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2016 (2) TMI 542 - AT - CustomsValuation of import of H. Acid and Bita Napthol on High Seas Sales basis - Subsequent to clearance DRI Officers found that M/s ACCIL had raised debit notes in respect of the said consignments and have collected the debit note amount from four of the importers. It was, therefore contended that the assessable value should be the value declared by the importer the value of the debit note. Held that - It is clearly stated in the circular that the actual High Seas Sales contract price paid by the last buyer would constitute the transaction value under Rule 4 of Customs Valuation Rules, 2004. It is also mentioned that the importer is required to furnish entire chain of documents such as original invoice, High Seas Sales contract, the details of service charges, commission paid etc, to establish the link between the first international transfer of goods to the last transaction. In the instant case, it is clearly established that M/s ACCIL has entered into the sales agreement with the other appellants and had not furnished the details to Customs authorities, but raised the debit notes and recovered higher amounts from their buyers. Demand of duty confirmed with penalty invoking extended period of limitation - Decided against the assessee.
Issues Involved:
1. Determination of assessable value for customs duty. 2. Applicability of the extended period of limitation. 3. Imposition of redemption fine. 4. Imposition and quantum of penalties. Issue-wise Detailed Analysis: 1. Determination of Assessable Value for Customs Duty: The primary issue was whether the assessable value for customs duty should include the value of the debit notes raised by M/s Asiatic Colour Chem Industries Ltd (ACCIL) on the importers. The appellants contended that the assessable value should be based on the CIF value plus 2%, as per their interpretation of the old Section 14 of the Customs Act and the Board's Circular No.32/2004-Cus. However, the Revenue argued that the assessable value should include the debit note amounts, as these represented the actual transaction value between ACCIL and the importers on a High Seas Sales basis. The Tribunal upheld the Revenue's view, stating that the assessable value should be the price at which ACCIL sold the goods to the importers, including the debit note value, as per the decision in M/s Hyderabad Industries Ltd Vs UOI. 2. Applicability of the Extended Period of Limitation: The appellants argued that the extended period of limitation should not be invoked as they acted on a bonafide belief based on the Board's Circular No.32/2004-Cus. However, the Tribunal found that ACCIL had not disclosed the issuance of debit notes to the Customs authorities, thereby justifying the invocation of the extended period of limitation due to suppression of facts. The Tribunal concluded that the appellants' claim of bonafide belief was not supported by the circular, which clearly stated that the transaction value should be the price paid by the last buyer. 3. Imposition of Redemption Fine: The Tribunal agreed with the appellants that redemption fine should not be imposed as the goods had already been cleared from Customs charge and were not available for confiscation. Consequently, the redemption fine imposed on all the appellants was set aside. 4. Imposition and Quantum of Penalties: The Tribunal recognized mitigating factors and decided to reduce the penalties. For M/s ACCIL, the penalty was reduced from Rs. 20 lakhs to Rs. 5 lakhs, and for Shri Mahesh Agarwal, Managing Director of ACCIL, from Rs. 20 lakhs to Rs. 2 lakhs. The penalties on the other appellants under Section 114A read with Section 112(a) of the Customs Act were upheld but with the provision that they could pay 25% of the penalty amount if paid within 30 days along with duty and interest. Conclusion: The Tribunal upheld the differential duty demand including the debit note value, justified the invocation of the extended period of limitation, set aside the redemption fine, and reduced the penalties with the option for the appellants to pay 25% of the penalty within 30 days. All appeals were disposed of in these terms.
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