2013 (3) TMI 347 - AT - Customs

Undervaluation - Confirming duty along with the interest and penalties of the undervalued imported goods by the Custom Authorities/Revenue Authorities. - The Counsel for appellants submits that the values of the consignments were once loaded by the Customs Authorities at the time of import and hence the Revenue authorities cannot load it again through another proceeding. They rely on many decisions of judicial forums to support the above argument. Held that - Nothing from case of Eicher Tractors Ltd 2000 (11) TMI 139 - SUPREME COURT OF INDIA can apply to the facts of this case where there are evidences to prove the undervaluation of the goods except evidence regarding remittance of the extra consideration. It is in the context of this that Revenue is pointing out that the transaction was between closely related persons, with the appellants acting just as conduits, who could easily do such transactions without getting noticed by Government authorities. Existence of certain facts has to inferred based on acts that are proved and there is no reason to insist of producing proof of aspects which could be easily hidden in the circumstances of the case. On an overall appreciation of facts before us we find the following relevant facts. The impugned imported goods are something needed by many manufacturers in India. The importers are neither manufacturers who consume the goods in their own manufacturing process or traders, who import the goods and make available the goods at competitive prices to manufacturers in India at arm s length. The importers in question were acting as mere conduits between suppliers in China and actual buyers who used it in further manufacture and having close nexus with the supplier in China. In fact there is only one person behind the three importers. This person cannot demonstrate any special skill or circumstances enabling him to get the impugned goods at low prices. The inference of undervaluation in such circumstances is quite reasonable. So when contemporaneous imports of the goods are shown the burden to prove bona fides definitely shifted to the importers. At such a juncture the main defense is that they had not declared the full details at the time of import and hence their goods were different. The specifications declared at the time of importation are sketchy. There is nothing to show that the goods manufactured using the components imported by them were of any inferior quality. In fact their prices were competitive only to the extent of duty evasion engineered in these imports. Once the burden had shifted to the importer to prove that the declared values were correct the appellants have hardly done anything to discharge such burden except arguments about possible difference in specifications which they chose not to declare at the time of import. They only want to take advantage of the fact that their declarations were vague at the time of import and for that reason their price has to be considered to be lower.The four appeals are disposed of in the above terms by giving partial relief in respect of penalty imposed under the Customs Act subject to condition.

Issues Involved:
1. Whether further proceedings for loading value for a second time can be initiated on the basis of new evidence after initial assessment.
2. Relevance of the decision in the case of Eicher Tractors Ltd.
3. Whether the appellants were conduits for imports between closely related persons relevant for determining undervaluation.
4. Whether the reference prices taken by Revenue were that of comparable goods.
5. How is the correction in Export Declaration at Hong Kong to be viewed.
6. Relevance of retraction of statements by Shri Ajay Kumar Agarwal.
7. Relevance of imports by many other importers of such goods at more or less the same price as the appellants.
8. The effect of denial of cross-examination of officers and others.
9. Is the demand confirmed under a Valuation Rule different from what is suggested in SCN?
10. The argument that the appellants were importing odd-lot goods.

Detailed Analysis:
1. Further Proceedings for Loading Value:
The Tribunal found that the argument that once customs authorities load the value at the time of import, they cannot load it again through another proceeding, is not consistent with Section 28 of the Customs Act. The Tribunal cited several cases, including *Mohan Meakin Ltd. v. CCE* and *TTK Ltd.*, but concluded that these cases do not provide impunity from further proceedings if new evidence of undervaluation is found. The Tribunal upheld the possibility of re-assessment based on new evidence.

2. Relevance of Eicher Tractors Ltd. Decision:
The Tribunal noted that the decision in *Eicher Tractors Ltd. v. CC* is often cited to dismiss undervaluation cases where no proof of extra payment is provided by the Revenue. However, the Tribunal distinguished the present case by noting that there was substantial evidence of undervaluation, and the relationship between the appellants and the suppliers justified further investigation.

3. Appellants as Conduits:
The Tribunal examined whether the appellants acted as conduits for imports between closely related persons. They referred to the case of *Italia Ceramics Ltd. v. CC* but concluded that the evidence showed the appellants were mere conduits, facilitating undervaluation. The Tribunal emphasized that the relationship between the parties justified the rejection of the declared transaction value.

4. Comparable Goods Reference Prices:
The appellants argued that the value of goods could vary based on different parameters. However, the Tribunal found that the burden of proof had shifted to the appellants once the Revenue demonstrated that other importers declared higher values. The appellants failed to provide sufficient evidence that their goods were of inferior quality or had different specifications. The Tribunal upheld the use of reference prices from other importers.

5. Correction in Export Declaration at Hong Kong:
The Tribunal acknowledged that there was a discrepancy in one export declaration but concluded that this was likely a result of human error. They noted that the case of undervaluation was supported by other substantial evidence, and the discrepancy in one declaration did not undermine the overall case.

6. Retraction of Statements by Shri Ajay Kumar Agarwal:
The Tribunal found that the retraction of statements by Shri Ajay Kumar Agarwal was not credible. The retraction was made during a bail application, and the Magistrate had rejected the bail, indicating the seriousness of the evidence against him. The Tribunal gave more weight to the initial statements admitting undervaluation.

7. Imports by Other Importers:
The appellants argued that other importers were importing goods at similar prices. The Tribunal noted that cases of undervaluation were also being pursued against those importers, and the appellants could not claim a defense based on negative equity.

8. Denial of Cross-Examination:
The Tribunal found that the denial of cross-examination of officers and others was not fatal to the case. The case was based on documentary evidence and not on the opinions of officers. The Tribunal concluded that the request for cross-examination was a tactic to delay proceedings.

9. Different Valuation Rule:
The appellants argued that the adjudicating authority changed the valuation rule from what was suggested in the SCN. The Tribunal found that the basis for the demand remained consistent, and the adjudicator's reference to Rule 4(2)(g) was to demonstrate the reasonableness of the proposed value.

10. Odd-Lot Goods Argument:
The appellants claimed they were importing stock lots at lower prices. The Tribunal dismissed this argument, noting that the imports were made in multiple consignments over four months, which did not support the claim of stock lot purchases.

Conclusion:
The Tribunal upheld the order revising the value and confirming the duty liability. They provided partial relief by allowing the appellants the option to pay 25% of the duty demanded along with interest within 30 days of receipt of the order. The penalty on Shri Ajay Kumar Agarwal was upheld. The appeals were disposed of with the specified relief in terms of penalties.

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