2021 (12) TMI 744 - AT - Customs

Finalization of provisional assessement - import of Embroidery Beads/Stones - enhancement of value - goods confiscated under Section 111 (m) of Customs Act - levy of redemption fine and penalty - HELD THAT - It is found from the findings of the learned Commissioner that he was correct in coming to the conclusion that transaction value in these cases cannot be rejected and assessment cannot be finalized as per the Office Note of the SIB. Valuation has to be done as per Section 14 of the Customs Act, 1962, i.e. as per the transaction value and if there is reason to doubt the truth and accuracy of the transaction value the reason has to be recorded and after rejecting the transaction value, the correct value should be determined as per the Customs Valuation Rules. There is not even a suggestion in the show cause notice that the transaction value of the imported consignments was not correct or there was relationship between the buyer and seller or that there was any additional consideration for sale or the value was manipulated in any other manner - the learned Commissioner was correct in accepting the value declared by the importer and ordering finalization of the provisional assessment accordingly. Confiscation of the goods under Section 111 (m) and imposition of redemption fine - HELD THAT - Since, there was no mis-declaration of value as has been correctly found by the learned Commissioner, the confiscation of the goods cannot be sustained on another ground that the description of the goods did not match with that in the test report - the description of the goods in the test report was only an elaboration of the description already given in the bills of entry and nothing else. This cannot be called a mis-declaration of the description of the goods. Therefore, confiscation of the goods under Section 111 (m) and imposition of penalty under Section 125 cannot be sustained and need to be set aside. Imposition of penalty under Section 112 (a) - HELD THAT - The penalty under Section 112 (a) is imposable for acts or omission which render goods liable for confiscation under Section 111. Since it is found that the confiscation cannot be sustained neither can be the penalty under Section 112 (a). Penalty under Section 114AA of the Customs Act - HELD THAT - In the impugned order the penalty of ₹ 10 lakhs was imposed upon the importer under Section 114AA but no such proposal was made in the show cause notice and, therefore, it is beyond the show cause notice and cannot be sustained and the same is liable to be set aside. It is further found that no misdeclaration of goods or value has been established in the present case and for this reason also penalty under Section 114AA cannot be sustained. The impugned order is set aside and the importer s appeal is allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the assessment of the bills of entry filed by the appellant/importer as per the declared value was correct or whether the value should have been enhanced as proposed in the show cause notice.
2. Whether the confiscation of the goods under Section 111 (m) of the Customs Act, 1962, was correct and if so, whether the redemption fine of ? 90 lakhs imposed by the Commissioner is correct.
3. Whether the imposition of penalty of ? 10 lakhs under Section 112 (a) is correct and adequate or it needs to be set aside or enhanced.
4. Whether the imposition of penalty of ? 10 lakhs under Section 114AA of the Customs Act, 1962, on the importer is correct and adequate or it needs to be enhanced or set aside.

Detailed Analysis:

1. Assessment of Bills of Entry:
The appellant described the imported goods as "Embroidery Beads/Stones." CIPET's test reports confirmed the goods as Embroidery Beads/Stones with specific plastic content. The Commissioner noted that the description in the test report was more elaborate but did not contradict the declared description. The Tribunal held that the declared value should be accepted as there was no evidence to doubt its accuracy. The DGOV Circular and Office Note did not provide specific reasons to reject the declared value, and the Customs Valuation Rules, 2007, were not properly applied. Therefore, the declared transaction value was upheld.

2. Confiscation and Redemption Fine:
The Commissioner ordered confiscation under Section 111 (m) on the grounds of mis-declaration of goods. However, the Tribunal found that the description in the test report was merely an elaboration of the declared description and did not constitute mis-declaration. Since there was no mis-declaration of value, the confiscation under Section 111 (m) and the imposition of a redemption fine of ? 90 lakhs were set aside.

3. Penalty under Section 112 (a):
The penalty under Section 112 (a) is imposed for acts or omissions that render goods liable for confiscation under Section 111. Since the confiscation was not sustained, the penalty under Section 112 (a) was also set aside.

4. Penalty under Section 114AA:
The Tribunal noted that no proposal for a penalty under Section 114AA was made in the show cause notice. Additionally, since no mis-declaration was established, the penalty under Section 114AA was set aside.

Conclusion:
The Tribunal set aside the impugned order, allowing the importer’s appeal with consequential relief. The Revenue’s appeal was rejected, and the stay application filed by the Revenue was disposed of. The cross-objection filed by the importer in the Revenue’s appeal was also disposed of.