2018 (6) TMI 488 - AT - Customs

Valuation of imported goods - zinc ash - rejection of the declared assessable value - demand based on the confessional statement of the Director - Confiscation - redemption fine - Held that - The Director of the appellant firm had in his statement agreed that the invoices received by DRI along with its information showed real price of the goods. He also agreed that the amount of differential value was given in cash to the Indian representative of the foreign supplier in cash. The statement has not been retracted at any time. The claim of appellant that the said statement was obtained due to coercion was unsubstantiated and cannot be accepted. The case of Revenue is not merely based on rejection of transaction value in terms of Rule 10A of the Customs Valuation (Determination of Value of Imported Goods) Rules 2007 - It is not that the Customs has the evidence of real transaction value and thus there is no need to go to the rules. Since real transaction value i.e. the amount transferred through legal channels and amount paid to the local representative of the foreign supplier is available the same becomes transaction value and the duty can be demanded taking the same as assessable value. Confiscation - redemption fine - Held that - The goods are not available for confiscation no confiscation can be ordered and no redemption fine can be imposed - confiscation and redemption fine set aside. Appeal allowed in part.

Summary

Issues:
Appeal against rejection of assessable value, demand of customs duty, interest, penalty, and redemption fine.

Analysis:
The appeal was filed against the rejection of declared assessable value, imposition of customs duty, interest, penalty, and redemption fine. The appellant imported zinc ash at US $305 per metric ton. The investigation revealed undervaluation issues related to invoices from the supplier, leading to a show cause notice. The Director of the appellant admitted to a scheme with the supplier to save customs duty by paying a higher amount off the record. The difference in price was paid in cash to the supplier's representative in India. The assessable value was revised based on this information, leading to the demand for customs duty, interest, and penalty. The Commissioner (Appeals) upheld the decision, citing the Customs Valuation Rules and the Director's statement. The appellant challenged this decision before the Tribunal.

The appellant argued that the Director's confessional statements were coerced and based on unauthenticated documents. They contended that evidence obtained from undisclosed sources should not be admissible under the Customs Act. Additionally, they claimed that no goods were available for confiscation, questioning the imposition of redemption fine. The appellant provided a comparative import price chart, indicating that the average import price of zinc ash during the relevant period was lower than the assessed value.

Upon review, the Tribunal found that the Director's statement confirmed the real price of the goods and the cash transactions with the supplier's representative. The statement was deemed voluntary as it was not retracted. The Tribunal noted that the Revenue's case was not solely based on rejecting the transaction value under the Valuation Rules. Despite the appellant's argument regarding sequential assessment under the Valuation Rules, the Tribunal concluded that since the real transaction value was established, it could be used as the assessable value for duty calculation.

Regarding confiscation and redemption fine, the Tribunal ruled that since the goods were not available for confiscation, no redemption fine could be imposed. Consequently, the redemption fine was set aside, and the appeal was partly allowed.

In conclusion, the Tribunal upheld the revised assessable value based on the Director's statement and cash transactions, while setting aside the redemption fine due to the unavailability of goods for confiscation. The decision was pronounced on 16/5/2018.