2024 (11) TMI 844 - AT - Customs

Mis-declaration of value - rejection of the assessable value of seized goods - Liability for confiscation of goods and imposition of penalty under Section 111(m) of the Customs Act, 1962 - Differential customs duty in respect of the seized goods, on which altered MRP stickers were found, was proposed to be recovered from the appellant along with the proportionate interest and the appropriate penalty - HELD THAT - Rule 5 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008 has been relied upon by the department while confirming the impugned demand. We observe that the said rule is vis-a-vis a manufacturer who alters or tempers the retail sale price declared on the package of the goods after their removal from the place of manufacture resulting in increase of price and in such situation the said increase price shall be taken as retail sale price of the goods removed. However, since the appellant herein is the importer as different from the manufacturer the said rule is held to has wrongly been invoked. The apparent and admitted fact on record remains is that the MRP sticker found present on the product examined at import shed was true as per the declaration in the import documents. The alteration was found at a later stage when the goods were already reached the domestic market to the retailers through the distributor of the appellant. The only basis that origin of both types of MRP stickers i.e. from two different retailers is same has wrongly be held to be an evidence against appellant to have altered those stickers. Thus, we hold that there is no evidence whatsoever on record that the alleged alteration in the MRP was done by the appellant or with the consent and/or knowledge of the appellant. As already brought to notice that there is no evidence for any flow back of money to the appellant. The onus was upon the department to prove that any money has come back to the appellant. On the contrary, the proprietors of the retailers have denied sending any money back to the appellant. We hold that demand has been confirmed on the basis of presumptions and surmises. We rely upon decision of this Tribunal in the case of Videocon International Ltd 2004 (3) TMI 111 - CESTAT, MUMBAI . Finally keeping in view that the two samples withdrawn for verifying the value from the open market, one invoice in that regard is post GST regime so is invalid and cannot be applied to the instant case and it is not clear that the same piece was sold under invoice produced as evidence by the department. Secondly department has failed to produce any evidence that the goods purchased on those two invoices are same as have been imported by the appellant. The similarity of font size is nothing more than the presumption and assumption on part of department. In light of these observations, we are not in agreement with the findings in the order under challenge. Hence we hold that the goods in the present case are not liable for being confiscated in terms of Section 111 (m) of the Customs Act, 1962. There is no circumstance apparent which warrants the imposition of penalty. Consequently, the order under challenge is hereby set aside and the appeal is hereby allowed.

Summary

Issues Involved:

1. Allegation of misrepresentation of value through alteration of Maximum Retail Price (MRP) stickers.
2. Responsibility for accurate declaration of Retail Sale Price (RSP) under the Standards of Weights and Measures Act, 1976.
3. Admissibility and reliability of evidence, including statements and cross-examinations.
4. Application of Rule 5 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules 2008.
5. Validity of market survey and evidence gathered from it.
6. Liability for confiscation of goods and imposition of penalty under Section 111(m) of the Customs Act, 1962.

Detailed Analysis:

1. Allegation of Misrepresentation of Value through Alteration of MRP Stickers:

The primary issue was whether the appellant-importer altered the MRP stickers on imported goods to misrepresent their value. The investigation revealed discrepancies in the MRP between the imported goods and those found in the market. The appellant contended that any alteration was done by retailers, not by them, and that the market survey was conducted without their knowledge. The tribunal found no evidence directly linking the appellant to the alteration of MRP stickers, as the investigation officers admitted no samples were drawn from the distributor, M/s. Moon Enterprises, which was the appellant's direct link in the distribution chain.

2. Responsibility for Accurate Declaration of RSP:

The Department argued that the appellant failed to accurately declare the RSP at the time of importation, as required by the Standards of Weights and Measures Act, 1976. The appellant countered that the declared MRP was accurate at the time of import and any subsequent alteration was not their responsibility. The tribunal noted that the MRP stickers on the products at the import shed matched the import documents, and any changes occurred later in the distribution chain, absolving the appellant of responsibility for the alterations.

3. Admissibility and Reliability of Evidence:

The tribunal scrutinized the evidence, including statements and cross-examinations. It was noted that the proprietor of M/s. Moon Enterprises was not cross-examined, and the investigation officers admitted to not drawing samples from the distributor. The tribunal emphasized the importance of cross-examination and found that the lack of it rendered the statements unreliable. The tribunal cited precedents, including Andaman Timber Industries and Arya Abhushan Bhandar, to support the inadmissibility of uncorroborated statements.

4. Application of Rule 5 of Central Excise Rules 2008:

The Department applied Rule 5, which pertains to manufacturers altering retail sale prices post-removal from the place of manufacture. The tribunal held this rule inapplicable as the appellant was an importer, not a manufacturer. The tribunal observed that the alteration was found at the retail level, not at the point of import, and thus the rule was wrongly invoked.

5. Validity of Market Survey and Evidence Gathered:

The tribunal questioned the validity of the market survey, noting that the appellant was neither informed nor involved in the survey. The evidence from the survey, including invoices post-GST implementation, was deemed invalid as it did not conclusively link the goods to the appellant. The tribunal criticized the Department's reliance on assumptions and presumptions, particularly regarding the similarity of font size on MRP stickers.

6. Liability for Confiscation and Imposition of Penalty:

The tribunal concluded that the goods were not liable for confiscation under Section 111(m) of the Customs Act, 1962, as there was no evidence of the appellant's involvement in altering the MRP. The tribunal found no grounds for imposing a penalty, as the Department failed to prove any flow back of money to the appellant or any direct involvement in the alleged misrepresentation.

Conclusion:

The tribunal set aside the order under challenge, allowing the appeal. It held that the allegations were based on presumptions without substantive evidence, and the appellant was not responsible for the alleged alterations in MRP. The tribunal emphasized the importance of evidence and cross-examination in confirming such allegations.