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2023 (5) TMI 20 - AT - CustomsConfiscation of paper cup machines imported - redemption fine - penalty - undervaluation and mis-declaration of goods (mis-declaration of brand) - HELD THAT - Admittedly, Shri Pankaj Jain has not admitted any under-valuation of the imported goods. Shri Pankaj Jain has stated that such machinery is also manufactured in India and he has purchased one similar machine from M/s. Lami Coats Shivakashi (T.N.) vide their invoice No. 0281 dated 16.12.2015 for Rs. 4,50,000/- plus GST of Rs. 9,000/-. This machine was equivalent in efficiency with the model imported by the appellant viz. TW- D16. This fact has not been found to be untrue by the Revenue. Allegation of mis-declaration of brand - HELD THAT - Admittedly, there is no mis-match in the data contained in the bill of entry filed by the appellant and the import documents viz. bill of lading, invoice, etc. The appellant have stated that he had ordered for TW-D16 machines whereas the supplier has erroneously dispatched the DEBAO D-16 model machines. This error has been admitted by the shipper/exporter, which fact has not been found to be untrue. So far whatsapp data obtained from Samsung 4 G LTE mobile phone, alleged to be submitted by Shri Pankaj Jain to the Revenue at the time of recording of his statement on 23.05.2016, a question was put to him by Revenue please tell since when u are using the Samsung 4G LTE brand phone. In answer, Shri Pankaj Jain stated - that this phone is being used at his home for almost 2 years. This phone is also used for the purpose of the business. It is further recorded that Shri Pankaj Jain submitted the Samsung 4G LTE mobile phone to the Revenue for further investigation, which was sealed in an envelope (without recording the IMEI No.) bearing signature of Shri Pankaj Jain. Evidently, IMEI number is the identification number of a mobile phone - the appellant have, in course of recording his further statement by Revenue on 18.05.2018, stated that he has never used Samsung 4 G LTE mobile phone and it was under coercion exercised by the officers of DRI, he was made to write that he has used the Samsung 4 G LTE phone and is submitting the same for further investigation. He has never used Samsung 4 G LTE phone having Sl. No. R 33 C50059El having IMEI No. 359554043878258. Valuation Report submitted by the Chartered Engineer, Shri R.K. Agarwal - HELD THAT - The appellant have disputed the valuation by Shri R.K. Agarwal, Chartered Engineer on the ground of competency and also on merits. The Chartered Engineer has been empowered to value only in case of import of second hand machinery under the Customs Valuation Rules. In case of new machinery, Rules require valuation to be done on the basis of contemporaneous imports (NIDB data). In absence of such data, authority is required to follow the Valuation Rules in seriatum, which has not been done - Revenue have not assigned any reasons for not adopting NIDB data. Admittedly, the appellant have declared a higher value of USD 5000 per machine. Further it is found that the show cause notice is bad as the same does not propose rejection of transaction value nor the demand of differential duty. Thus, the show cause notice is both speculative and presumptive - the adoption of unit price of USD 12450 per machine is bad as the said price is in respect of import of only one machine. Hence, the same is not comparable, as in the present case the appellant have imported a lot of 16 machines. Jurisdiction of DRI officers to issue show cause notice - HELD THAT - The said ground is left open, in view of my findings on merits. Appeal allowed.
Issues Involved:
1. Confiscation and Redemption Fine under Section 111(m) of the Customs Act. 2. Penalty under Section 112(a) of the Customs Act. 3. Allegations of Mis-declaration and Under-valuation. 4. Reliability of Evidence and Procedural Validity. Summary: 1. Confiscation and Redemption Fine under Section 111(m) of the Customs Act: The main issue was whether the confiscation of paper cup machines imported under Bill of Entry No. 5275518 dated 16th May 2016 was justified under Section 111(m) of the Customs Act, with an option to redeem on payment of a redemption fine of Rs. 20 lakhs. The Tribunal found that the appellant had not admitted to any under-valuation of the imported goods. The appellant argued that similar machinery is also manufactured in India and provided evidence of purchasing a comparable machine domestically. The Tribunal noted that there was no mismatch in the data contained in the bill of entry and the import documents and accepted the appellant's explanation that the supplier erroneously dispatched the wrong model. 2. Penalty under Section 112(a) of the Customs Act: A penalty of Rs. 2,20,000 was imposed on the appellant under Section 112(a) of the Act. The appellant contested this, arguing that the show cause notice was speculative and based on assumptions. The Tribunal found that the evidence provided by the Revenue, including WhatsApp messages and statements, was not reliable. The Tribunal also noted that the statements of various persons relied upon by the Revenue were not subjected to cross-examination, violating the principles of natural justice. 3. Allegations of Mis-declaration and Under-valuation: The Revenue alleged that the appellant had mis-declared the brand and value of the machines. The Tribunal found that the appellant had declared a higher value of USD 5000 per machine compared to contemporaneous imports. The Tribunal held that the show cause notice was speculative and did not properly reject the transaction value or demand differential duty. The Tribunal also found that the valuation report by the Chartered Engineer was not reliable, as it was based on visual inspection and internet data, and the Chartered Engineer was not competent to value new machinery. 4. Reliability of Evidence and Procedural Validity: The Tribunal found that the WhatsApp data recovered by the Revenue was not reliable, as it was obtained without proper procedural safeguards and was not supported by an appropriate certificate under Section 138 C(4) of the Act. The Tribunal also found that the statement of the alleged Hawala Operator, Shri Tarun Baid, was not reliable, as he had retracted his statement and was not examined in the adjudication proceedings. The Tribunal held that the evidence provided by the Revenue was not reliable and that the show cause notice was bad in law. Conclusion: The Tribunal allowed the appeal, set aside the impugned order, and held that the appellant was entitled to consequential benefits in accordance with the law.
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