2025 (1) TMI 317 - AT - Customs

Evasion of Customs Duty - failure to declare MRP before the Customs and sold the goods at higher MRP - scope of its jurisdiction of Adjudicating Authority in terms of the remand order - sufficient opportunity of hearing not granted to appellant - violation of principles of natural justice. Scope of its jurisdiction of Adjudicating Authority in terms of the remand order - HELD THAT - There are no hesitation in saying that the Adjudicating Authority has exceeded its jurisdiction in considering the issue in respect of the live consignment and the goods lying in the godown of the appellant as they have already been decided by the Tribunal and the same were binding on the Adjudicating Authority being a subordinate authority. Reference made to the decision of the Apex Court in UNION OF INDIA VERSUS KAMLAKSHI FINANCE CORPORATION LTD. 1991 (9) TMI 72 - SUPREME COURT laying down that the principles of judicial discipline require that, the orders of the higher Appellate Authorities should be followed unreservedly by the subordinate authorities unless its operation has been suspended by competent court. The order of the Appellate Collector is binding on the Assistant Collector working within his jurisdiction and the order of the Tribunal is binding on the Assistant Collectors and the Appellate Collectors, who function under the jurisdiction of the Tribunal . Sale of goods on much higher MRP after changing the MRP label - HELD THAT - The Tribunal has categorically observed that there is clear violation of the provisions of the Customs Act, which calls for demand of differential duty as well as penal action. Since the quantification of the differential duty was made in a summary manner based on certain illustrative evidences, the Tribunal had remanded the limited issue for quantification of differential duty by detailed verification. Whether sufficient opportunity has been granted to the appellant during the remand proceedings? - HELD THAT - Personal hearing was given for 24.09.2018 but nobody appeared, and accordingly the case was taken up for adjudication on the basis of the available records and the invoices submitted by the appellant. Hence, it cannot be said that the principles of natural justice has not been followed and sufficient opportunity has not been granted to the appellant, however, it is the appellant who failed to co- operate and deliberately avoided the hearing. As per the Revenue, on examination it was revealed that MRP/RSP were neither affixed on individual packs nor on cardboard cartons and later, it was found that these goods were sold at much higher price than the MRP declared for assessment purposes thereby evading the payment of appropriate CVD - There are no merits in the submissions at this stage as the Revenue had not challenged these findings of the Tribunal in the earlier round of litigation. Quantification and its consideration by the Adjudicating Authority - HELD THAT - Even during the course of arguments, the learned counsel for the appellant had no further documents to substantiate the contention that the sale price higher than the declared MRP comprised only a small percentage and therefore there are no reason to differ from the findings of the Adjudicating Authority. Conclusion - i) Selling goods at higher MRPs than declared constitutes a customs violation warranting differential duty and penalties. ii) The duty demand on the live consignment was set aside. The duty demand on goods in the godown was set aside. The need for quantification of differential duty on goods sold at higher MRPs was upheld. iii) The Adjudicating Authority's jurisdictional overreach was rectified by setting aside its contrary findings. iv) The quantification of differential duty was affirmed based on available evidence. Appeal allowed in part.

1. ISSUES PRESENTED and CONSIDERED

The judgment primarily revolves around the following core legal questions:

Whether the customs duty demand on the live consignment covered by Bill of Entry No.8107125 dated 27.01.2015 was justified.
Whether the customs duty demand on goods found in the appellant's godown was sustainable.
Whether the appellant's action of selling goods at a higher MRP than declared constituted a violation justifying differential duty and penal action.
Whether the Adjudicating Authority exceeded its jurisdiction by revisiting issues already decided by the Tribunal.
Whether the quantification of differential duty was conducted in accordance with the Tribunal's remand directions.

2. ISSUE-WISE DETAILED ANALYSIS

First Issue: Customs Duty on Live Consignment

Legal Framework and Precedents: The assessment of goods based on MRP is guided by specific notifications and customs regulations. The Tribunal had previously held that the demand of duty on the live consignment was premature.
Court's Interpretation and Reasoning: The Tribunal found that since the goods were provisionally released and the duty had already been paid, the demand was unjustified.
Key Evidence and Findings: The goods were not affixed with MRP labels, leading to the provisional release on bond and payment of differential duty.
Application of Law to Facts: The Tribunal concluded that the Adjudicating Authority should not have confirmed the duty as the goods were released provisionally and the duty was already paid.
Treatment of Competing Arguments: The Tribunal rejected the Adjudicating Authority's reasoning that the goods would have been sold at a higher MRP.
Conclusions: The duty demand on the live consignment was set aside.

Second Issue: Duty on Goods in Godown

Legal Framework and Precedents: The Tribunal had previously held that the demand for duty on goods in the godown was unsustainable as it amounted to a double demand.
Court's Interpretation and Reasoning: The Tribunal reiterated that the goods in the godown were part of past imports and should not be subjected to a separate duty demand.
Key Evidence and Findings: The goods in the godown were without MRP labels and were allegedly sold at higher MRPs.
Application of Law to Facts: The Tribunal found no justification for a separate duty demand on these goods.
Treatment of Competing Arguments: The Tribunal dismissed the Adjudicating Authority's view that the goods were improperly imported.
Conclusions: The duty demand on goods in the godown was set aside.

Third Issue: Sale at Higher MRP

Legal Framework and Precedents: Selling goods at a higher MRP than declared constitutes a violation under customs law, warranting differential duty and penalties.
Court's Interpretation and Reasoning: The Tribunal acknowledged the appellant's admission of selling goods at higher MRPs and deemed the differential duty demand justified.
Key Evidence and Findings: Invoices showed sales at higher MRPs, particularly in Kerala.
Application of Law to Facts: The Tribunal remanded the issue for detailed verification of invoices to accurately quantify the differential duty.
Treatment of Competing Arguments: The Tribunal found the appellant's argument of limited higher MRP sales unsubstantiated due to lack of evidence.
Conclusions: The Tribunal upheld the need for quantification of differential duty.

Jurisdictional Overreach by Adjudicating Authority

Legal Framework and Precedents: The principles of judicial discipline require subordinate authorities to adhere to higher appellate authorities' orders.
Court's Interpretation and Reasoning: The Tribunal found that the Adjudicating Authority exceeded its jurisdiction by reconsidering issues already settled by the Tribunal.
Key Evidence and Findings: The Adjudicating Authority revisited and contradicted the Tribunal's prior rulings.
Application of Law to Facts: The Tribunal set aside the Adjudicating Authority's findings on the first two issues.
Treatment of Competing Arguments: The Tribunal emphasized adherence to its prior decisions.
Conclusions: The Tribunal reasserted its previous rulings and set aside the Adjudicating Authority's contrary findings.

Quantification of Differential Duty

Legal Framework and Precedents: The Tribunal had remanded the issue for detailed verification of invoices to determine the correct differential duty.
Court's Interpretation and Reasoning: The Tribunal found that the appellant failed to provide additional evidence to contest the quantification.
Key Evidence and Findings: The appellant did not submit further invoices beyond those already examined.
Application of Law to Facts: The Tribunal upheld the Adjudicating Authority's quantification based on available evidence.
Treatment of Competing Arguments: The Tribunal dismissed the appellant's claims due to lack of supporting documentation.
Conclusions: The Tribunal affirmed the quantification of differential duty.

3. SIGNIFICANT HOLDINGS

Core Principles Established: The principles of judicial discipline mandate adherence to higher appellate authorities' orders. Selling goods at higher MRPs than declared constitutes a customs violation warranting differential duty and penalties.
Final Determinations on Each Issue:

The duty demand on the live consignment was set aside.
The duty demand on goods in the godown was set aside.
The need for quantification of differential duty on goods sold at higher MRPs was upheld.
The Adjudicating Authority's jurisdictional overreach was rectified by setting aside its contrary findings.
The quantification of differential duty was affirmed based on available evidence.

Verbatim Quotes of Crucial Legal Reasoning: "The orders of the higher Appellate Authorities should be followed unreservedly by the subordinate authorities unless its operation has been suspended by competent court."