1999 (5) TMI 373 - AT - Customs

Summary

Issues Involved:
1. Alleged mis-declaration and undervaluation of imported goods.
2. Basis for valuation of goods under Section 14(1)(a) of the Customs Act, 1962.
3. Validity of the Proforma Invoice as a contract.
4. Comparison with contemporaneous imports.
5. Justification for confiscation and imposition of penalty.

Issue-Wise Detailed Analysis:

1. Alleged Mis-declaration and Undervaluation:
The appellants were accused of importing 250 M.T. of H.D.P.E. Grade BA 550-13 by mis-declaring the value of the goods in the import documents, resulting in an alleged undervaluation of Rs. 18,34,862/-. A show cause notice was issued to explain why the goods should not be confiscated and the duty evaded should not be recovered, along with the imposition of a penalty.

2. Basis for Valuation of Goods under Section 14(1)(a) of the Customs Act, 1962:
The Collector of Customs concluded that the contract between MTC and the foreign supplier could not be treated as the basis for valuation under Section 14(1)(a) of the Customs Act, 1962. The Collector observed that the price of US $ 590 per M.T. mentioned in the contract was not reflective of the prevailing international price at the time of importation, which was significantly higher (US $ 1150 to 1300 per M.T.). The Collector held that the goods had been undervalued with the intent to evade customs duty.

3. Validity of the Proforma Invoice as a Contract:
The appellants argued that the Proforma Invoice dated 27-1-1987 from the foreign supplier, indicating a price of US $ 590 per M.T., was a valid sales contract for all purposes, including opening of L/C and obtaining foreign exchange. However, the Collector noted that the usual terms and conditions of a contract of import, such as the date of shipment and delivery, were not present in the Proforma Invoice. The significant time gap between the Proforma Invoice and the actual importation further weakened its validity as a contract.

4. Comparison with Contemporaneous Imports:
The Collector referred to contemporaneous imports of identical goods at Bombay Port during the same period, which showed a much higher price ranging from US $ 1150 to 1300 per M.T. The appellants failed to provide a plausible explanation for why the foreign supplier did not revise the price in line with the prevailing international market rates. The Tribunal found that the contemporaneous imports satisfied the tests of comparability in terms of goods, quantity, commercial level, and timing.

5. Justification for Confiscation and Imposition of Penalty:
The Tribunal upheld the Collector's order of confiscation of the goods and imposition of a penalty of Rs. 10 lakhs. The Tribunal found no infirmity in the Collector's findings and concluded that the appellants had not been able to discharge the burden of proof to establish that the Proforma Invoice price was the actual price for purposes of Section 14(1)(a). The Tribunal also noted that the quantum of penalty was not disproportionate.

Conclusion:
The Tribunal dismissed the appeal and upheld the impugned order, confirming the confiscation of goods and imposition of a penalty on the appellants for mis-declaration and undervaluation of the imported goods. The decision was based on the lack of a valid contract, significant time gap, and higher prices of contemporaneous imports.