2000 (10) TMI 619 - AT - Customs

Summary

Issues:
1. Valuation of imported goods based on under-invoicing
2. Allegations of undervaluation leading to duty appropriation
3. Discrepancies in invoices and statements provided during investigation
4. Allegation of goods being undervalued deliberately
5. Confiscation of goods and imposition of penalties

Issue 1: Valuation of imported goods based on under-invoicing

The case involved an appeal against the Commissioner's order regarding the valuation of imported chlorhexidine gluconate. The Commissioner had raised concerns about under-valuation based on investigations by the Directorate of Revenue Intelligence (DRI). The DRI found discrepancies between the declared value and the manufacturer's price list, leading to a proposed valuation of $8 per kilogram FOB instead of the declared $1 per kilogram. The appellant contested this valuation, arguing that the goods required processing before sale, but failed to provide evidence to support this claim. The Commissioner upheld the valuation, citing lack of evidence to substantiate the processing claim.

Issue 2: Allegations of undervaluation leading to duty appropriation

The Commissioner's order included the appropriation of duty deposited by the appellant amounting to approximately Rs. 17.75 lakhs. This appropriation was based on the Commissioner's findings of deliberate undervaluation of the imported goods. Despite the appellant's arguments and complaints of harassment during investigations, the Commissioner concluded that the duty payment was justified due to the undervaluation of the goods. The appellant's plea against this duty appropriation was dismissed.

Issue 3: Discrepancies in invoices and statements provided during investigation

The case highlighted discrepancies in the invoices and statements provided during the investigation. The appellant presented invoices showing different values for the imported consignments, with one set at $1 per kilogram and another at $7 per kilogram. The Commissioner questioned the voluntary nature of these documents, suggesting they were obtained under pressure. However, the appellant failed to demonstrate coercion in obtaining the invoices, leading to the Commissioner's decision to uphold the valuation based on the $7 per kilogram rate.

Issue 4: Allegation of goods being undervalued deliberately

The Commissioner found that the goods were deliberately undervalued, leading to the proposed valuation of $7 per kilogram. Despite arguments about the nature of statements recorded and duty payments made, the Commissioner maintained that the undervaluation was intentional. The Commissioner's decision was based on the belief that the goods were knowingly undervalued, justifying the proposed valuation and duty appropriation.

Issue 5: Confiscation of goods and imposition of penalties

The Commissioner's order did not include confiscation of the goods or imposition of penalties, citing the nature of statements recorded and the duty payment as reasons. However, the appellate tribunal disagreed with this decision, stating that the duty payment after the investigation did not absolve the importer of liability. The tribunal suggested further examination of penalties for both the importer and individuals involved, emphasizing the need to assess involvement and profit margins. Ultimately, the tribunal confirmed the valuation of the goods but allowed the department's appeals, setting aside the decision against confiscation and penalties.