2017 (9) TMI 598 - AT - Customs

High Seas Sale - Valuation - it was observed that there is undervaluation of the consignments leading to short levy of customs duty - payment of tax with interest before issuance of SCN - penalty - Held that - it is the KOEL who was the importer and who filed the Bill of Entry on behalf of the appellant as the appellant was not aware of the procedures. Further there was no role played by the appellant in the alleged undervaluation committed by the supplier KOEL. Further the appellant paid the entire duty along with interest before the issue of SCN voluntarily and therefore he is not liable to pay penalty as there was no intention to evade duty - penalty set aside - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Undervaluation of imported goods
- Short levy of customs duty
- Imposition of penalties and fines

Detailed Analysis:

1. Undervaluation of imported goods:
The case involved an appeal against an order passed by the Commissioner (A) upholding the Order-in-Original, which rejected the appellant's appeal. The appellant imported furnace oil on a high sea sales basis from a supplier, and discrepancies were noted in the invoices submitted to the customs department. The DRI discovered that the appellant had paid higher amounts to the supplier than declared for customs duty assessment. The high sea sales agreement included various charges beyond the declared value, leading to undervaluation of the consignments and short levy of customs duty. The issue was adjudicated by the Joint Commissioner of Customs, who re-determined the assessable value of the imported goods, confirmed the duty amount short paid, imposed penalties under the Customs Act, and also imposed a redemption fine. The appellant contended that they were not aware of the undervaluation and had paid the entire duty along with interest voluntarily before the show-cause notice was issued.

2. Short levy of customs duty:
The appellant argued that they purchased the furnace oil from the supplier under a standard high sea sales agreement, and the customs clearance was handled by the supplier. The appellant claimed that they paid the duty promptly upon intimation from the supplier and that the penalties and fines imposed were unjustified. The appellant maintained that they were not the importer, and the supplier was responsible for filing the Bill of Entry and handling customs procedures. The appellant emphasized that they had no role in the undervaluation and had acted in good faith by paying the entire duty before any official notice was served.

3. Imposition of penalties and fines:
In the absence of the appellant during the hearing, the written submissions were considered. The Tribunal observed that the appellant had fulfilled their duty obligations promptly upon notification from the supplier, indicating a lack of intent to evade duty. Relying on legal precedents, the Tribunal concluded that the appellant should not be penalized for the undervaluation committed by the supplier. The Tribunal set aside the penalties and fines imposed on the appellant, noting that they had acted in good faith and had no involvement in the undervaluation scheme. The appeal was allowed, and the penalties and fines were revoked.

In conclusion, the Tribunal's judgment focused on the lack of involvement and intent on the part of the appellant in the undervaluation of imported goods, leading to the reversal of penalties and fines initially imposed. The case highlighted the importance of diligent compliance with customs regulations and the consequences of undervaluation in customs assessments.