2015 (10) TMI 496 - AT - Customs

Valuation - Misdeclaration - Undervaluation - violation of the principles of natural justice - Held that - Proprietor of the appellant having admitted to the valuation and having forgone the requirement of a show cause notice or personal hearing. It is pertinent to mention here that the said voluntary statement of the proprietor was never retracted and even during the proceedings before Commissioner (Appeals) the plea that the statement was taken under duress was not taken. - while the appellant s contentions about valuation and differential duty are totally untenable, we do observe that redemption fine of ₹ 2 Lacs has been imposed on the goods imported vide Bill of Entry No. 859681 on which the differential duty works out to only ₹ 13,103/- computed on the basis of undervaluation of 10%. As the redemption fine as a general principle has a nexus with the margin of profit and the goods were otherwise freely importable, we find the redemption fine to be excessive in the wake of the facts that the duty evaded due to undervaluation was only ₹ 13,103/-. We are of the view that given the level of undervaluation (just 10%) and the amount of duty sought to be evaded (Rs.13,103/-), redemption fine of ₹ 20,000/- is reasonable. However as penalty has been imposed in view of the duty evaded on imports under all the 29 Bills of Entry, the penalty of ₹ 50,000/- cannot be said to be unreasonable warranting appellate intervention. - Decided partly in favour of assessee.

Summary

Issues: Valuation of imported goods, Confiscation of goods, Recovery of differential duty, Imposition of penalty, Natural justice principles, Excessive redemption fine

Valuation of imported goods:
The appellant imported goods which were found to be under-declared in weight and undervalued. The proprietor of the appellant admitted to the under-declaration and undervaluation, agreeing to pay the differential duty, fine, and penalty voluntarily. The appellant contended that the valuation was against the Valuation Rules, citing judgments. However, the Tribunal found the appellant's contentions untenable due to the proprietor's voluntary admission and agreement with the valuation. The Tribunal emphasized that the principles of natural justice were not violated as the appellant had foregone the opportunity for a Show Cause Notice and personal hearing. The Tribunal held that the value declared by the proprietor became the true transaction value, rejecting the appellant's challenge to the valuation.

Confiscation of goods and Recovery of differential duty:
The Order-in-Original directed the confiscation of goods, recovery of differential duty, and imposition of a penalty on the appellant for undervaluation and short levy. The Tribunal upheld these directions based on the appellant's voluntary admission of undervaluation and agreement to pay the differential duty. The Tribunal noted that the appellant's plea of valuation being against the law was unfounded due to the proprietor's acceptance of the valuation without contesting it at any stage. The Tribunal emphasized that the appellant's voluntary statement was never retracted, and the plea of duress was not raised during the proceedings.

Imposition of penalty:
A penalty was imposed on the appellant for the undervaluation and short levy on imports under various Bills of Entry. The Tribunal upheld the penalty, considering the duty evaded and the appellant's admission of under-declaration. The Tribunal found the penalty of Rs. 50,000 reasonable given the duty evaded on multiple consignments, rejecting the appellant's argument against the penalty imposition.

Natural justice principles:
The appellant argued that the order was issued in violation of natural justice principles. However, the Tribunal ruled that as the appellant voluntarily accepted the valuation, admitted undervaluation, and waived the requirement for a Show Cause Notice and personal hearing, the principles of natural justice were not breached. The Tribunal emphasized that the appellant had the right to be heard but chose not to avail of it, making the challenge on natural justice grounds untenable.

Excessive redemption fine:
The Tribunal found the redemption fine of Rs. 2 lakhs excessive compared to the actual duty evaded, which was Rs. 13,103. Considering the level of undervaluation and the duty amount, the Tribunal reduced the redemption fine to Rs. 20,000, deeming it more reasonable. However, the Tribunal upheld the penalty of Rs. 50,000 due to duty evasion on multiple consignments, stating that it was not unreasonable.

Conclusion:
The Tribunal partly allowed the appeal by reducing the redemption fine but upheld the confiscation of goods, recovery of differential duty, and imposition of penalty based on the appellant's voluntary admission and agreement with the valuation. The Tribunal emphasized the importance of the appellant's voluntary statements and actions in determining the outcome of the case.