2017 (8) TMI 498 - AT - Customs

Valuation of imported goods - Sartorius brand of Electronic Balances - undervaluation - NIDB data of contemporaneous imports - main case of appellant is that Revenue has not procured any evidence to show that appellant has paid more than the declared price i.e. the appellant has paid any amount over and above the transaction value to their supplier - authenticity of documents produced by SMIPL through Shri N. Ramesh, on which the case of Revenue is based upon - confiscation - redemption fine - penalty - Held that - It is apparent from cross examination of Shri N. Ramesh, that he does not know the real source of these documents. He has just been handed over the documents to be given to Customs. He was handed over these documents by Sh Mohan Bhatt GM sales and marketing. Sh Mohan Bhatt has not been examined in this regard. The documents are not issued in his office and he has no knowledge about their authenticity. He has simply received the said documents from another person in his organization. While they have handed over photocopies of the said invoices they are not in possession of the originals. It is not in doubt that they are competitor of the appellants in the market. The cross examination shows the contradictions as at one point he says he does not know who handed over the invoices at another point he seems to be sure who gave it to him - The documents produced in these circumstances cannot be straight away relied upon as true and correct. If revenue wished to rely on these documents they needed to corroborate it from the source of the documents. They should have conducted suitable enquiries directly from the office of Sartorius Germany. Reliance placed upon the manufacturers pricelists which were provided by M/s. SMIPL - Held that - These pricelists for 2002 and 2006 are only zerox and unsigned copies and they are not certified by the parent company or by their officer. They are on plain paper and not on the letterhead of the Sartorius Germany. They do not bear any signature and logo of the parent company. The pricelists for the year 2003, 2005 and 2007 produced by SMIPL cannot be relied as their source has not been verified and as same are not authenticated or certified by the parent company. The Revenue has not verified genuineness of the pricelists or the invoices relied upon from the principal manufacturer in Germany. These unsigned and unauthenticated documents, which are not on the letterhead of foreign principal cannot be relied to sustain the charge of undervaluation. Moreover merely pricelists of the foreign supplier/manufacturer cannot be considered as a proof of transaction value. NIDB data of contemporaneous imports - The appellants have contended that these imports cannot be compared with the imports made by them for the reason that they are bulk importers while the imports listed in NIDB data are retail /one off imports - Held that - A perusal of the NIDB data shows that the imports are indeed retail imports apparently by actual users. The appellants are undoubtedly traders and bulk importers and thus the two are not at same commercial level. Moreover their claim of importing goods without facility of after sales service and stock lots has not been disputed. While the price difference is very high and gives rise to suspicion, it cannot be said with reasonable certainty that the appellants have done undervaluation. Result of market inquiries conducted by revenue - Held that - The market enquiries show that the appellants are selling the goods at higher prices and are recovering some amount in cash. The market enquiries just show that the product can be sold at much higher price as compared to the price at which it has been imported. It does not by any stretch of imagination prove that the goods have been undervalued at the time of import. Local sale price of the imported goods can at best be a corroborative evidence, but it cannot be considered as primary evidence of undervaluation unless the transaction value is discarded in terms of rule 3. In the instant case no evidence for rejection of transaction value has been brought about. Neither any evidence of any money being transferred over and above the declared price been brought out. There is no evidence brought on record by the Revenue that appellant has paid any amount over and above invoice price shown at the time of clearance of the impugned goods - appeal allowed - decided in favor of appellant.

Issues Involved:
1. Confirmation of demand and imposition of penalty, confiscation, and imposition of redemption fine.
2. Jurisdiction issue raised by appellant.
3. Allegation of undervaluation of imported goods.
4. Authenticity of evidence relied upon by revenue.
5. Comparison of declared transaction value with contemporaneous imports and local market prices.

Detailed Analysis:

1. Confirmation of Demand and Imposition of Penalty, Confiscation, and Imposition of Redemption Fine:
The appeals were against the confirmation of demand, imposition of penalty, confiscation, and imposition of redemption fine. The High Court of Bombay quashed the previous orders and directed a re-hearing by a different bench. The case involved multiple show cause notices (SCNs) concerning the rejection and re-determination of transaction values, confirmation of duties, and imposition of penalties and fines.

2. Jurisdiction Issue:
The appellants raised the issue of jurisdiction through a miscellaneous application. However, the tribunal had already settled this issue in a previous order, rendering the application infructuous and dismissed.

3. Allegation of Undervaluation of Imported Goods:
The appellants were accused of undervaluing imported Sartorius brand electronic balances. Initially, they imported directly from Germany but later from a Dubai distributor. The revenue relied on photocopies of invoices and price lists provided by a competitor (SMIPL), which the appellants contested. They argued that the documents were unauthenticated and inadmissible, and that the declared transaction values were genuine.

4. Authenticity of Evidence:
The appellants challenged the authenticity of the key evidence, including unsigned invoices and price lists provided by SMIPL. The tribunal noted that these documents were not authenticated, certified, or on the letterhead of the parent company, and were supplied by a competitor. The cross-examination of SMIPL’s representative revealed inconsistencies and lack of knowledge about the documents' origins, undermining their reliability. The tribunal cited precedents where unsigned photocopies were deemed insufficient to support undervaluation allegations.

5. Comparison with Contemporaneous Imports and Local Market Prices:
The revenue compared the declared transaction values with contemporaneous imports and local market prices. However, the tribunal found that the imports listed in the NIDB data were retail imports by actual users, not at the same commercial level as the bulk imports by the appellants. The tribunal emphasized that local sale prices could only serve as corroborative evidence, not primary proof of undervaluation. The tribunal concluded that the revenue failed to provide sufficient reliable evidence to corroborate the undervaluation charge.

Conclusion:
The tribunal concluded that the revenue did not provide sufficient reliable evidence to support the undervaluation charge. Consequently, all charges based on this allegation, including confiscation, were lifted. The appeals were allowed with consequential relief. The decision emphasized the need for authenticated and reliable evidence to substantiate undervaluation claims and upheld the importance of maintaining the integrity of transaction values unless proven otherwise.

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