1998 (5) TMI 79 - AT - Customs

Issues Involved:
1. Confirmation of the order of assessment under Rule 8 of the Customs Valuation Rules.
2. Confiscation of goods and the option to redeem.
3. Determination of the value of imported goods and the application of discounts.
4. Imposition of redemption fine and penalties.
5. Validity of the invoice and valuation method under Section 14 of the Customs Act.
6. Examination of the relationship between the importer and supplier and the charge of under-valuation.

Issue-wise Detailed Analysis:

1. Confirmation of the Order of Assessment under Rule 8 of the Customs Valuation Rules:
The Collector (Appeals) confirmed the order of assessment under Rule 8 of the Customs Valuation Rules, which was contested by the appellants. The department did not rely on contemporaneous evidence but instead used a quotation from Daxco Pvt. Ltd. to determine the value of the goods. The Collector (Appeals) accepted the department's approach but noted that the discount value should have been considered to ensure fairness, equity, and justice.

2. Confiscation of Goods and the Option to Redeem:
The Collector (Appeals) set aside the confiscation of the PCBs, ordering their unconditional release as the charge of misdeclaration was not proven. However, the spectral set was confiscated with an option to redeem it. The redemption fine was reduced to Rs. 1 lac, and penalties were imposed on the appellants and other parties involved.

3. Determination of the Value of Imported Goods and the Application of Discounts:
The Collector (Appeals) reduced the value of the imported goods by 40% towards discount, based on a quotation from Daxco Pvt. Ltd. The appellants argued that the Collector wrongly noted the discount as 25% instead of 40%. Additionally, the value of Singapore $ 28692 was for the entire system, not just the imported parts, leading to an incorrect valuation. The correct value, after applying the 40% discount, aligned closely with the appellants' invoice value.

4. Imposition of Redemption Fine and Penalties:
The Collector (Appeals) imposed a redemption fine of Rs. 1 lac and penalties of Rs. 50,000/- on the appellant company and Rs. 15,000/- each on other appellants. The appellants contended that the penalties were unjustified as the department failed to prove under-valuation or any clandestine dealings.

5. Validity of the Invoice and Valuation Method under Section 14 of the Customs Act:
The appellants argued that their invoice value should be accepted under Section 14 of the Customs Act, as there was no contemporaneous import to challenge it. The Collector (Appeals) accepted that there was no evidence of a relationship between the importer and supplier to depress the value. The Supreme Court's judgment in Mirah Exports Pvt. Ltd. v. Collector of Customs was cited, emphasizing that the burden of proving under-valuation lies with the Revenue, which must produce necessary evidence.

6. Examination of the Relationship between the Importer and Supplier and the Charge of Under-valuation:
The Collector (Appeals) noted that there was no evidence of a relationship between the importer and supplier to suggest under-valuation. The department's reliance on Daxco's quotation was flawed as it did not reflect the actual transaction value. The Supreme Court's stance in various cases was reiterated, stating that the invoice price should be accepted unless proven otherwise by the Revenue.

Conclusion:
The appeal was allowed, setting aside the impugned order. The Collector (Appeals) fell into error by partially relying on Daxco's quotation for valuation while rejecting it for other purposes. The correct valuation, after applying the 40% discount, aligned with the appellants' invoice value, negating the charges of under-valuation and justifying the release of the goods without additional penalties.

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