2024 (8) TMI 1159 - AT - Customs

Absolute Confiscation of prohibited goods - Undeclared counterfeit goods - Mis-declared goods other than counterfeit - rejection of transaction value of the remaining goods under Rule 12 and re-determining their value under Rule 9 of the Valuation Rules - levy of penalty. Branded goods - HELD THAT - The appellant abandoned these goods and had also explained the reason for abandoning them that they did not belong to him at all and that he had not placed any order for them - It is not only a clear a case of relinquishing the title to the goods but, in fact, he went one-step further to claim that he had never placed had any order for them and that the goods did not belong to him. He had not responded to the show cause notice or participated in the personal hearing. It is found impermissible to the appellant to now take U-turn and claim those goods which did not belong to him at all. Therefore, the absolute confiscation of the counterfeit goods needs to be sustained. Valuation of other goods - HELD THAT - The show cause notice proposed to reject the declared transaction value under rule 12 for this reason. In paragraph 17 of the show cause notice, it was indicated that valuation could not be done under rule 4, 5, 7 and 8 of the Valuation Rules and that there was no contemporaneous data of identical or similar goods. For this reason, it was proposed to conduct a market survey or inquiry as per rule 9 ( Residual Method). The market survey was conducted after taking the representative samples of the goods in the presence of Pankaj Gupta, proprietor of the appellant firm and others to ascertain their market value in India. From the prices found in market inquiry, abatement of 60% was given in lieu of the duty and profit margin and other expenses to arrive at the assessable value - It is recorded in the show cause notice that this method of valuation was accepted by the importer and its Customs Broker and importer had paid duty on the enhanced value. In respect of certain other items such as wind cheater, PU ball, baby car, PVC table cover, PU wheel cover and resin show piece, the declared values were accepted - the total assessable value was proposed to be re-determined in the show cause notice. The total unbranded goods were valued at Rs. 1,65,49,893/- and a redemption fine of the same value was imposed by the Commissioner in the impugned order. He also confiscated 2880 of reading glasses/ sun goggles valued at Rs. 11,42,993/- and allowed them to be redeemed on payment of an redemption fine of an equal amount. In other words, the amount of redemption fine imposed by the Commissioner in the impugned order is equal to the value of the goods itself - this is harsh and the amount of redemption fine must be reduced. The penalty imposed on Sh. Pankaj Gupta, the proprietor of the appellant is Rs. 94,51,763/- under section 112(a) read with Section 114A and section 114AA of the Act. No breakup is given on the amount of penalty imposed under the three sections. We find section 114A provides for penalty but if a penalty is imposed under that section no penalty can be imposed under section 112 also. Section 114AA provides for penalty for a person knowingly or intentionally making, signing, using or causing to be made signed or used any declaration, statement of documents which is false or incorrect in any material particular in the transaction of any business for the purposes of Act - it would meet the ends of justice if penalty under section 114A and 114AA are set aside and the penalty under section 112(a) is reduced to Rs. 9,00,000/-. Appeal allowed in part.

Issues Involved:
1. Absolute confiscation of branded counterfeit goods.
2. Rejection of the transaction value of the remaining goods under Rule 12 and re-determination under Rule 9 of the Valuation Rules.
3. Confiscation of goods under Section 111(l) and 111(m) of the Customs Act, 1962.
4. Imposition of penalty on the appellant under Section 112(a), Section 114A, and Section 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Absolute Confiscation of Branded Counterfeit Goods:
The appellant had categorically abandoned the branded counterfeit goods and waived the show cause notice and personal hearing. The right holders confirmed that the goods were counterfeit. The Commissioner confiscated them under Section 111(d) of the Customs Act, 1962, which allows confiscation for goods imported contrary to any prohibition imposed under the Act or any other law for the time being in force. The appellant consistently maintained that these branded goods did not belong to him and were sent by mistake by the Chinese supplier. Therefore, the absolute confiscation of the counterfeit goods was sustained.

2. Rejection of the Transaction Value and Re-determination Under Rule 9:
The declared value in the Bill of Entry was for goods described therein, but the actual imported goods were different in quality and quantity. The Commissioner had reasonable doubt to reject the transaction value under Rule 12 of the Customs Valuation Rules. Since values of identical or similar goods were not available, the valuation was conducted under Rule 9 (Residual Method). A market survey was conducted in the presence of the appellant, and values were determined with a 60% abatement for duty and profit margin. The appellant did not contest the proposals in the show cause notice nor presented any contrary evidence. Thus, the Commissioner correctly rejected the transaction value and re-determined it under Rule 9.

3. Confiscation Under Section 111(l) and 111(m):
The goods were mis-declared in terms of description, quantity, and valuation. The Commissioner held that by not making the correct declaration in the Bill of Entry, the appellant violated Section 46, making the imported goods liable for confiscation under Section 111(l) and 111(m) of the Customs Act, 1962. The confiscation of these goods was upheld, but the redemption fine was reduced to Rs. 16,54,989/- for goods at serial no. 1 to 10 and Rs. 1,14,299/- for goods at serial no. 11 of table 9.

4. Imposition of Penalty:
The Commissioner imposed a penalty of Rs. 94,51,763/- under Section 112(a) read with Section 114A and Section 114AA of the Customs Act, 1962. However, no breakup was provided for the amount imposed under the three sections. Section 114A provides for penalty but prohibits additional penalties under Section 112. Section 114AA penalizes false declarations, but the appellant's intention or knowledge was not clearly established. Therefore, penalties under Section 114A and 114AA were set aside, and the penalty under Section 112(a) was reduced to Rs. 9,00,000/-.

Final Order:
1. Absolute confiscation of the counterfeit goods under Section 111(d) was upheld.
2. Confiscation of other goods under Section 111(l) and 111(m) was upheld, but the redemption fine was reduced.
3. Demand of differential customs duty was upheld.
4. Penalty under Section 112(a) was reduced to Rs. 9,00,000/-.
5. Penalties under Section 114A and 114AA were set aside.
6. The appellant is entitled to consequential relief, if any.

(Order pronounced on 22.08.2024)

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