2011 (1) TMI 996 - AT - Customs

Customs Act Appeals: Value Enhancement, Confiscation, Penalties

The appeals involved issues regarding enhancement of goods value, confiscation under Section 111(m) of the Customs Act, penalties under Sections 112/114A, ... Demand of differential duty and penalties - enhance the value of the goods - amount of duty was determined by the adjudicating authority by rejecting the declared value in two Bills of Entry and enhancing the value of the goods on the basis of Bank Advice - Commissioner further relied on Anil Modi's [indenting agent] statements to buttress his findings having admitted of receiving commission from ODC based on the higher price of the goods mentioned in the commission-related fax message - Dungarmal submitted that the transaction value was correctly declared by them and that no valid reason was stated by the Commissioner for rejecting the same & department should have given cogent reasons for rejection of the declared value - Held that:- Xerox copies of the alphabetically marked invoices were purported to have been issued by ODC as invoices covering a certain quantity of CRGO material sold to Dungarmal, it has not been established by the Revenue that the document was issued by ODC to Dungarmal as a supplementary invoice in respect of the goods already supplied under an original invoice. In fact, even the source of these alphabetically marked invoices was not disclosed to the appellants. Thus the Revenue could not produce the originals of these documents either. In the circumstances, the contention raised by assessee had to be accepted that the presumption under Sec.139 of the Customs Act is not available in respect of the xerox copies of what appeared to be alphabetically marked invoices issued by ODC to Dungarmal . In any case, Dungarmal did not admit having received such invoices, nor did they admit that payment of any amount mentioned in any of such invoices was made to ODC either through banking channels or otherwise. The statements of Anil Modi, who was apparently confronted with these documents, would not be of any avail to the Revenue inasmuch as, undisputedly, the documents were not retrieved from his premises and also did not mention his name as indenting agent. Whatever was stated by Anil Modi in relation to the alphabetically marked documents will be of no relevance. For all these reasons, unable to accept the said alphabetically marked documents as evidence of undervaluation of goods by those who filed the relevant Bills of Entry. In the result, the value declared in the relevant Bills of Entry will have to be accepted, particularly in the absence of proof of contemporary imports of identical/similar goods at higher value. Issues Involved:1. Enhancement of the value of goods and demand for differential duty.2. Confiscation of goods under Section 111(m) of the Customs Act.3. Imposition of penalties under Sections 112/114A of the Customs Act.4. Validity of documentary evidence and statements.5. Retraction of statements and their admissibility.6. Admissibility of facsimile copies as evidence.7. Quantum of penalties imposed.Detailed Analysis:Enhancement of the Value of Goods and Demand for Differential Duty:The appeals were directed against orders passed by the Commissioner of Customs based on investigations by the Directorate of Revenue Intelligence (DRI). The Commissioner enhanced the value of imported CRGO steel in coils and demanded differential duty based on documents such as Bank Advice and fax messages. The adjudicating authority found that Dungarmal paid higher prices than declared, as evidenced by a Bank Advice showing a payment of US$ 37,982.90 and other telex messages indicating payments to ODC. The Commissioner relied on these documents and statements to hold that Dungarmal had undervalued the goods, leading to demands for differential duty.Confiscation of Goods under Section 111(m) of the Customs Act:The goods were found liable for confiscation under Section 111(m) due to misdeclaration of value. Alfa, one of the High Seas buyers, declared a lower value than what was paid to Dungarmal, thus rendering the goods liable for confiscation. The Tribunal upheld this finding, noting that Alfa should have ensured the correctness of their declaration in the Bills of Entry.Imposition of Penalties under Sections 112/114A of the Customs Act:Penalties were imposed on Dungarmal, Alfa, and Anil Modi under Sections 112/114A for their roles in undervaluing the goods and evading duty. The Tribunal found that Alfa and Dungarmal were liable for penalties due to their involvement in undervaluation. However, the penalties on Alfa and Dungarmal were reduced to Rs. One lakh each, considering the circumstances.Validity of Documentary Evidence and Statements:The Tribunal examined the documentary evidence, including fax messages and Bank Advice, and found them to be credible. The statements of Anil Modi and Dungarmal Doshi were also considered. Anil Modi's statement, which was not retracted, corroborated the documentary evidence. Dungarmal Doshi's statement dated 25.5.99, which admitted to paying US$ 38,000 to ODC, was found to be voluntary and credible despite a subsequent retraction.Retraction of Statements and Their Admissibility:Dungarmal Doshi retracted his statement on 27.5.99, alleging coercion. However, the Tribunal found that he failed to prove these allegations. The retraction was not accepted, and the original statement dated 25.5.99 was treated as voluntary and truthful. The Tribunal cited case law to support the rejection of the retraction and the acceptance of the original statement.Admissibility of Facsimile Copies as Evidence:The Tribunal held that facsimile copies of documents were admissible under Section 138C of the Customs Act. These documents, including the faxed messages and Bank Advice, were deemed to be genuine and corroborated by statements. The Tribunal found no need for forensic examination or cross-examination of DRI officers, as the documentary evidence was sufficiently corroborated by oral evidence.Quantum of Penalties Imposed:The Tribunal reduced the penalties on Alfa and Dungarmal to Rs. One lakh each, considering the extent of undervaluation and the involvement of both parties. The penalties were found to be disproportionate to the offense, and a reduction was deemed appropriate.Summary of Results:- Appeal No.C/468/02 (Alfa Trancore Industries): Dismissed on merits, penalty reduced to Rs. One lakh.- Appeal No.C/469/02 (Dungarmal Pruthviraj & Co.): Dismissed on merits, penalty reduced to Rs. One lakh.- All other appeals: Allowed.(Pronounced and dictated in court)