1999 (3) TMI 200 - AT - Customs

Summary

Issues Involved:
1. Confiscation of imported goods under Section 111(d) and Section 111(m) of the Customs Act, 1962.
2. Imposition of penalty.
3. Assessment of Bills of Entry at enhanced value.
4. Violation of Import Trade Control Policy.
5. Allegation of under-invoicing and misdeclaration of value.
6. Validity of the import license and compliance with Phased Manufacturing Programme (PMP).
7. Relationship between the importer and the foreign supplier affecting valuation.

Detailed Analysis:

1. Confiscation of Imported Goods:
The Collector of Customs confiscated component parts of Electronic Typewriters covered by 12 Bills of Entry under Section 111(d) and Section 111(m) of the Customs Act, 1962. The goods had already been released, and a sum of Rs. 2.00 Lakh was ordered to be recovered from the Bank Guarantee in lieu of confiscation. The Collector also imposed a penalty of Rs. 50,000/-. The 12 Bills of Entry were assessed at an enhanced value.

2. Imposition of Penalty:
The penalty of Rs. 50,000/- was imposed on the appellants for the violation of customs regulations. The appellants contended that they had valid licenses for the imported items and that there was no violation of the import-export policy. However, the tribunal upheld the penalty, finding it proportionate to the value of the goods and the nature of the violations.

3. Assessment of Bills of Entry at Enhanced Value:
The Collector ordered that the 12 Bills of Entry be assessed at an enhanced value. The tribunal noted that there was an agreement between the foreign supplier and the Indian importer, establishing a special relationship. The proforma invoice and a Fax message were considered significant evidence indicating the correct price of the material. The tribunal upheld the enhancement of value based on this evidence.

4. Violation of Import Trade Control Policy:
The tribunal found that the appellants violated the Import Trade Control Policy. The import of complete typewriters was prohibited as consumer goods, and the import of sub-assemblies in SKD condition was restricted. The appellants were importing complete typewriters in dismantled form with the intention of reassembling and selling them in the Indian market, which was against the policy.

5. Allegation of Under-Invoicing and Misdeclaration of Value:
The department alleged that the importers had misdeclared the value of the goods to evade customs duty. The proforma invoice showed the correct price, which was higher than the declared price. The tribunal found that the appellants had made deliberate under-invoicing, resulting in an attempt to evade customs duty. The under-valuation rendered the goods liable to confiscation under Section 111(d) and Section 111(m) of the Customs Act, 1962.

6. Validity of the Import License and Compliance with Phased Manufacturing Programme (PMP):
The appellants held an industrial license and were permitted to undertake a Phased Manufacturing Programme (PMP). The PMP required indigenization year after year, but the appellants did not comply with this requirement. In the third year, the appellants were allowed to import only 13.40% of the components, but they imported 100% of the components required for the manufacture of electronic typewriters. The tribunal found that the appellants violated the restrictions imposed under the PMP.

7. Relationship Between the Importer and the Foreign Supplier Affecting Valuation:
The tribunal noted that there was a special relationship between the foreign supplier and the Indian importer, which affected the valuation of the goods. The proforma invoice and the Fax message were considered important evidence indicating the correct price. The tribunal upheld the department's reliance on this evidence for enhancing the value of the goods.

Conclusion:
The tribunal upheld the confiscation of the goods, the imposition of the penalty, and the assessment of the Bills of Entry at the enhanced value. The appeal was rejected, and the impugned order was upheld.