1990 (2) TMI 213 - AT - Customs

Summary

Issues Involved:
1. Whether the goods imported are raw materials/components or finished products and whether they qualify for importation under OGL.
2. Whether there was misdeclaration in respect of the 4th invoice and the justification of the levy of fine in lieu of confiscation.
3. Whether there was under-valuation and the goods imported have to be assessed under Section 14(1)(a) or Section 14(1)(b) of the Customs Act, 1962.
4. Whether there was justification for the fine in lieu of confiscation and penalties under the Act.

Issue-wise Detailed Analysis:

1. Whether the goods imported are raw materials/components or finished products and whether they qualify for importation under OGL:
The Tribunal ordered a joint inspection of the full consignment to determine whether the goods were expanded or unexpanded. The joint inspection report covered only six cartons, revealing that some items retained their dimensions after heating, indicating they were finished products. The appellants contended that goods marked "B" were "beamed" and unexpanded, thus raw materials. The Tribunal concluded that items HVTM 60/26-1410 B, HVTM 42/19-1420 B, S.C.TM 32/14-1650 BMD, and S.C.TM 42/19-1420 B were finished raw materials, while BBIT 65/25-PAC-A/U and CICM 34/12-380/U were finished products. The Collector was directed to examine the remaining cartons to determine their status.

2. Whether there was misdeclaration in respect of the 4th invoice and the justification of the levy of fine in lieu of confiscation:
The appellant did not file Invoice No. 33759 dated 15th October, 1986, with the Bill of Entry, which mentioned 98 packages but only included three invoices for 86 packages. The Tribunal upheld the Collector's finding of misdeclaration but reduced the redemption fine from Rs. 13,00,000.00 to Rs. 3,50,000.00, deeming the original fine excessive.

3. Whether there was under-valuation and the goods imported have to be assessed under Section 14(1)(a) or Section 14(1)(b) of the Customs Act, 1962:
The Tribunal found that 74% of the equity shares of the appellant were held by a subsidiary of the supplier, establishing a relationship. Evidence, including telexes and price lists, indicated that the goods were supplied at prices significantly lower than those offered to unconnected buyers. The Tribunal held that there was under-valuation and that the goods should be assessed under Section 14(1)(b) of the Customs Act, 1962, read with Customs Valuation Rules, 1963. The declared value was Rs. 6,84,554.00, while the assessed value was Rs. 74,78,870.00.

4. Whether there was justification for the fine in lieu of confiscation and penalties under the Act:
The Tribunal found the fines and penalties imposed by the Collector to be highly excessive. The Collector was directed to re-fix the fine and penalty, considering the gravity of the offense. The appeal was otherwise rejected, with directions for the revenue authorities to give consequential effect to the order.