2009 (6) TMI 370 - AT - Customs

Valuation transfer of goods from foreign headquarters - We find that the appellants had declared in the invoice enclosed with the Bill of Entry that the goods under import were the property of SASL-owner, the import did not involve remittance of foreign exchange, the price declared was for customs purpose and that the goods would be re-exported. We find that it is sufficient disclosure of the fact that the import did not involve sale of the impugned goods and that the transaction was not of commercial nature between unrelated buyers. No misdeclaration especially as department did not enquire about genuineness of declared price Further, The appellants had declared the assessable value for the import of the subject consignment adopting net book value which was zero in respect of most items - It is nobody s case that the appellants had worked out the net book value at the time of filing declaration as per the records manipulated for the purpose and that the said records had not been maintained in the regular course of their day to day business. The appellants declared the price for the purpose of assessment in terms of its understanding of Section 14 of the Act. It cannot be held that the appellants had misdeclared the value for assessment intentionally to evade payment of duty - The importer cannot be held to have mis-declared the assessable value for the reason that it had not declared a value conforming to the requirement as understood by the authorities. Moreover, the price is not acceptable to the authorities only for the reason that the same was lower compared to the prices worked out in accordance with the Ministry s letter F. No. 493/124/86-Cus., dated 19-12-1987. In the circumstances we hold that there was no misdeclaration or suppression of facts with intent to evade payment of duty on the part of the importer. The demand invoking longer period is time-barred. In the result, we vacate the impugned demand and the penalty imposed on SASL and allow this appeal.

Issues:
1. Allegation of short-payment of customs duty by suppressing facts.
2. Violation of principles of natural justice by the Commissioner.
3. Dispute regarding valuation method for used goods.
4. Allegation of misdeclaration and suppression of facts by the importer.
5. Applicability of penalty under the Customs Act, 1962.
6. Examination of goods by customs authorities.
7. Time-barred demand invoking longer period.

Analysis:
1. The case involved allegations of short-payment of customs duty by the importer, who was accused of suppressing the fact that the imported goods were used and undervaluing them. The Commissioner demanded differential duty and imposed a penalty under Section 112(a) of the Customs Act, 1962. The Tribunal found that the Commissioner violated principles of natural justice by modifying the demand without giving the importer an opportunity to be heard. The matter was remanded for detailed consideration.

2. The appeal contended that the importer had transferred the goods for a specific project and declared the value based on Gross Book Value after applying depreciation. The importer argued that there was no suppression of facts or misdeclaration, and the dispute was related to the method of valuation for used goods. The Commissioner's valuation method was challenged, leading to discrepancies in the differential duty demanded.

3. The Commissioner found the importer guilty of misdeclaration and suppression of facts, leading to an enhanced demand based on Gross Book Value discrepancies. The importer maintained that the valuation was done as per their understanding and there was no intentional misdeclaration to evade duty payment. The Tribunal analyzed the disclosure made by the importer and concluded that there was no deliberate suppression or misdeclaration, especially considering the nature of the goods and the declared purpose of import.

4. The judgment highlighted the importance of disclosure by the importer, where the invoice clearly stated the non-commercial nature of the transaction, the absence of foreign exchange remittance, and the intention for re-export. The Tribunal found that the authorities could have questioned the declared value if deemed necessary, but the importer's valuation method was not intentionally misleading. The clearance of the goods by customs without objection was also considered in the decision.

5. The penalty under the Customs Act was a crucial aspect of the case, with the Commissioner invoking provisions for deliberate suppression. However, the Tribunal ruled in favor of the importer, emphasizing that there was no intent to evade duty payment and the demand was unjustified. The issue of time-barred demand invoking a longer period was also addressed, leading to the vacating of the demand and penalty imposed on the importer.

6. In conclusion, the Tribunal set aside the demand and penalty, allowing the appeal in favor of the importer. The judgment emphasized the importance of proper valuation, disclosure, and adherence to procedural fairness in customs matters, ultimately ruling in favor of the importer based on the evidence and legal considerations presented during the proceedings.

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