2024 (6) TMI 202 - AT - Customs

Valuation of imported goods - polyester filament for paint brushes - suppression of transaction value/undervaluation - Rejection of declared value - re-determination of value - admissibility of statement of appellant recorded u/s 108 of CA - admissibility of documentary evidence - Admissibility of Computer Printouts u/s 138C of the Customs Act - recovery of differential customs duty and penalty under Section 114A, 114AA and 112(a)(ii) and 112(b)(ii) of the Customs Act, 1962 - invocation of extended period of limitation including GST - past imports. Whether the statement of the appellant recorded under Section 108 was voluntary in nature or the same was hit by threat, pressure or coercion by the Department? - HELD THAT - On going through the statements of Shri T. N. Malhotra made on three occasions, it is found that he has admitted the modus-operandi and details of the transaction inextenso. Further, he has given the details, which were exclusively in his knowledge, that in the last four years, they have imported goods and filed around hundred bills of entry mainly relating to polyester filament for manufacturing paint brushes and gave the details of the overseas supplier. He also disclosed that he used to send email to them and after getting confirmation on pricing, it was finalised. All the statements have been duly signed and pursuant thereto, the appellant has deposited the differential duty amount with interest and penalty voluntarily. There is no mention in the challans that duty deposited is under protest . Infact in the subsequent statement dated 16.04.2018, he reiterated that whatever he has admitted in his earlier statement is correct. Shri T.N. Malhotra had given the statements voluntarily and he has deposited the duty freely and not under protest . None of the statements have been retracted by Shri T. N. Malhotra at any stage and the submission that he was not allowed to retract his statements is unsustainable, for the simple reason that when Shri Malhotra had requested for another date in terms of summons dated 27.02.2018, the same was allowed by the Department. Consequently, the statement of Shri Malhotra is admissible as substantive evidence. Admissibility of documentary evidence - HELD THAT - The statements of Shri T.N. Malhotra is duly supported by documents and hence the same can be relied on - In Surjeet Singh Chhabra Vs. Union of India 1996 (10) TMI 106 - SUPREME COURT the Apex court held that the confession made by a party even if it is retracted, binds him as it is an admission since custom officials are not police officers. The learned Authorised Representative has also referred to the decision in Naresh J. Sukhawani Vs. Union of India 1995 (11) TMI 106 - SUPREME COURT where the Apex Court relied on the statement of the co-accused and upheld the conviction of the petitioner for contravention of illegal export of foreign exchange as the statement clearly inculpates not only the co-accused, but also the petitioner. Admissibility of Computer Printouts u/s 138C of the Customs Act - HELD THAT - In the facts and circumstances of this case, where the appellant had duly admitted the documents, which he recovered from his own email and we-chat after getting the OTP on his own mobile phone, the objection raised by the appellant is unsustainable. The issue is answered, accordingly, against the appellant and in favour of the Revenue. Undervaluation - HELD THAT - It is concluded that in view of the documents retrieved by the appellant himself and his admissions made in the statement recorded under Section 108 proves the allegations of undervaluation beyond any doubt. The rejection of the declared value under Rule 12 has been rightly adhered to and following the sequential order as per the Valuation Rules, the valuation determined on the basis of parallel invoices is correct in view of the judicial pronouncements in similar circumstances. The contention that Revenue has not relied on the NIDB or EDW data has no merits in the facts of the present case. Invocation of extended period of limitation including GST - HELD THAT - It is evident that the appellant had mis-declared the value of the goods and suppressed the correct value of the goods, which was much higher than what was declared to the custom authorities with intent to evade the customs duty to be levied on the correct value. The entire modus-operandi was disclosed only when the documentary evidence was unearthed whereby parallel invoices were traced showing much higher value of imports and which has been admitted by Shri T. N. Malhotra, the master mind of this fraud. It is a clear case of suppressing the actual transaction value of the goods and wilfull undervaluation of the imported goods - on account of mis-declaration, suppression of true value of the imported goods with intent to evade payment of requisite customs duty, the extended period of limitation is applicable and the same would apply in the case of short payment of IGST. Confiscation - HELD THAT - According to the appellant, the goods have been correctly declared, finally assessed by the Department and cleared on payment of appropriate customs duty and therefore, the Department could not have re-assessed the goods alleging mis-declaration. Having concluded that the goods have been imported by declaring incorrect value, which have been admitted by the appellant, no further evidence was required and hence the same are liable for confiscation under Section 111 (m) of the Act. Penalty u/s 112, 114A 114AA of CA - HELD THAT - Penalty has been imposed on the appellant company and Shri T.N. Malhotra under Section 114A of the Act for willful suppression and mi29 statement of actual value by filing wrong declaration and hence no interference is called for. Penalty under Section 112(a)(ii) and 112(b)(ii) of the Act has been imposed on Shri T.N. Malhotra being the only active Director of the company, who was solely looking after the entire affairs of the company and the master mind behind the evasion of customs duty - Under Section 114AA, penalty has been imposed both on the appellant company and Shri T.N. Malhotra, as the importer had intentionally made incorrect declaration of the value in the B/E by manipulating the invoices - penalty under Section 112 has been rightly imposed as the goods have been held to be mis-declared by the appellant and were liable for confiscation under Section 111(m) of the Act. Similarly, there are no reason to interfere with the penalty imposed under Section 114A and Section 114AA of the Act. Past imports - HELD THAT - The Adjudicating Authority took a contradictory view that the importer must have undervalued in respect of other bills of entry filed since the goods imposed are similar/identical goods from same source. Such findings are not agreed as the same seems to be based on conjectures and surmises. Hence, the valuation arrived at in respect of five live consignments cannot be loaded in respect of the past consignments in the absence of requisite documents - the impugned order in respect of past consignments are set aside. Appeal allowed in part.

Summary

Issues Involved:

1. Voluntariness of the statement recorded u/s 108 of the Customs Act.
2. Admissibility of documentary evidence.
3. Allegations of undervaluation.
4. Invocation of extended period of limitation including IGST.
5. Confiscation of goods u/s 111(m) of the Customs Act.
6. Imposition of penalty u/s 112, 114A, and 114AA of the Customs Act.
7. Valuation of past imports.

Summary:

1. Voluntariness of the statement recorded u/s 108 of the Customs Act:
The Tribunal examined whether the statements made by Shri T.N. Malhotra were voluntary or coerced. It concluded that the statements were voluntary, true, and not retracted at any stage. The Tribunal relied on precedents that statements made under Section 108 are admissible if made voluntarily.

2. Admissibility of documentary evidence:
The Tribunal upheld the admissibility of email and WeChat printouts retrieved by Shri T.N. Malhotra, supported by his voluntary statements. The Tribunal referred to the Gujarat High Court's decision in Principal Commissioner of Customs Vs. Kishan Manjibhai Gadesriya, which affirmed the admissibility of such electronic evidence without the need for a certificate u/s 138C(4) of the Act.

3. Allegations of undervaluation:
The Tribunal found that the appellant had under-invoiced the goods with the help of overseas suppliers, as admitted by Shri T.N. Malhotra. The undervaluation was corroborated by documentary evidence retrieved from emails and WeChat. The Tribunal upheld the re-determination of value under Rule 9 of the Customs Valuation Rules, 2007, based on parallel invoices.

4. Invocation of extended period of limitation including IGST:
The Tribunal held that the extended period of five years u/s 28(4) of the Act was applicable due to the appellant's wilful suppression of the actual transaction value. The demand for short payment of IGST was also upheld under the extended period of limitation.

5. Confiscation of goods u/s 111(m) of the Customs Act:
The Tribunal concluded that the goods were liable for confiscation u/s 111(m) of the Act due to the incorrect declaration of value, which was admitted by the appellant.

6. Imposition of penalty u/s 112, 114A, and 114AA of the Customs Act:
The Tribunal upheld the penalties imposed on the appellant company and Shri T.N. Malhotra under Sections 112, 114A, and 114AA of the Act for wilful suppression and misstatement of the actual value.

7. Valuation of past imports:
The Tribunal set aside the impugned order concerning past consignments due to the absence of requisite documents. It remanded the matter to the Adjudicating Authority for a fresh decision and a speaking order. The Tribunal confirmed the demand and penalty for the current five bills of entry.

Conclusion:
The appeal filed by the appellant company was partly allowed in respect of past consignments, while the demand and penalty for the current five bills of entry were confirmed. The appeal by Shri T.N. Malhotra against the imposition of penalty was dismissed.