2020 (2) TMI 199 - AT - Customs

Valuation of imported goods - rejection of declared value - prohibited goods or not - contemporaneous imports/NIDB data - HELD THAT - The tyres are not prohibited item under Exim policy, and can be imported freely. Further as the tyres are generally required all over the country there are several importers of identical/similar goods. It is trite law that since the goods were assessed by proper officer based on transaction value, onus lies on the Revenue to prove undervaluation, which it has failed miserably to do so since it did not show any contemporaneous import data of identical or similar items or NIDB data to indicate undervaluation and therefore the invoice value is required be accepted and the transaction value itself and hence could not have been discarded. No copy of the emails on which the Department seeks to rely has been made as RUDs. Emails and other electronic evidence cannot be relied upon to prove undervaluation in absence of compliance of provisions of Section 138C of the Act - Thus statements of Shri H S Chadha cannot be relied upon and given credence to substantiate the Departments claim of undervaluation without any corroborative evidence and the charge of undervaluation cannot be made out on mere assumptions and presumptions especially since he himself has stated on various occasions that there is no undervaluation and these are quotations. Tyres are regularly imported all over the country and therefore the Department could have easily garnered evidence of contemporaneous imports which it admittedly did not do. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Undervaluation of imported tyres.
2. Rejection of declared value under Rule 12 of Customs Valuation Rules 2007.
3. Confiscation of goods and imposition of penalties.
4. Demand for differential duty and interest.
5. Denial of exemption from payment of Special Additional Duty (SAD).

Issue-Wise Detailed Analysis:

1. Undervaluation of Imported Tyres:
The primary issue was the alleged undervaluation of tyres imported by two companies under the same management. The revenue authorities alleged undervaluation based on emails and statements from the director, which led to the rejection of the transaction value and the determination of a higher value for duty calculation. The tribunal found that the revenue failed to provide contemporaneous import data or any evidence of extra payment beyond the declared transaction value. The tribunal emphasized that the onus of proving undervaluation lies with the revenue, which it failed to discharge.

2. Rejection of Declared Value under Rule 12 of Customs Valuation Rules 2007:
The adjudicating authority rejected the declared value under Rule 12 and redetermined the value based on email quotations. The tribunal noted that the revenue did not sequentially apply the Customs Valuation Rules 2007, as required by law. The tribunal highlighted that quotations alone cannot be the basis for re-determining the value of goods, as established in previous judgments.

3. Confiscation of Goods and Imposition of Penalties:
The adjudicating authority ordered the confiscation of goods with an option for redemption upon payment of a fine. Penalties were also imposed on the companies and the director. The tribunal found that the statements of the director were conflicting and could not be relied upon without corroborative evidence. The tribunal ruled that the charge of undervaluation could not be substantiated based on assumptions and presumptions.

4. Demand for Differential Duty and Interest:
The adjudicating authority confirmed the differential duty demand along with interest. The tribunal ruled that the demand for differential duty and interest could not be sustained as the revenue failed to prove undervaluation. The tribunal also noted the absence of any evidence indicating that the buyer and seller were related or that the declared transaction value was not the actual value paid.

5. Denial of Exemption from Payment of Special Additional Duty (SAD):
The adjudicating authority denied the exemption from SAD on certain goods, citing the absence of RSP stickers. The tribunal found that this issue was not proposed in the show cause notice and that the absence of stickers was observed much after the clearance from the port. The tribunal ruled that the denial of SAD exemption could not be sustained.

Conclusion:
The tribunal set aside the impugned orders against both companies and their director, ruling that the demand for differential duty, interest, penalties, and denial of SAD exemption could not be sustained. The appeals were allowed with consequential benefits, and any appropriated amounts were ordered to be revoked.

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