2022 (10) TMI 1018 - AT - Customs

Hawala transactions - valuation of imported goods - import of furniture from China - undervaluation of the furniture to the extent of 17% and the undervalued amount have been transacted through hawala - Recovery of differential duty - interest and penalty - Confiscation - HELD THAT - The under valuation has been established on the basis of confessional statements given by various witnesses in their statement. Therefore, more or less there is no dispute about the charge of under valuation against the appellant. The appellant have mainly harped on the excessive imposition of redemption fine. Considering the gravity of the offence committed by the appellant under a systematic modus operandi, the redemption fine imposed by the Lower Authority appears to be proper. The offence committed by the appellant has not been rebutted by the appellant in many words. Moreover, the under valuation has been clearly established on the basis of the statements given by various persons, which were never retracted. The transaction of the deferential value due to under valuation made by hawala has also been proved by the Revenue - there are no reason to interfere in the impugned order - appeal dismissed.

Issues Involved:
1. Under-valuation of imported goods.
2. Confiscation and redemption fine.
3. Recovery of differential duty and interest.
4. Imposition of penalties under various sections of the Customs Act, 1962.
5. Validity of the transaction value and determination of the assessable value.
6. Quantum of redemption fine and penalties.
7. Double jeopardy in penalty imposition.

Detailed Analysis:

1. Under-valuation of Imported Goods:
The appellant was found to have systematically undervalued imported furniture from China by 17%, with the undervalued amount transacted through hawala. This was established based on confessional statements from various witnesses, including the appellant's own admission. The confessions were not retracted, corroborating the charge of under-valuation.

2. Confiscation and Redemption Fine:
The Adjudicating Authority confiscated the consignment under Section 111(m) of the Customs Act, 1962, and imposed a redemption fine of Rs. 8,00,000/- under Section 125 of the Customs Act, 1962. The Commissioner (Appeals) upheld this fine, considering the gravity of the offense and the systematic modus operandi of under-valuation.

3. Recovery of Differential Duty and Interest:
The differential duty of Rs. 3,08,111/- was ordered to be recovered under the proviso to Section 28(1) of the Customs Act, 1962, along with appropriate interest under Section 28AB of the Customs Act, 1962. The appellant had already deposited Rs. 4,80,800/- voluntarily, which was appropriated towards the payment of duty.

4. Imposition of Penalties:
Multiple penalties were imposed:
- Rs. 3,08,111/- on M/s. West Wing Infrastructures Pvt. Ltd. under Section 114A of the Customs Act, 1962, with a reduction to 25% if paid within 30 days.
- Rs. 1,00,000/- on Shri Kalpesh D. Prajapati under Section 112(a) and another Rs. 1,00,000/- under Section 114AA of the Customs Act, 1962.
- Rs. 50,000/- each on four other individuals under Section 112(a) of the Customs Act, 1962.

5. Validity of Transaction Value and Determination of Assessable Value:
The declared assessable value was rejected, and the value was re-determined to Rs. 17,90,422/- under Section 14 of the Customs Act, 1962, read with Rule 9 of the Customs Valuation Rules, 2007. The methodology used by the Adjudicating Authority was upheld, as the declared value was found to be grossly undervalued and not the sole consideration for the sale.

6. Quantum of Redemption Fine and Penalties:
The appellants contested the quantum of redemption fine and penalties as excessive. However, the Commissioner (Appeals) found the fine of Rs. 8,00,000/- appropriate, considering the assessable value of Rs. 17,90,422/- and the gravity of the offense. The penalty under Section 114AA was struck down, but the penalty under Section 112(a) was maintained.

7. Double Jeopardy in Penalty Imposition:
The Commissioner (Appeals) acknowledged that imposing penalties under both Section 112(a) and Section 114AA for a single offense was incorrect. Therefore, the penalty under Section 114AA was struck down, leaving only the penalty under Section 112(a).

Conclusion:
The appeals were dismissed, and the impugned order was upheld. The under-valuation was clearly established, and the penalties and fines imposed were deemed appropriate given the systematic nature of the offense. The Commissioner (Appeals) carefully considered all points, and no interference with the order was warranted.

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