2001 (7) TMI 253 - AT - Customs

Summary

Issues Involved:
1. Demand of differential duty.
2. Imposition of penalties under Section 112 of the Customs Act.
3. Determination of assessable value of imported goods.
4. Compliance with remand order for de novo adjudication.
5. Validity of evidence (telex messages, statements, and letters).
6. Burden of proof for valuation under Section 14 of the Customs Act.

Detailed Analysis:

1. Demand of Differential Duty:
The Commissioner of Customs (Preventive), Ahmedabad confirmed a demand of differential duty amounting to Rs. 57,32,520.00 against the appellants under Section 28 of the Customs Act. The demand was based on the Department's allegation of under-invoicing, proposing to enhance the assessable value of imported High Density Polyethylene (HDPE) to US $1250 PMT from the declared range of US $860 to 910 PMT. The Tribunal found that the Department failed to prove that the actual value of the goods was higher than the declared value. The Tribunal held that the declared value should be accepted for assessment as the Department did not discharge its burden of proof under Section 14 of the Customs Act.

2. Imposition of Penalties under Section 112 of the Customs Act:
The Commissioner imposed penalties of Rs. 60 lakhs on the company and Rs. 15 lakhs on the Managing Director under Section 112 of the Customs Act. The Tribunal noted that the imposition of penalties was contingent upon the establishment of under-valuation, which the Department failed to prove. Consequently, the penalties were deemed unsustainable and were set aside.

3. Determination of Assessable Value of Imported Goods:
The Department's case relied on two telex messages and other evidence to propose an enhanced value of US $1250 PMT. The appellants contested this, arguing that the quoted prices in the telex messages did not result in actual importation and lacked a nexus with their transactions. The Tribunal agreed, noting that the telex messages were mere quotations without evidence of actual transactions. Further, the Tribunal emphasized that the price at the time of the contract, not the fluctuating prices at the time of importation, should be considered. The Tribunal concluded that the Department failed to establish the enhanced value as the correct assessable value.

4. Compliance with Remand Order for De Novo Adjudication:
The Tribunal's remand order directed the Commissioner to consider nine Bills of Entry and an Order-in-Original, which were not duly considered in the de novo adjudication. The Commissioner rejected the Bills of Entry as unauthenticated photocopies without verifying their authenticity intra-departmentally. The Tribunal found this approach non-compliant with its remand order, emphasizing that the burden of verification lay with the Commissioner. The Tribunal also noted the lack of consideration of the Order-in-Original and the failure to allow cross-examination of the author of a key letter, further indicating non-compliance.

5. Validity of Evidence (Telex Messages, Statements, and Letters):
The Tribunal scrutinized the evidence relied upon by the Department, including telex messages, statements by Shri Prakash Goenka, and a letter from the All India Plastic Manufacturers' Association (AIPM). The telex messages were dismissed as mere quotations without evidence of actual transactions. Statements by Goenka were deemed unreliable due to his vested interests and lack of credibility. The AIPM letter was considered inadmissible as it was unproven and lacked evidentiary value. The Tribunal concluded that none of these pieces of evidence could substantiate the Department's case of under-valuation.

6. Burden of Proof for Valuation under Section 14 of the Customs Act:
The Tribunal reiterated that the burden of proving the correct value of imported goods lies with the Department, as established by the Supreme Court in Sounds N. Images v. Collector of Customs. The Department's failure to provide satisfactory evidence to counter the declared value meant that the declared value should be accepted for assessment purposes. The Tribunal held that the Department did not meet its burden of proof, leading to the dismissal of the demand for differential duty and the associated penalties.

Conclusion:
The Tribunal set aside the impugned order, accepting the declared value of the imported goods for assessment and nullifying the penalties imposed on the appellants. The appeals were allowed with consequential reliefs.