2023 (8) TMI 1294 - AT - Customs

Undervaluation of imported goods - MDF boards - large-scale evasion of customs duty - Section 14 of the Customs Act, 1962 - test report disclosed the samples which do not confirm to Grade I or Grade II - inadmissibility of statements - non-availability for cross-examination. HELD THAT - The statements made and signed by the dead persons or who cannot be found remain valid and admissible as long as these statements are made in the course of business. Therefore, the Commissioner was right in stating that Customs Officer is not a Police Officer - Statements made before him under Section 108 of Customs Act, 1962 are admissible in evidence and are not hit by Section 25 of Indian Evidence Act as is held by the apex court in the case of ROMESH CHANDRA MEHTA VERSUS STATE OF WEST BENGAL 1968 (10) TMI 50 - SUPREME COURT . Whether these statements made by Shri Sathyanarayana was it done in the course of business and has it been corroborated with other statements and evidences on record? - HELD THAT - The statements and the under-invoicing documents were also corroborated by other importers of MDF from Green Panel Products, Malaysia whose names figured in the attachment of the incriminating email. It is also a fact that the other importers to whom show-cause notices were issued, approached the Settlement Commission Bench at Chennai. They admitted and paid the duty differences based on the incriminating email recovered from V R Marketing at Chennai and recovered under Mahazar. The fact that the other importers accepted the incriminating email and under-invoicing documents, goes to prove the authenticity and correctness of all the documents recovered. In view of these corroborated evidences, it is seen that Shri Sathyanaraya s statement and the documents recovered from his computer (extracted below) are authentic, therefore, the Commissioner was right in redetermining the value of the goods of 15 Bills of Entry as Rs.1,61,16,901/- CIF under Rule 4 of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act, 1962. Accordingly, the differential duty of Rs.35,49,849/- demanded under proviso to Section 28(1) of the Customs Act, along with interest is also upheld. The goods are liable for confiscation and accordingly, the confiscation is upheld in all the 15 Bills of Entry. The High court of Kerala in the case COMMISSIONER OF CUSTOMS, COCHIN VERSUS OFFICE DEVICES 2009 (6) TMI 66 - KERALA HIGH COURT has held that 10% of the value as RF is reasonable and upheld the same, hence the redemption fine of Rs.2,00,000/- which is only 10% of the value is upheld. As per proviso to Section 114A of the Customs Act, 1962, provided also that where any penalty has been levied under this Section, no penalty shall be levied under Section 112 or Section 114. Accordingly, since penalty imposed under 114A is upheld, the penalty of Rs. 25,000/- on M/s. Ply Point under Section 112(a) of the Customs Act, 1962 is set aside. Appeal disposed off.

Summary

Issues Involved:
1. Allegation of undervaluation based on test report.
2. Admissibility of Shri Sathyanarayana's statement posthumously.
3. Corroboration of statements and evidence.
4. Retraction of statements by Shri V. Habeeb Rahiman.
5. Imposition of penalties and confiscation.

Summary:

1. Allegation of Undervaluation Based on Test Report:
The first issue was whether undervaluation could be alleged since the test report disclosed that the samples did not confirm to Grade I or Grade II. The Commissioner held that the undervaluation was not based on the quality of the MDF boards but on evidence unearthed during investigations.

2. Admissibility of Shri Sathyanarayana's Statement Posthumously:
The second issue was the admissibility of Shri Sathyanarayana's statement since he had committed suicide and was not available for cross-examination. Section 138B and Section 32 of the Indian Evidence Act were cited to assert that statements made by persons who are dead or cannot be found are relevant if made in the course of business. The Commissioner affirmed that statements made before Customs officers are admissible as held by the Supreme Court in Romesh Chandra Mehta v. State of West Bengal and Harbansingh Sardar Lenasingh v. State of Maharashtra.

3. Corroboration of Statements and Evidence:
The third issue was whether Shri Sathyanarayana's statements were made in the course of business and corroborated by other evidence. The Tribunal found that the documents recovered from Shri Sathyanarayana's computer indicated higher prices than those quoted by the appellant. These documents, along with corroborating statements from Shri V. Habeeb Rahiman and other importers, validated the under-invoicing. The Tribunal upheld the Commissioner's redetermination of the value of goods under Rule 4 of the Customs Valuation Rules, 1988 read with Section 14 of the Customs Act, 1962, and the differential duty demand.

4. Retraction of Statements by Shri V. Habeeb Rahiman:
The fourth issue was the retraction of Shri V. Habeeb Rahiman's statement. The Tribunal noted that the retraction was an "afterthought" to evade duty. The statement dated 15.06.2006 confirmed the dealings with V.R. Marketing and the authenticity of the documents recovered.

5. Imposition of Penalties and Confiscation:
The Tribunal upheld the penalties under Section 114A of the Customs Act, 1962, citing that suppression of facts and under-invoicing were proven. The High Court of Karnataka's decision in Commissioner of Customs, Mangalore v. Tata Power Company Ltd. was referenced to assert that once conditions for penalty imposition exist, the penalty must be imposed as prescribed by law. The Tribunal also upheld the confiscation of goods and the redemption fine of Rs. 2,00,000/-, setting aside the penalty under Section 112(a) due to the proviso to Section 114A.

Conclusion:
The appeal was disposed of with the Tribunal upholding the redetermination of the value, differential duty demand, penalties under Section 114A, and confiscation of goods while setting aside the penalty under Section 112(a).