2023 (10) TMI 539 - AT - Customs

Valuation of imported goods - mis-declaration on the part of the importer of the vessel with regard to transaction value of the vessel declared at the time of importation - Levy of penalty u/s 112 (a) (b) and Section 114AA of the Customs Act, 1962 - HELD THAT - The MOA dated 10.10.2010 wherein the price indicated as USD 63,68,295/- some sort of a performa invoice rather than actual sale agreement. The basic evidence on which the department has relied upon is this agreement wherein the price has been indicated as 63,68,295/- whereas it is found that on the same date and by the same party another agreement has been signed wherein the price agreed between the owner and the cash buyer is USD 61,31,400 (CIF). It can be seen that as per Section 14 of the Customs Act, 1962 that value of the imported goods for the purpose of levy of Customs duty shall be the transaction value of the imported goods which is paid at the time of importation. It is found that transaction value is decided between the supplier of the goods and the buyer, which is importer in this case declared on the bills of entry for the purpose of assessment of the customs duty. The importer has opened a Letter of Credit in favour of the supplier of vessel which is for the amount indicated in MOA. The transaction value which have been declared on the bill of entry is the invoice value for which letter of credit through a recognized banking system has been opened. There is no evidence to suggest any extra payment to the supplier of the vessel except the invoice value - the invoice value is the true transaction value in this case and there is no element of misdeclaration of value. Levy of penalty u/s 112 (a) (b) and Section 114AA of the Customs Act, 1962 - HELD THAT - These penalties have primarily been imposed by the learned Adjudicating Authority holding that transaction value has been misdeclared. Since it is already held in the preceding paras that charges of misdeclaration are not established, therefore, the penalties imposed on the other appellants are not sustainable and the same are set-aside. Appeal allowed.

Summary

Issues Involved:
1. Misdeclaration of the transaction value of the vessel MV Basil.
2. Confiscation of the vessel under Section 111 of the Customs Act, 1962.
3. Imposition of penalties under Section 112(a) & (b) and Section 114AA of the Customs Act, 1962.

Summary:

1. Misdeclaration of the Transaction Value:
The primary issue was whether there was an element of misdeclaration regarding the transaction value of the vessel MV Basil at the time of importation. The Revenue's suspicion was based on the difference between two Memoranda of Agreement (MOA) dated 11.10.2010, one indicating the vessel's price as USD 63,68,295 and another as USD 61,31,400. The appellant argued that the lower value was due to changes in circumstances such as delays and reduced fuel availability. The Tribunal found that both MOAs were signed on the same date by the same parties, and the lower price was the actual transaction value supported by a legal Letter of Credit. Therefore, there was no misdeclaration.

2. Confiscation of the Vessel:
The Assistant Commissioner, Customs, Bhavnagar, had seized the vessel under Section 110 of the Customs Act, 1962, and subsequently ordered its confiscation under Section 111 of the Customs Act, 1962, on the grounds of misdeclared value. The Tribunal, however, held that the invoice value declared by the importer was the true transaction value, and there was no evidence of any extra payment beyond the declared value. Consequently, the confiscation order was set aside.

3. Imposition of Penalties:
Penalties were imposed on various parties under Section 112(a) & (b) and Section 114AA of the Customs Act, 1962, based on the alleged misdeclaration of the vessel's value. Since the Tribunal found no misdeclaration, it ruled that the penalties imposed were not sustainable and set them aside.

Conclusion:
The Tribunal concluded that there was no misdeclaration of the transaction value of the imported vessel MV Basil. The confiscation order and the penalties imposed under Sections 112(a) & (b) and 114AA of the Customs Act, 1962, were set aside. All appeals were allowed.