2008 (10) TMI 317 - AT - Customs

Undervaluation enhancement of value - Market enquiries were conducted from well known shops selling goods identical to impugned goods correlation of goods enquired and impugned goods - The persons from whom enquiries were conducted have clearly stated that the price of the goods is much higher than the price declared by the importers - It is not necessary that actual sale invoice referring to the total quantity is to be furnished by the persons from whom the enquiries were made, for the reason that it is almost impossible to expect the shopkeepers to provide the actual sale invoice of such goods. Further, the report that the value of the goods is much higher than what was declared by the importer is also corroborated by the importers own statement that the goods had been undervalued about 25%. Therefore, the finding of the Commissioner (Appeals) setting aside the enhancement of value is set aside. - Once we have held that the value of the goods is required to be loaded, commensurate with the value of the goods, the fine and penalty amounts are required to be enhanced

Summary

Issues:
1. Undervaluation of imported goods
2. Confiscation of goods
3. Reduction of redemption fine and penalty

Undervaluation of Imported Goods:
The case involved nine packages of ladies swim suits, elastic belts, ladies scarves, footwear, and handbags imported by M/s. Sapna Enterprises, Mumbai. Upon examination, it was discovered that there was an excess of 100 swim suits concealed under a carton of footwear, along with 221 pieces of elastic belts found in short quantities. Market enquiries revealed that the goods were grossly undervalued. The importer admitted to undervaluing the goods by 25% due to a special discount. The Additional Commissioner enhanced the value for assessment purposes, confiscated the goods, and imposed a fine and penalty. The Commissioner (Appeals) reduced the redemption fine and penalty but set aside the value loading. The Tribunal held that the market enquiry report, which showed higher prices than declared, was relevant and upheld the enhancement of value to Rs. 4,24,462. The Tribunal also increased the fine and penalty to align with the enhanced value, overturning the reduction by the Commissioner (Appeals).

Confiscation of Goods:
The Additional Commissioner had confiscated all goods covered by the bill of entry due to undervaluation and imposed a redemption fine and penalty. The Commissioner (Appeals) reduced the redemption fine and penalty amounts. However, the Tribunal, upon upholding the enhancement of value, reinstated the original redemption fine of Rs. 20,000 and penalty of Rs. 5,000, aligning them with the enhanced value of the goods. The Tribunal emphasized that the fine and penalty should be commensurate with the value of the goods, leading to the decision to set aside the reduction made by the Commissioner (Appeals).

Reduction of Redemption Fine and Penalty:
The issue of reduction in the redemption fine and penalty arose when the Commissioner (Appeals) lowered these amounts from the original order by the Additional Commissioner. The Tribunal reversed this reduction, reinstating the redemption fine to Rs. 20,000 and the penalty to Rs. 5,000, in line with the enhanced value of the goods. The Tribunal emphasized that the fine and penalty should reflect the actual value of the goods, thereby aligning them with the adjudicating authority's initial decision and rejecting the reduction made by the Commissioner (Appeals).