2014 (5) TMI 676 - AT - Customs

Tribunal rules in favor of appellant on imported goods valuation, reduces fines, emphasizes judicial discipline

The Tribunal ruled in favor of the appellant regarding the valuation of imported goods, holding that the transaction value should be accepted unless ... Valuation of goods - Redemption fine - Penalty - Held that:- Matter is referred to larger bench with following questions of law:- Whether on assessable value as determined in adjudication by the revenue is to be set-aside and redemption fine and penalty are to be reduced to 10% and 5% respectively as held by Learned Member (Judicial). OR Whether the valuation as enhanced by revenue based on Chartered Engineer's Certificate are to be upheld as importations have taken place without licence and no land port Chartered Engineer's Certificate has been produced and further redemption fine and penalty as ordered by Commissioner is to be upheld as held by Member (Technical). Issues Involved:1. Valuation of imported goods.2. Quantum of redemption fine and penalty.3. Mis-declaration and import without a license.Issue-wise Detailed Analysis:1. Valuation of Imported Goods:The appellant imported 105 pieces of assorted make old and used photocopier machines and filed a bill of entry, declaring the value of the goods as Rs.10,13,256/-. The Revenue did not accept the declared value and found that contemporary clearances as per NIDB data showed the value to be around Rs.19,59,937/-. The goods were examined, and it was found that two machines had different models than declared, leading the Revenue to believe there was mis-declaration and undervaluation. The Commissioner enhanced the value of the imported photocopiers to Rs.20,13,120/- based on a Chartered Engineer's certificate. The appellant contended that there was no evidence to reject the transaction value and argued that the transaction value should be accepted unless there is substantial evidence against it. The Tribunal agreed with the appellant, noting that the Revenue had not provided sufficient evidence to discard the declared value and that the transaction value should be adopted unless proven incorrect. The Tribunal referenced several decisions supporting this view, including cases where enhancement of value based on Chartered Engineer's certificates was set aside.2. Quantum of Redemption Fine and Penalty:The Commissioner imposed a redemption fine of Rs.5 lakhs and a penalty of Rs.2.50 lakhs under Section 112 (a) of the Customs Act, 1962. The appellant argued for a reduction in the fine and penalty, citing precedents where fines and penalties were reduced to 10% and 5% of the value of the goods, respectively. The Tribunal noted various decisions where similar reductions were made and followed the precedent, reducing the redemption fine to 10% and the penalty to 5% of the value of the goods. The Tribunal emphasized the importance of following binding precedents and judicial discipline, referencing decisions of the Hon'ble Kerala High Court and the Hon'ble Bombay High Court.3. Mis-declaration and Import Without a License:The appellant imported the photocopiers without the required license under the EXIM Policy 2004-2009. The goods were seized and confiscated due to this violation. The Tribunal acknowledged the violation but focused on the proportionality of the penalties imposed. The Tribunal referred to past decisions where fines and penalties were reduced despite repeated violations of the EXIM Policy, emphasizing the need for consistency and adherence to precedents. The Tribunal upheld the confiscation of the goods but allowed the appellant to redeem them on payment of the reduced fine and penalty.Separate Judgment by Member (Technical):The Member (Technical) disagreed with the reduction of the redemption fine and penalty, arguing that the mis-declaration and undervaluation were proven, and the enhanced value based on the Chartered Engineer's certificate should be upheld. The Member (Technical) cited the Supreme Court's criticism of arbitrary reductions in fines and penalties and emphasized that each case should be decided based on its facts and circumstances. The Member (Technical) maintained that the adjudication by the Commissioner was appropriate and should be confirmed.Difference of Opinion:There was a difference of opinion between the members on whether the assessable value as determined by the revenue should be set aside and the redemption fine and penalty reduced to 10% and 5%, respectively, or whether the enhanced valuation and the original fines and penalties should be upheld.