2024 (6) TMI 58 - AT - Customs

Undervaluation of imported glass sheets - huge difference between the declared value and the contemporaneous imports - Invocation of extended period of limitation - Non-supply of relied upon documents - Rejection and re-determination of transaction value - penalty - Whether the revenue was justified in rejecting the declared value and re-determining the same? - HELD THAT - Limitation - The requirements of the statute to invoke the larger period of limitation are fraud, suppression, willful mis-statement of facts, but we are afraid when it comes to the price, the revenue has to prove beyond hilt that the prices so declared by the appellant cannot be accepted for any reasons in terms of Rule 3 of the Customs Valuation Rules. That is to say, the revenue must have concrete evidences of contemporaneous imports, which are comparable in all respects like the quantity, size, description, country of origin, etc. It is also a matter of record that the authority himself has admitted that even during search/investigation in the case of the appellant, no incriminating documents was found and thus, the allegation has just remained unproved. Transaction value - The case of the revenue is that there were contemporaneous imports, which had resulted in mis-declaration /undervaluation of the transaction value; the contemporaneous imports itself indicate that the revenue was in fact having all the details of the comparable cases of imports which had resulted in the issuance of show cause notice. Now the original authority in order to justify resorting to rule 8, candidly admits that rules 4 to 7 could not be applied for various differences, including description itself, which only tempts us to accept the appellant s plea that the very allegation for not accepting the transaction value based on comparable imports itself lacks merit because nothing was comparable; and the case of the revenue is built on hollow grounds. This argument of the ld. Advocate becomes relevant when we refer to the appeal memo which was referred to during the course of arguments. It refers to the copy of a relied upon documents NIDB data supplied by the department to the appellant and the description of the goods referred therein are Apples which has nothing to do with the import of Glass sheets and hence, it is not only that the proceedings which was conducted so mechanically, but also without proper application of mind. We do not find from the impugned order that the same has proceeded on the above guiding principles laid by the Apex court in the case of South India Television 2007 (7) TMI 9 - SUPREME COURT and hence, we have to hold that the revenue has failed to prove undervaluation alleged against the appellant and the resultant re-determination by the revenue of the declared value lacks support. In the light of the above discussion, we are of the view that the appellant should succeed both on limitation as well as merits.

Summary

Issues Involved:
1. Whether the revenue was justified in rejecting the declared value and re-determining the same.
2. Whether the Show Cause Notice (SCN) was barred by limitation.
3. Whether there was a violation of natural justice due to non-supply of relied upon documents.

Summary:

Issue 1: Rejection of Declared Value and Re-determination

The appellant, an importer of various types of glass sheets, was alleged to have indulged in undervaluation of imports. The Directorate of Revenue Intelligence (DRI) inferred undervaluation based on contemporaneous imports data (NIDB). The Adjudicating Authority confirmed the demands and imposed penalties u/s 112(a) of the Customs Act, 1962. The appellant contended that the transaction value could only be rejected as per Section 14 of the Customs Act, 1962 read with Rule 10A of Customs Valuation Rules, 1988/2007. The Tribunal found that the revenue failed to provide concrete evidence of contemporaneous imports comparable in all respects and thus failed to justify the rejection of the declared value. The Tribunal emphasized that the transaction value must be accepted unless grounds for rejection under Section 14 r/w Customs Valuation Rules are fully satisfied.

Issue 2: Limitation

The appellant argued that the SCN dated 04.05.2011 was barred by limitation as the period involved was from 16.05.2006 to 14.05.2008. The Tribunal noted that the requirements to invoke the larger period of limitation include fraud, suppression, or willful misstatement of facts. The Tribunal found that the revenue did not prove willful misstatement or fraud beyond doubt and thus, the invocation of the extended period was not justified. The Tribunal referred to the Supreme Court's decision in Commissioner of Customs Vs. M/s. M.M.K. Jewellers [2008 (25) ELT 3 (SC)], which held that the extended period of limitation cannot be invoked in the absence of suppression of facts, collusion, or willful misstatement.

Issue 3: Violation of Natural Justice

The appellant contended that the non-supply of relied upon documents violated principles of natural justice. The Tribunal agreed, noting that the appellant made several requests for the supply of documents, which were not furnished. The Tribunal referred to the Bombay High Court's decision in Johnson and Johnson Ltd. Vs. Dy. Chief Controller of Imports & Exports [2003 (154) ELT 370 (Bom)], which held that non-supply of adverse materials constitutes a violation of natural justice. The Tribunal found that the documents provided were incomplete and thus, the appellant was denied a fair opportunity to rebut the allegations.

Conclusion:

The Tribunal held that the revenue failed to prove undervaluation and the resultant re-determination of the declared value lacked support. The demand and the impugned order were set aside, and the appeal was allowed with consequential benefits. The penalties imposed on the 2nd and 3rd appellants were also set aside.

(Order pronounced in the open court on 29.05.2024)