2005 (7) TMI 178 - AT - Customs

Applicability of the Section 14 - duty free goods - Undervaluation Of goods - Export of Polyethylene Newar/Straps to U.A.E. - Adjudication - EXIM - HELD THAT - Commissioner while dropping the proceedings has upheld the justification of invoking the provisions of Section 14(1) however he has found that no case was made out to hold that the goods exported by M/s. DOL were grossly overvalued. He has observed that evidence of Shri Kamal Chadda of Dubai, who imported the Cargo had not been challenged by Revenue and there was no bar on DRI officers to have examined him, as was evidence his affidavit in Income Tax proceedings at Delhi before the Income Tax Officer. That misdeclaration at Dubai was the effort result of his employees that Testimony was accepted by I. Tax Officer there was no reason arrived pleaded herein to reject the same when Contra evidence of any kind of by recording Kamal Chadda's further explanation his employees statements were not brought on record. When full remittance received through Banking channels is being upheld, the declarations of undervaluation made to Dubai Customs cannot be a reason to arrive at bringing home the charge on the present appellants of having knowledge thereto. The forging documents of the Delhi Chamber Officials by the appellants cannot be conclusively accepted. If the appellants have given duplicate sets of invoices showing different values, that surely cannot be an offence of misdeclaration on Customs Documents in India. Since it is not admitted by the exporters that the lower values on such invoices was the Transaction Value. The price as shown at higher levels are claimed, declared confirmed to be received via Banking Channels is a fact on record. The fact of duplicate sets being in existence is only a presumption against the respondents, if at all, they have supplied the same. It is common knowledge that fake letter heads, can be duplicated by Computers/Scanners there is no material in the grounds urged before us to arrive at that, as per forensic evidence, etc they are handiwork of issued by M/s. DOL especially the invoices with lower prices or they were within the knowledge of M/s. DOL. The gaps flaws in the re-enquiry made have been observed by the Commissioner which have led him to drop the proceedings that cannot be allowed to be filled in by this appeal. When in law on facts, proceedings are found to be not permissible, being void ab inito on merits there are no reasons to uphold the order of dropping the proceedings we find no merits in the grounds taken to allow these appeals. Consequent to the findings, these appeals are rejected.

Summary

Issues Involved:
1. Res Judicata
2. Misdeclaration of Goods
3. Valuation under Section 14(1) of the Customs Act, 1962
4. Forgery of Invoices
5. Role of Importer and Employees
6. Profit Margin and Overvaluation
7. Evidence and Burden of Proof

Issue-wise Detailed Analysis:

1. Res Judicata:
The principle of res judicata was a significant issue in this case. The respondents argued that the fresh show cause notice issued on 30-12-1997 was barred by res judicata as the matter had already been settled by the Supreme Court. The Tribunal agreed, stating that the fresh notice was based on the same grounds as the earlier notice and that the issue of valuation under Section 14 of the Customs Act had been conclusively settled by the Supreme Court.

2. Misdeclaration of Goods:
The Tribunal examined whether the goods were misdeclared. The Commissioner had previously found that the goods were made from prime quality granules and not from recycled material as alleged. This finding was upheld by the CEGAT and the Supreme Court, making the issue final. The Tribunal noted that the fresh show cause notice did not bring any new evidence to alter this conclusion.

3. Valuation under Section 14(1) of the Customs Act, 1962:
The Tribunal discussed whether Section 14(1) was applicable to the valuation of export goods. The Commissioner had justified invoking Section 14(1) but found no evidence of gross overvaluation. The Tribunal upheld this view, noting that the Supreme Court had left the issue open but had not provided grounds for a fresh adjudication.

4. Forgery of Invoices:
The Department alleged that the invoices submitted to Dubai Customs were forged by the employees of the exporter. The Tribunal found that the Commissioner had rightly dismissed this allegation due to lack of concrete evidence. The importer's confession that his employees had forged the invoices to evade customs duty was not corroborated by any additional evidence.

5. Role of Importer and Employees:
The Tribunal scrutinized the role of the importer and his employees in the alleged forgery. The Commissioner had found that the employees might have acted without the knowledge of the importer. The Tribunal agreed, noting that there was no evidence to suggest that the exporter was involved in or aware of the forgery.

6. Profit Margin and Overvaluation:
The Department argued that a profit margin of 1900% indicated overvaluation. The Tribunal noted that while a high profit margin could suggest manipulation, it was not conclusive evidence of overvaluation. The Commissioner had found that the remittances were received through banking channels, which supported the declared value.

7. Evidence and Burden of Proof:
The Tribunal emphasized that the burden of proof was on the Department to establish overvaluation and forgery. The Commissioner had found that the Department failed to provide sufficient evidence. The Tribunal concurred, stating that the Department's reliance on the importer's uncorroborated statement was insufficient.

Conclusion:
The Tribunal concluded that the fresh show cause notice was barred by res judicata and that the Department had failed to provide sufficient evidence to support the allegations of misdeclaration, overvaluation, and forgery. Consequently, the appeals were rejected, and the Commissioner's order dropping the proceedings was upheld.