Cus - Basis on which value of Appellants' imports is sought to be 'again' enhanced by SCN was already available with department at time of assessment of duty made by relying on contemporaneous value - Larger period of limitation not applicable: CESTAT
By TIOL News Service
MUMABI, DEC 04, 2015: INFORMATION was gathered that the appellant M/s Rico Gems Corporation& others were evading Customs Duty by resorting to under valuation and mis-declaration of the goods and selling the same to M/s. Telebrands India Pvt. Ltd who is engaged in business of selling of the goods through telemarketing.
Various documents were recovered from the appellants' premises. Officers also obtained report from Custom Department, Hong Kong. In one of the statements undervaluation was admitted by ShriNarendra Mehta, proprietor of importer firm. However, the said statement was retracted. Undervaluation was alleged to be further supported by the difference in the value declared to the Customs, sale price of importer to M/s. Telebrand and sale price of the Telebrand to their ultimate customers, the difference thereof was also considered for alleging the undervaluation.
During the investigation, goods were lying with buyer of the imported goods, M/s. Telebrand and M/s. Tele Product were seized. On the basis of detailed investigation, a show cause notice No. F.No. VIII/CG-25/S&D/4/06/1163 dated 31/3/2010 came to be issued wherein it was proposed to demand of differential duty on the undervalued amount, to confiscate the seized goods and to impose penalties. The said show cause notice was adjudicated wherein the Commissioner confirmed the charges and proposals made in the show cause notice.
In the present case too, the Commissioner of Customs (Import), New Custom House, Ballard Estate, Mumbai-I confirmed demand of differential custom duty, penalties and personal penalties on various persons on the issue of undervaluation of imported goods.
The appellants are before the CESTAT and make voluminous submissions negating the stand taken by the department.
The Special Consultant for the respondent department while reiterating the findings contained in the impugned order also made lengthy submissions supported by case laws.
The Bench, inter alia , observed thus -
+ As per Rule 5 and 6 of the Customs Valuations Rules, 1988 where two or more values of contemporaneous imports are available, the lowest of such value has to be adopted. In the present case, the department also accepted the contemporaneous import price at the time of clearance and assessment of the goods. Subsequently even if the price of M/s. Shreenath and M/s. GNG& Co. is considered, the situation will be that two contemporaneous values are available and according to Rule 5 and 6 of Customs Valuation Rules, 1988, the lowest of the value shall be adopted. In this legal position, the adjudicating authority has erred in applying the alleged value of M/s. Shreenath and M/s. GNG& Co. for enhancement of the value.
+ As regard the issue that if the value is enhanced once, whether further enhancement is permissible, we are of the view that it is only possible when it is established that there is undervaluation and actual value has been suppressed. However, in the present case, in our observation there is no positive evidence which establish the undervaluation. Therefore as per the settled legal position once value of imported goods has been enhanced applying the contemporaneous value, no further enhancement is permissible.
+ Mere price negotiation by a person, other than importer, with the foreign supplier alone is not an act of offence or it does not establish the undervaluation of the goods. We observed that neither in any of the statement of the witnesses nor in documentary evidences show that due to negotiation either M/s. Telebrand or importer M/s. Rico Gems have made any payment to the foreign supplier over and above the price declared in the invoices submitted to the Customs Department. For this reason also negotiation of the price between M/s. Telebrand and foreign supplier has no effect on the value negotiated, invoiced by foreign supplier and declared by the importer to the Customs.
+ In terms of clear provisions of above Section 139, the documents provided from outside India can be admitted as evidence only when it is not proved contrary. In the present case, firstly the documents attached with the letter has not been signed. Secondly, attested copies of invoices were not submitted. In the annexure to the letter, invoice number, description of the goods are wrongly mentioned therefore it is proved contrary to the actual details of the imported goods, therefore, the same cannot be admitted as evidence in terms of Section 139.
+ The bulk of the imports which are subject matter of the instant appeal are after recording of statements (in April 2006) and recovery of the documents by the department, and yet the assessments were finalized on the basis of contemporaneous value. The basis on which the value of the Appellants imports is sought to be again enhanced by the present Show Cause Notice (dated 31.08.2010) was already available with the department at the time of assessment of duty made by relying on contemporaneous value. It is admitted fact that the value was sought to be enhanced by the department on the basis of contemporaneous value of Shreenath and GNG and not on any admissible evidence, therefore on the part of the Appellant, no willful mis-statement or suppression of facts or intention of evading duty exist. The larger period of limitation, therefore, is not applicable.
The impugned order was set aside and all the appeals were allowed with consequential reliefs.
In passing: Also 2015-TIOL-2809-CESTAT-MUM .
(See 2016-TIOL-23-CESTAT-MUM)
