By TIOL News Service

NEW DELHI, OCT 08, 2013: THE appellant filed a Bill of entry dated 26.10.2006 for the import of goods declared as stock lot of colour picture tubes 14" 20" 21" and 29". Along with said bill of entry the invoice as also the packing list was enclosed. The goods were declared as stock lot of CRT picture tubes 14" CRT picture tubes E data ground display tube colour with a phosphor dot screen pitch screen under the claim of classification under heading 8540 4000. The goods were examined by an officer below the rank of Deputy Commissioner who observed as under :-

"As directed, O/E 100% in presence of CHA and found to contain CRT picture tubes of 4 dimensions, said to be in stock lot as per invoice, PL and BL attached. The goods are bulky, packed in the pallets and are unbranded . It cannot be ascertained "whether they are defective or not". Further visually they appeared to be old but unused. ...... to see the goods."

Thereafter the goods were examined by the Deputy Commissioner who remarked as under:-

"Goods are new and prime they are not stock lot. Valuation may be carried out accordingly."

Based upon the above observation of the Deputy Commissioner, Revenue entertained a view that description of the goods in the invoice is not correct as also the classification of same under heading 8540 4000 is not correct. The goods are properly classifiable under heading 8540 0090 and chargeable to customs duty at the rate of 12.5%. Accordingly, the matter was taken up for adjudication by the Additional Commissioner of Customs, who observed that inasmuch as the wrong classification was claimed by the importer and the goods were not stock lot and were new goods as observed by the Deputy Commissioner, the same were also undervalued. He accordingly, enhanced the value of the goods on the basis of NIDB data. Accordingly, vide his order, he confiscated the goods with an option to the appellant to redeem the same on payment of redemption fine of Rs.3 lakhs and penalty of Rs.1.50 lakhs was also imposed upon the importer without any reference to the section of Customs Act under which such penalty was being imposed.

On appeal, Commissioner (Appeals) upheld the said order of adjudicating authority. Hence, the present appeal.

Member (J): observed,

Except the said report of the Deputy Commissioner, every other documents i.e. the invoices raised by the supplier, packing list as also the BL describing the goods as stock lot. From the facts on record, goods are of various sizes and of various numbers. The invoices raised by the supplier also reflect upon the value of each and every item. Revenue has not adduced any evidence to show that value of the said goods as reflected in the suppliers invoice is not the correct value. Comparing the same with NIDB data, where the goods were unbranded goods and there is no disclosure by the lower authorities as regards the brand name of the goods entered in NIDB data is neither appropriate nor proper.

It is held by various Courts that the charges of under valuation cannot be upheld on the basis of NIDB data.

Apart from the fact that NIDB data cannot be held to be an admissible evidence for the purpose of enhancement of value, in the present case, the goods imported by the appellant were unbranded. It does not stand disclosed in the impugned orders that the value picked up from the NIDB data was of unbranded goods or branded goods. In any case, unbranded goods cannot be compared with other branded or unbranded goods, especially when the goods were stock lot goods and there is no other evidence on record produced by the Revenue upheld the allegation of undervaluation.

Member (T): Observed,

Even appellant has failed to give any evidence/material indicating manufacturer's invoice or subsequent negotiation for reduction in price and year of manufacture. Once goods are proved to be new and non stock lot and also misdeclared , the value declared by the appellant became redundant as it is based on misdeclared facts. Appellant's contention for non acceptance of value also becomes unsustainable. Goods not imported making proper declaration that becomes smuggled goods.

Even on the point of classification, there is clear misdeclaration . Appellants has declared it CRT falling under chapter heading 8540 4000 attracting nil rate of actually. But these were rightly classifiable under chapter heading 8540 0090 attracting duty of 12.5% Assessment order no. 42/2006 dated 07.12.2006 has truly described the nature, uses and various specifications of Data/Operator display tube colour with a phosphor dot screen pitch smaller then 0.4 mm. No catalogue was produced by the party to verify above characteristics. Also no description was mentioned in Import invoice. Goods' description was misdeclared to claim wrong classification under 85404000 since the basic customs duty under this CTH was nil by tariff.

Invoices on record show import of branded goods though in examination these are described as unbranded goods. Appellants have attempted to evade duty by way of misdeclaration of the import. Once misdeclaration as to value, and classification is found, appropriate duty became payable with other consequences of law.

DIFFERENCE OF OPINION: Because of the difference between the two Members, the matter is referred to Third Member with the question, "Whether there was deliberate misdeclaration of classification and description as well as value inviting penal provisions under section 114 of Customs Act, 1962 as held by Hon'ble Member (Technical) or penalty is to be set aside as held by Member (Judicial) ."

(See 2013-TIOL-1478-CESTAT-DEL)