1992 (2) TMI 206 - AT - Customs

Summary

Issues Involved:
1. Valuation of imported consignments of Polyester Webbing and thread.
2. Liability of Polyester Webbing to additional duty under the Additional Duty Rules, 1976.
3. Imposition of penalty under Section 112(a) of the Customs Act, 1962.

Detailed Analysis:

1. Valuation of Imported Consignments of Polyester Webbing and Thread:
The primary issue was whether the declared value of Polyester Webbing at US $2.25 per kg was accurate or under-declared. The Customs Department suspected the value to be low and conducted an investigation. They obtained quotations from various suppliers in Taiwan, which indicated higher prices ranging from US $3.11 to US $3.86 per kg. The department concluded that the declared value was not acceptable for assessment under Section 14(1)(a) of the Customs Act, 1962, and proposed to enhance the value to US $3.00 per kg under Section 14(1)(b) read with Rule 3(c) and 4 of the Customs Valuation Rules, 1963.

The appellants challenged the reliability of the quotations, particularly from M/s. Vee Pee International and M/s. Kuang Tai Co., arguing that these firms either did not exist or quoted inflated prices due to commission arrangements. However, the Tribunal upheld the department's valuation, citing precedents that quotations can be used to determine assessable value under Section 14 of the Customs Act, 1962. The Tribunal found that the lower authorities had made sufficient adjustments and had taken the lowest of the quotations, thus fixing the assessable value at US $3.00 per kg was justified.

2. Liability of Polyester Webbing to Additional Duty:
The second issue was whether Polyester Webbing was liable to additional duty equivalent to the rate of Central Excise duty on Polyester yarn under the Additional Duty Rules, 1976. The department argued that Polyester Webbing is a narrow woven fabric under Heading 5806 and thus liable to additional duty. The appellants contended that the imported webbing did not have selvedges and thus could not be classified as narrow fabric.

The Tribunal noted that the definition of narrow fabric under Chapter 58 required the fabric to have selvedges. The records did not indicate whether the imported goods had selvedges. Additionally, the Tribunal found no clear indication in the impugned order as to which item in the Central Excise Notification 53/87 the goods were classified under. Consequently, the Tribunal held that the Additional Collector was not justified in confirming the demand for additional Customs duty and set aside this demand.

3. Imposition of Penalty:
The final issue was the imposition of penalties under Section 112(a) of the Customs Act, 1962. The Additional Collector imposed a penalty of Rs. 10,000/- for misdeclaration of value, while the Deputy Collector imposed a nominal penalty of Rs. 500/-. The Tribunal found no evidence of a deliberate strategy by the appellants to declare a lower value. Therefore, it deemed the penalty imposed by the Additional Collector as harsh and set it aside in both appeals.

Conclusion:
The appeals were disposed of with the Tribunal upholding the enhanced valuation of US $3.00 per kg for the imported Polyester Webbing but setting aside the demand for additional Customs duty and the penalties imposed.