2020 (11) TMI 86 - AT - Customs

Valuation of imported goods - consumer electrical goods like light fittings, chandeliers, garden lights etc. - rejection of declared value - enhancement of the value - imposition of penalties - HELD THAT - The allegation of undervaluation has been established by the documentary evidence brought on record and corroborated by the oral evidence of the appellants. Interestingly, such oral evidences were given not once but on 3 to 4 occasions. Thus, the oral evidence is reliable as it corroborates whatever documentary evidence is available on record. Moreover, there is no allegation that the statements were given under threat or coercion or undue influence. The appellants have admitted that they were undervaluing, based on the invoice and packing list, etc. received through courier, whereas the actual import /transaction value (higher value) was contained in the order list sent by the supplier via email. Such email and order lists were downloaded and saved by the appellants on their computer(s) for future reference. Such data was retrieved at the time of search and is undisputed. Thus, revaluation made on the basis of the actual transaction value contained in the order list or by loading 33.3% for some of the items, based on the undervaluation as per the statements of the Manager, is just and reasonable. Revenue was not required to look into the value of the similar goods as per contemporaneous import, in view of the actual transaction value found in the documentary evidence retrieved from the appellants. Accordingly, rejection of the declared value and the re-valuation of the goods are upheld. So far as the penalties are concerned with respect to the 13 past bills of entries, the same were subject to assessment by the Customs Department. In some cases, the values were loaded, which were accepted by the appellant and duty paid accordingly. Accordingly, we set aside the penalty with respect to the past imports of ₹ 74, 05,019/- under Section 112(a) and reduce penalty under Section 114AA from Rs Ten lakhs to Rs One lakh. Penalty on Shri A.V. Joseph can be reduced to ₹ 1 lakh under Section 112(a) and ₹ 50, 000/- under Section 114 AA - as far as Penalty on Smt. Reshmi Sanjith under Section 112 (a) is concerned, the same is liable to be set aside as she has been working as an employee on a meagre salary and there is no allegation on her having made any personal pecuniary gain from the illegality being committed by the firm. Appeal allowed in part.

Summary

Issues:
Allegations of undervaluation and evasion of customs duty, seizure of documents, retraction of statements by involved parties, determination of actual value of imported goods, imposition of penalties, challenge to valuation methodology, consideration of documentary evidence, reliance on oral evidence, application of Customs Valuation Rules, assessment of penalties on involved individuals.

Detailed Analysis:

1. Allegations of Undervaluation and Evasion of Customs Duty:
The main issue in this case revolved around the allegations of undervaluation and evasion of customs duty by the appellant, a partnership firm engaged in importing consumer electrical goods from China. The Directorate of Revenue Intelligence (DRI) conducted a search at the appellant's premises, seized relevant documents, and alleged undervaluation based on gathered intelligence.

2. Retraction of Statements:
Statements of involved parties, including Shri A.V. Joseph and Smt. Reshmi Sanjith, were recorded during the investigation. However, both parties later retracted their statements, claiming coercion and threat. The Department refuted these retractions, leading to a dispute regarding the admissibility and reliability of the statements made.

3. Determination of Actual Value of Imported Goods:
The tribunal ascertained the actual value of the goods imported by the appellant based on seized documents and order lists. The revaluation of goods was done considering the actual transaction value contained in the order list, leading to the imposition of differential duty and penalties.

4. Imposition of Penalties:
The Customs Department imposed penalties on the appellant firm, Shri A.V. Joseph, and Smt. Reshmi Sanjith under various sections of the Customs Act, 1962. The tribunal analyzed the grounds for imposing penalties, including undervaluation, mis-declaration, and non-compliance with customs regulations.

5. Challenge to Valuation Methodology:
The appellant challenged the valuation methodology adopted by the Department, arguing that the revaluation based on previous import order lists and loading values for certain items was unjustified. The tribunal evaluated the valuation process and its compliance with Customs Valuation Rules.

6. Consideration of Documentary and Oral Evidence:
Both documentary evidence, such as seized emails and order lists, and oral evidence from involved parties were crucial in establishing the undervaluation allegations. The tribunal assessed the reliability and admissibility of these evidences in determining the actual value of imported goods.

7. Application of Customs Valuation Rules:
The tribunal examined the application of Customs Valuation Rules in the case, emphasizing the importance of actual transaction value for valuation purposes. The tribunal upheld the rejection of declared values and revaluation based on documentary evidence.

8. Assessment of Penalties on Involved Individuals:
The tribunal reviewed the imposition of penalties on Shri A.V. Joseph and Smt. Reshmi Sanjith, considering their roles in the alleged undervaluation and evasion of customs duty. The tribunal adjusted the penalties imposed based on the level of involvement and culpability of each individual.

In conclusion, the tribunal upheld the allegations of undervaluation, confirmed the revaluation of imported goods, and adjusted the penalties imposed on the involved parties based on the evidence and circumstances of the case. The appeals of the appellant firm and Shri A.V. Joseph were allowed in part, while the appeal of Smt. Reshmi Sanjith was fully allowed, entitling the appellants to consequential benefits as per the law.