2024 (3) TMI 1246 - AT - Customs

Misdeclaration and undervaluation of the goods - redemption fine and penalty - Imports Pile Fabrics declaring the same as Stock Lot Polyester Knitted Fabrics - whether the enhancement of value as well as the allegation that the goods have been mis-declared is legal and proper - HELD THAT - It can be seen that the textile expert who reported that the goods have brushing on one side does not have knowledge about what is brushing and how it is carried out. The allegation that the goods have been mis-declared is without any factual basis. Further, in para-2 of the SCN dt. 12.3.2008 it has been categorically stated by the department that docks officers have examined and reported that the goods are Stock Lot of Polyester Knitted Fabrics in different colours. We therefore hold that the finding of the department that goods have been mis-declared is without any factual basis and requires to be set aside. Undervaluation of the goods - The appellant has declared the value of the goods as USD 1/kg. However, the department has re-determined the value as Rs.112.18/ kg and Rs.137.47/kg in the de novo orders. In the show cause notice, the enhancement of value has been proposed on the basis of market enquiry. This evidence with regard to the market enquiry was supplied to the appellant along with show cause notice. The appellant then cross examined these traders in the de novo proceedings. None of the traders supported the case of the department. Thereafter, in the de novo proceedings the original authority has completely rejected the evidence of the traders and relied upon the National Import Data Base (NIDB). The details of the NIDB data of which the adjudicating authority has relied for enhancing the value has not been supplied to the appellant. The SCN does not draw any reference of NIDB data and the enhancement was proposed in the SCN on the basis of market enquiry only. The department ought not to have relied on the NIDB data without providing copies to appellant. We therefore find that the enhancement of value is without any legal or factual basis. The same requires to be set aside which we hereby do. Thus, we are of the considered opinion that the demand, interest, redemption fine and penalty imposed cannot sustain.

Summary

Issues: Misdeclaration of goods, Undervaluation of goods

Misdeclaration of Goods:
The appellants imported Pile Fabrics declaring them as 'Stock Lot Polyester Knitted Fabrics'. The department found misdeclaration and undervaluation after investigation. The original authority confirmed misdeclaration, stating the goods were knitted fabrics with one side brushing. The value declared was enhanced under Rule 8 of Customs Valuation Rules. The appellants were initially denied the opportunity to cross-examine witnesses. After approaching the High Court, they were allowed to cross-examine in de novo proceedings. The original authority upheld misdeclaration and undervaluation, imposing fines and penalties. The Commissioner (Appeals) reduced the penalties but upheld misdeclaration and undervaluation.

Undervaluation of Goods:
The department re-determined the value of goods higher than the declared value. The appellant argued that evidence from traders in the market enquiry did not support the enhanced value. The department relied on National Import Data Base (NIDB) without providing details to the appellant. The original authority rejected trader evidence and based the decision on NIDB. The Tribunal found the enhancement of value lacked legal and factual basis, setting it aside. After reviewing the evidence, the Tribunal concluded that the demand, interest, redemption fine, and penalties imposed could not be sustained. Therefore, the impugned orders were set aside, and the appeals were allowed with consequential relief.