2014 (1) TMI 1120 - AT - Customs

Importer & Directors Face Penalties for Misdeclaration & Under-Valuation of Mobile Phones

The Commissioner confirmed duty and penalties against the importer and directors for mis-declaration and under-valuation of imported mobile phones. The ... Import of mobile phones - Mis declaration of goods - Under valuation of goods - Held that:- whatever special customs duty (SAD) was required to be paid on the import of the goods, was refundable to the assessee at the time of sale of the mobile phones upon payment of VAT. In fact, we find that confirmation of SAD relates to previous 27 consignments, which were cleared by the Customs authorities and were subsequently sold by the assessee in the open market and the SAD paid by the importer at the time of clearance of those 27 consignments stand refunded to the said assessee - even if higher SAD would have been paid by them at the time of import of earlier 27 consignments, the same would have been refunded to the importer. Revenue has not initiated proceedings against the assessee in respect of SAD already refunded to them. As such, we are of the view that differential SAD now being confirmed against the assessee, by way of impugned order, is also eligible to be refunded to them, thus making the entire situation revenue neutral. As regards the balance amount of duty, falling under the category of education cess and higher education cess, totally amounting to ₹ 16.32 lakhs, we find that the appellants bank guarantee of ₹ 13.98 lakhs is sufficient to cover the said amount. We accordingly direct the appellant to keep the said bank guarantee alive during the pendency of the appeal subject to which balance amount of duty and penalties imposed upon all the applicants shall stand waived and its recovery stayed during pendency of the appeal - Conditional stay granted. Issues:1. Confirmation of duty and penalties against the importer and directors.2. Mis-declaration and under-valuation of imported mobile phones.3. Refund of special additional customs duty (SAD) and other duties.4. Bank guarantee and pre-deposit requirements.5. Fraud and mis-declaration by the importer in connivance with another party.6. Difference of opinion on the waiver of deposit and penalties.Issue 1: Confirmation of duty and penalties against the importer and directors:The Commissioner confirmed a duty of Rs.70,51,612 against the importer, M/s. R V Solution Pvt. Ltd., and imposed penalties under Sections 112 and 114 of the Customs Act on the company and its directors. The duty was related to the mis-declaration and under-valuation of mobile phones imported by the company.Issue 2: Mis-declaration and under-valuation of imported mobile phones:The importer declared values ranging from 28 to 35 USD per piece for mobile phones, but the Revenue enhanced the value to 55 USD per piece based on other importers' declarations. However, it was found that even the values declared by other importers were also enhanced to 55 USD by Customs authorities. Allegations included mis-declaration and under-valuation of goods.Issue 3: Refund of special additional customs duty (SAD) and other duties:The importer claimed that the special additional customs duty paid at the time of import was refunded upon selling the goods in the market. The differential amounts confirmed by the Commissioner were argued to be required to be refunded, making the situation revenue neutral. The appellant had already given a bank guarantee to cover the disputed amount.Issue 4: Bank guarantee and pre-deposit requirements:The appellant sought dispensation of pre-deposit based on the bank guarantee provided, which was deemed sufficient to cover the disputed amount. The Tribunal directed the appellant to keep the bank guarantee active during the appeal, leading to the waiver of the balance amount of duty and penalties during the appeal's pendency.Issue 5: Fraud and mis-declaration by the importer in connivance with another party:The adjudicating authority found mis-declaration and fraud in connivance with another party, M/s. Shenzhen Dhingshang Electronics Co. Ltd. Hong Kong. The importer was accused of submitting incorrect statements and wrong declarations related to the manufacturer and brand of the imported goods.Issue 6: Difference of opinion on the waiver of deposit and penalties:There was a difference of opinion between the judges regarding whether the importer should keep a bank guarantee alive during the appeal or deposit a percentage of the confirmed duty along with penalties. The majority decision favored waiving the deposit requirements and allowing the stay petitions of all the applicants.This judgment addresses issues related to duty confirmation, penalties, mis-declaration, duties refund, bank guarantees, fraud, and differing opinions on deposit requirements. The Tribunal considered the importer's arguments regarding duty payments, refunds, and pre-deposit obligations while analyzing the allegations of mis-declaration and fraud. Ultimately, the majority decision favored the importer by allowing the stay petitions without requiring additional deposits, subject to the bank guarantee's maintenance during the appeal process.