1996 (5) TMI 255 - AT - Customs

Issues Involved:

1. Mis-declaration of the value of imported goods.
2. Determination of the correct transaction value under Customs Valuation Rules.
3. Confiscation of goods under Section 111(m) of the Customs Act, 1962.
4. Imposition of redemption fine and penalty.
5. Demand of additional duty on the value not covered under EPCG license.

Detailed Analysis:

1. Mis-declaration of the value of imported goods:
The appellants were penalized for declaring a value for imported goods that was not accepted by the lower authority, which determined the value under the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The goods were confiscated under Section 111(m) of the Customs Act, 1962, due to the mis-declaration of value, and a redemption fine of Rs. 25,00,000/- and a penalty of Rs. 10,00,000/- were imposed.

2. Determination of the correct transaction value under Customs Valuation Rules:
The appellants declared the value of each Auto Coner as US $ 20,000 CIF, supported by an invoice from a reputable dealer in the USA and a Chartered Engineer's Certificate. However, the Customs authorities doubted this value, citing a similar import of a 1985 model machine at US $ 80,000 CIF. The show cause notice was issued based on this doubt, and the value was enhanced to US $ 80,000 per machine under Rule 8 of the Customs Valuation Rules.

The appellants argued that the value declared was accurate, supported by a Chartered Engineer's Certificate and a certificate from the Standardisation, Testing and Quality Certification Directorate (STQC), which is a high-powered committee. This committee certified the reasonableness of the declared price, and the appellants provided additional evidence, including proforma invoices and letters from the suppliers, to support their declared value.

3. Confiscation of goods under Section 111(m) of the Customs Act, 1962:
The goods were confiscated due to the alleged mis-declaration of value. However, the appellants contended that the value declared was certified by the STQC and supported by various documents, including a Chartered Engineer's Certificate and proforma invoices from the manufacturers.

4. Imposition of redemption fine and penalty:
The lower authority imposed a redemption fine of Rs. 25,00,000/- and a penalty of Rs. 10,00,000/-. The appellants argued that the value declared was reasonable and supported by credible evidence, and therefore, the penalty and fine were unjustified.

5. Demand of additional duty on the value not covered under EPCG license:
A further duty was demanded on the value found in excess of the declared value, as it was not covered under the EPCG license produced by the appellants for concessional duty rates. The appellants contended that the value declared was accurate and certified by the STQC, and thus, the additional duty demand was unwarranted.

Judgment:
The appellate tribunal considered the arguments and evidence presented by both sides. The tribunal observed that the sole ground for enhancing the value was the earlier import of a similar machine at a higher price. However, no investigation was conducted to verify the correctness of that value. The tribunal emphasized the importance of the certification by the STQC, a high-powered committee with expertise in evaluating the reasonableness of prices for imported goods.

The tribunal noted that the lower authority did not provide sufficient reasons for rejecting the appellants' declared value, which was supported by various credible documents and certifications. The tribunal also highlighted the lack of any investigation into the earlier import or the veracity of the suppliers' statements.

The tribunal concluded that the lower authority's reliance on the earlier import value was not a valid basis for enhancing the value of the appellants' goods. The certification by the STQC and the additional evidence provided by the appellants were deemed sufficient to establish the reasonableness of the declared value.

Conclusion:
The tribunal set aside the order of the lower authority, including the enhancement of value, the penalty, and the confiscation of goods. The appeals were allowed with consequential relief to the appellants.

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