2017 (11) TMI 170 - AT - Customs

Valuation - enhancement of declared values - Whether the import of impugned goods is a pre-condition / intrinsic part of the total importation of the main plant and machinery or whether the goods can be considered as having been imported for subsequent post-import activity? - Held that - from the copy of the agreement available before us, it emerges that the agreement involves purchase of complete design, equipments, systems, technical services and training for Coke Oven plant and by-product plant project - the purchase of design is also part of the bucket list of purchase - sufficient evidence has been unearthed by the department to establish that declared / invoice values were much lower than the actual price adopted by the appellant to the foreign supplier - We are not able to find any infirmity in such enhancement of the declared values and the appellant s prayer on this count will also fail. Classification of Engineering Design and Technical Documentation - Whether Engineering Design and Technical Documentation imported can be classified under Chapter 49 of CTH as claimed by the appellant or whether they are required to be classified along with the main plant and machinery and equipments imported for the project? - Held that - We have then no doubt in our mind that the import of the Engineering Design and Technical Documentation are not for any post-import activity but are indispensible condition to the import of the main plant and equipment/machinery - once it has been established that the value of the Engineering, Design and Technical documents are required to be added to the assessable value of the related plant and machinery/equipment earlier imported, then each of such import will merit classification under Customs Tariff as that of the main import and we therefore are not able to find any infirmity in the change of classification ordered by the adjudicating authority. Redemption fine - Held that - The goods have been confiscated under Section 111 (m) of the Act which ordains that any goods which do not correspond to in respect of value or in any other particular with the entry made under the Act shall be liable for confiscation. When imported goods have been evidently found as not corresponding in respect of value, hence their confiscation under Section 111 (m) is ordinarily very permissible. There is also no bar for imposition of redemption fine under Section 125 if there is no duty liability has been determined - however, quantum of redemption fine reduced. Penalties - Held that - we find that they are commensurate with the acts and omissions alleged against the appellant in each of those cases and also keeping with the penal provisions they have been invoked in the SCN and found as correct by the adjudicating authority. This being so, we do not interfere with the imposition of penalties on the appellants or the quantum thereof. Appeal allowed in part.

Summary

Issues Involved:
1. Enhancement of declared values.
2. Classification of Engineering Design and Technical Documentation.
3. Confiscation and imposition of redemption fine.
4. Imposition of penalties.

Detailed Analysis:

1. Enhancement of Declared Values:
The core issue in these appeals was whether the declared values of imported goods, specifically Engineering Design and Technical Documentation, were accurate. The department contended that the declared values were significantly lower than the actual prices. This was substantiated by evidence showing advance and subsequent payments beyond the declared values. The Tribunal found no infirmity in the department's enhancement of the declared values, as the appellant failed to provide counter-evidence. The agreement between the appellant and the foreign supplier indicated that the purchase of design, engineering, and technical documentation was an integral part of the overall purchase of plant and machinery, thus justifying the value enhancement.

2. Classification of Engineering Design and Technical Documentation:
The Tribunal examined whether the imported documents should be classified under Chapter 49 of the Customs Tariff Heading (CTH) as claimed by the appellant or under the same classification as the main plant and machinery. The Tribunal concluded that the Engineering Design and Technical Documentation were indispensable for the import of the main plant and equipment, not for post-import activities. Therefore, these documents should be classified under the same CTH as the main equipment, rejecting the appellant's claim for separate classification.

3. Confiscation and Imposition of Redemption Fine:
The Tribunal addressed the legality of confiscation and the imposition of redemption fines under Section 111 (m) and Section 125 of the Customs Act, 1962. The goods were found to have been imported with incorrect declared values, justifying their confiscation. However, the Tribunal modified the redemption fines as follows:
- In Appeal No. C/554/2009, the redemption fine was reduced from ?70,00,000 to ?10,00,000.
- In Appeal No. C/270/2010, the redemption fine was reduced from ?1,50,00,000 to ?25,00,000.
- In Appeal No. C/271/2010, the confiscation and redemption fine of ?1,00,00,000 were set aside as the goods had already been cleared out of customs charge and were not available for confiscation.

4. Imposition of Penalties:
The penalties imposed under Section 112 (a) and Section 114A of the Customs Act were found to be commensurate with the violations. The Tribunal upheld the penalties, noting that they were appropriate given the acts and omissions of the appellant.

Conclusion:
The Tribunal upheld the enhancement of declared values and classification of the imported documents under the same CTH as the main equipment. It modified the redemption fines in two cases and set aside the confiscation and fine in one case where the goods had been cleared. The penalties imposed were upheld, and the appeals were disposed of on these terms.