1993 (3) TMI 220 - AT - Customs

Issues Involved:
1. Undervaluation of imported goods
2. Contemporaneous imports and comparison of values
3. Reliance on advertisement for valuation
4. Imposition of penalty and redemption fine
5. Compliance with Customs Act and Valuation Rules

Detailed Analysis:

1. Undervaluation of Imported Goods:
The appellant, a sole proprietor of M/s. P.P. Trading Co., filed an appeal against the order of the Collector of Customs, Calcutta, regarding the undervaluation of imported electrical resistance wire. The appellant declared the value of the goods at US $13,000 (Rs. 1,96,671.70) CIF, while the Customs authorities assessed the value at US $98,500 (Rs. 14,90,166.30) CIF. The goods were found to be of high-quality HSK No. 4 brand, manufactured in Japan. The adjudicating authority determined that the goods were undervalued by Rs. 12,98,569, leading to an attempted evasion of customs duty amounting to Rs. 16,39,569.

2. Contemporaneous Imports and Comparison of Values:
The adjudicating authority compared the value of the imported goods with contemporaneous invoices from M/s. Tohwa Electric Co. Ltd., Japan, the sole exporting agent for the manufacturer. The authority found that the value of identical goods could not be less than US $98,500. The appellant argued that the cited invoices were not contemporaneous and that the quantities were not comparable. However, the authority relied on eight specific invoices of imports of HSK No. 4 brand resistance wire, which were found to be contemporaneous and of similar specifications.

3. Reliance on Advertisement for Valuation:
The appellant contended that the order for the goods was placed based on an advertisement in a Hong Kong newspaper. However, the adjudicating authority noted that the advertisement was dated 3rd June 1989, whereas the order was placed on 4th October 1988, and the goods arrived in February 1989. The authority concluded that the advertisement was not related to the goods in question and rejected the invoices relied upon by the appellant.

4. Imposition of Penalty and Redemption Fine:
The adjudicating authority ordered the confiscation of the goods under Section 111(d) and (m) of the Customs Act, 1962. The importer was given an option to redeem the goods on payment of a fine of Rs. 6,50,000 and a penalty of Rs. 5,00,000 was imposed under Section 112(a) of the Customs Act. The appellant argued that there was no mens rea and that no penalty should be levied. However, the Tribunal upheld the imposition of the penalty and redemption fine, citing the significant undervaluation and the appellant's awareness of the goods imported.

5. Compliance with Customs Act and Valuation Rules:
The Tribunal confirmed that the adjudicating authority correctly ascertained the value of the goods in terms of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The authority adopted the value based on contemporaneous invoices and fixed the value of SWG-20 resistance wire at Yen 795/Kg, SWG-22 at Yen 850/Kg, SWG-24 at Yen 900/Kg, and SWG-26 at Yen 990/Kg. The Tribunal dismissed the appellant's contention regarding the absence of the exchange rate in the show cause notice, stating that it did not vitiate the order.

Conclusion:
The Tribunal dismissed the appeal, upholding the findings of the lower authority, the imposition of a penalty of Rs. 5,00,000, and a redemption fine of Rs. 6,50,000. The Tribunal confirmed that the value of the imported goods was correctly ascertained and that the appellant's reliance on the advertisement for valuation was unfounded. The decision emphasized compliance with the Customs Act and Valuation Rules, reinforcing the importance of accurate declaration and valuation of imported goods.

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