1997 (1) TMI 211 - AT - Customs

Summary

Issues Involved:
1. Valuation of imported goods.
2. Confiscation of goods.
3. Confiscation of foreign currency.
4. Imposition of penalty.

Detailed Analysis:

1. Valuation of Imported Goods:
The primary issue pertains to the valuation of 740 kgs. of Rough Cubic Zirconia imported from Hong Kong. The appellant declared the value as US $15.00 per kg. CIF, which was initially accepted by the Custom House. However, upon intelligence of gross undervaluation, a search was conducted, and it was discovered that the actual grading and quality of the goods did not match the declared "III grade inferior." The goods were examined by Shri Khandelwala, who reported the prices of Grade A, B, and C to be US $78, 70, and 60 per kg, respectively. The Collector proposed to determine the assessable value as US $65.8 per kg. CIF and to demand differential duty.

The appellant contested this valuation, arguing that the goods seized were not from the consignment cleared as per the Bill of Entry dated 22-9-1989. They claimed that the seized stones were sorted and mixed with stones from earlier imports. They also challenged the credibility of Shri Khandelwala's report, citing a conflict of interest as he was an employee of a business rival. The appellant provided various invoices and Bills of Entry to support their declared value, which were ignored by the Collector.

The Tribunal found that the Collector did not adequately address these contentions, particularly the appellant's claim that the seized goods were mixed with other stocks. The Tribunal noted that the Collector's reliance solely on Shri Khandelwala's report, despite serious objections from the appellant, was a significant error. The Tribunal emphasized the need for a more thorough examination of the evidence, including other reports and materials provided by the appellant.

2. Confiscation of Goods:
The goods were seized under the belief that they were grossly under-invoiced and thus liable to confiscation under Clauses (d) and (m) of Section 111 of the Customs Act, 1962. The Collector confiscated the goods and imposed a redemption fine of Rs. 1,00,000. The Tribunal, however, found that the Collector's findings on under-invoicing and misdeclaration of value were flawed due to the reliance on a disputed report and the failure to consider all available evidence. Consequently, the Tribunal set aside the finding of misdeclaration and the consequent confiscation of goods, remanding the case for fresh consideration.

3. Confiscation of Foreign Currency:
Foreign currency amounting to 141 US $, 880 Thailand Bahts, and 30 Hong Kong Dollars was found in the appellant's premises. The appellant initially admitted ownership of the currency but later claimed it belonged to Shri Kumar, a representative of the supplier. The Tribunal found this subsequent claim to be an afterthought and upheld the Collector's finding that the foreign currency was unlawfully possessed, violating Section 13 of the F.E.R. Act, 1973, read with Section 11 of the Customs Act, 1962. The confiscation of foreign currency under Section 111(d) of the Customs Act, 1962, was confirmed.

4. Imposition of Penalty:
A penalty of Rs. 2,00,000 was imposed under Section 112(a) of the Customs Act, 1962. Given the Tribunal's decision to remand the case for fresh consideration regarding the valuation and misdeclaration of goods, the quantification of the penalty was also set aside. The Tribunal indicated that the unlawful possession of foreign currency warranted an appropriate penalty, which should be determined afresh by the jurisdictional Commissioner of Customs.

Conclusion:
The appeal was disposed of with the following directions:
1. The finding of misdeclaration of value and consequent confiscation of goods and fixation of redemption fine were set aside. The case was remanded to the jurisdictional Commissioner of Customs for fresh decision on these aspects.
2. The confiscation of foreign currency was confirmed, and the offence was found to justify the imposition of an appropriate penalty. The imposition of a penalty of Rs. 2,00,000 was set aside, to be decided afresh by the jurisdictional Commissioner of Customs.