2014 (3) TMI 524 - AT - Customs

Imported Goods Valuation Dispute: Redemption Fine & Penalty Upheld, Proposal for Reduction

MARQUE ENTERPRISES Versus COMMISSIONER OF CUSTOMS

The case involved issues regarding the legality of the enhanced value of imported goods, justification of imposed redemption fine and penalty, and ... Confiscation of goods - Imposition of redemption fine - Undervaluation - Import of old and used CRT monitors - requirement of licence under foreign trade policy 2004-2009 - Difference of opinion - Whether the appeal has to be rejected by upholding the order of Commissioner (Appeals) vide which he has enhanced the assessable value of the imported goods and has confiscated the goods with redemption fine of Rs. one lakh and has imposed penalty of Rs.2 lakhs? OR The appeal has to be allowed in respect of assessable value, by accepting the transaction value as correct value of the imported goods and the redemption fine and penalty has to be reduced to 10% and 5% of the declared value? Matter referred to larger bench. Issues Involved:1. Legality of the enhanced value of imported goods.2. Justification of the imposed redemption fine and penalty.3. Compliance with procedural fairness regarding market inquiry and chartered engineer's certificate.Issue-wise Analysis:1. Legality of the Enhanced Value of Imported Goods:The appellant imported 980 pieces of old and used 17' CRT monitors from Germany. The goods were examined under the first check procedure to ascertain their physical condition and declared value. Based on the chartered engineer's certificate, the goods were valued at Rs. 6,91,711/- for assessment purposes. The appellant contested that the market inquiry was conducted without their knowledge and that no copy of the chartered engineer's report was provided to them. However, the records indicated that the appellant waived the issue of a show cause notice and agreed to the order in original passed by the Additional Commissioner, indicating acceptance of the findings regarding the non-availability of the required licence for import. The Commissioner (Appeals) upheld the enhanced value based on the chartered engineer's certificate and market inquiry.2. Justification of the Imposed Redemption Fine and Penalty:The adjudicating authority confiscated the imported monitors valued at Rs. 6,91,711/- under Section 111(d) of the Customs Act, 1962, giving an option to redeem the same on payment of a redemption fine of Rs. 1 lakh. Additionally, a penalty of Rs. 2 lakh was imposed on the appellant. The Commissioner (Appeals) relied on the Tribunal's judgment in the case of Commissioner of Customs (Prev.) vs. Rose Enterprises, where it was held that the redemption fine imposed was lenient and justified given the market value and duty chargeable. The appellant's plea that the fine and penalty were imposed without calculating the margin of profit and were on the higher side was dismissed, as the import was not made in accordance with the policy, making the goods smuggled under Section 2(39) of the Customs Act, 1962.3. Compliance with Procedural Fairness Regarding Market Inquiry and Chartered Engineer's Certificate:The appellant argued that the lower authorities relied on the chartered engineer's certificate and market inquiries conducted at their back, without providing a copy of the certificate. The Commissioner (Appeals) and the adjudicating authority found that the appellant's plea about the non-grant of personal hearing was false, as they had waived their right to a show cause notice and personal hearing. The appellant did not raise any objection to the valuation at the appellate stage, making this ground non-maintainable. The Commissioner (Appeals) emphasized that the import of goods without the proper licence was not contested by the appellant.Separate Judgments by Judges:Archana Wadhwa, J.:Judge Archana Wadhwa disagreed with the proposed order by her learned brother and recorded a separate order. She highlighted that the appellant's grievance was the non-supply of the market inquiry results and the chartered engineer's certificate, not the lack of a personal hearing. She found no evidence on record to show that the appellant was associated with the market inquiry or provided with the results and the certificate. She emphasized that the transaction value should be adopted as the correct assessable value unless there is sufficient evidence to show otherwise. She cited various Tribunal decisions supporting the rejection of enhanced value based on the chartered engineer's certificate. She proposed setting aside the impugned order regarding the enhancement of value and reducing the redemption fine and penalty to 10% and 5% of the value of the goods, respectively.Manmohan Singh, J.:Judge Manmohan Singh upheld the order of the Commissioner (Appeals), which enhanced the assessable value of the imported goods and imposed a redemption fine of Rs. 1 lakh and a penalty of Rs. 2 lakhs. He found no merit in the appellant's contention and rejected the appeal.Difference of Opinion:The difference of opinion between the judges was whether to uphold the order of the Commissioner (Appeals) or to accept the transaction value as the correct value and reduce the redemption fine and penalty. The case was to be decided based on this difference of opinion.