigation relied on evidence from a private person, Mr. Vishal Vora, who allegedly had We-Chat conversations with the supplier indicating undervaluation. The adjudicating authority dismissed this evidence as inadmissible, noting that the use of private investigators is not permitted under the Customs Act, 1962. The Tribunal supported this view, highlighting the risks of using unverified private investigations in competitive markets and declaring such evidence irrelevant and inadmissible.

Conclusion:
The Tribunal upheld the adjudicating authority's decision, finding no substantial evidence to support the allegations of undervaluation. The appeal filed by the Revenue was dismissed, and the order of the learned Commissioner was affirmed. The Tribunal emphasized the need for concrete evidence and proper legal procedures in cases of alleged undervaluation.

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