2015 (9) TMI 1259 - AT - Customs

Tribunal Upholds Commissioner's Decision on Undervaluation Case, Emphasizes Burden of Proof

M/s. Martwin Electronics, Shri Chandrakant K. Zangda, M/s. Rachana Electronics Versus Commissioner of Central Excise & S.T., Ahmedabad

The Tribunal upheld the Commissioner's decision in a case involving allegations of undervaluation of imported electronic components. The appellants failed ... Undervaluation of import of electronic components - department has built up its case on the basis of export declarations filed by the suppliers of the goods - Admissibility of evidence - Penalty u/s 114A r.w. 112 - Held that:- Export Declarations are obtained from the Customs and Excise Department, Hong Kong under the cover of their letter on letter head and signature, through Commission for India (High Commission/Embassy) in Hong Kong. It is also stated by Hong Kong Customs that they have no objection for the said 25 Export declarations to be used as evidence in judicial proceedings in India. It is also seen that the Export Declarations are signed by Thomas Chan, Merchandiser and Fradu Wang, Accountant on behalf of the Batshita International Limited. It also contains a declaration that he is the exporter and the particulars given in the declaration are accurate and complete. In view the facts and circumstances of this particular case, we find that these Export Declarations are admissible as evidence A perusal of the show cause notice dated 06.5.1998 reveals that appellants have not produced any evidence to substantiate that the invoice value declared by them are correct by way of showing value of contemporaneous imports etc. On the other hand, we find that the Department has brought in evidences such as the export declarations along with the declarations certifying its accuracy, obtained through official channels under the signature and letter head of Customs department, Hong Kong who has also certified that they have no objection of its use as evidence in judicial proceeding in India. Therefore, we find that the Revenue has brought in sufficient evidences to establish huge under valuation. The appellants have failed to bring any evidence on record to substantiate that the value declared by them is correct, even though the Commissioner of Customs in the earlier order-in-original dated 26.09.2000 in the first round of litigation, had categorically held that the department had discharged the burden of proof by way of giving declaration received from the Hong Kong, Customs. No evidence whatsoever in support of the price declared by the suppliers has been brought on record by the appellants at the time of adjudication, or de-novo adjudication or till now. - no reason to interfere with the impugned order-in-original - Decided against assessee. Issues Involved:1. Allegation of undervaluation of imported electronic components.2. Admissibility of export declarations as evidence.3. Discrepancies between export declarations and invoices.4. Burden of proof regarding the correctness of declared value.5. Imposition of duty, interest, and penalties.Issue-wise Detailed Analysis:1. Allegation of Undervaluation of Imported Electronic Components:The case centers on the import of electronic components such as ICs, Diodes, Transistors, etc., during November 1993 to July 1994. It was alleged that the appellants undervalued these goods, as the values declared in the export declarations filed by the supplier in Hong Kong were significantly higher than those shown in the invoices submitted in India. The declared value was Rs. 13,36,230.05, whereas the export declaration value was Rs. 88,26,462.14. The Commissioner confirmed the demand of duty amounting to Rs. 71,15,105/- along with interest and imposed equivalent penalties under Section 114A read with 112 of the Customs Act, 1962. Additionally, a personal penalty of Rs. 25,00,000/- was imposed on the proprietor under Section 112(a) and (b) of the Customs Act, 1962.2. Admissibility of Export Declarations as Evidence:The appellants contested the admissibility of the export declarations, arguing they were photocopies and not signed by an authorized signatory. The Tribunal, however, upheld the admissibility under Section 139(ii) of the Customs Act, 1962, noting that the declarations were obtained through official channels from the Hong Kong Customs and bore proper signatures and seals. The declarations were considered legal documents binding on the exporters and the appellants.3. Discrepancies Between Export Declarations and Invoices:The appellants pointed out several discrepancies between the export declarations and invoices, such as differences in quantities and consignee names. The adjudicating authority examined these discrepancies and found them to be minor and technical in nature, not affecting the fundamental issue of undervaluation. For instance, a discrepancy in quantity was clarified as a misunderstanding between pieces and pairs, and the change in consignee names was deemed insignificant as both firms shared the same address and were managed by the same individual.4. Burden of Proof Regarding the Correctness of Declared Value:The appellants failed to provide evidence supporting the correctness of the declared values. The Commissioner noted that the proprietor admitted to not maintaining written purchase orders or correspondence, which is unusual for international transactions. The lack of documentation further weakened the appellants' case. The Tribunal emphasized that the burden of proof lay with the appellants to demonstrate that the declared values were accurate, which they failed to do.5. Imposition of Duty, Interest, and Penalties:The Tribunal upheld the Commissioner's order, confirming the demand for duty and interest, and the imposition of penalties. The appellants' reliance on case laws was found to be distinguishable from the present case, as those cases involved different factual circumstances and lacked the substantial evidence presented by the Revenue in this case. The Tribunal concluded that the Revenue had provided sufficient evidence to establish undervaluation, and the appellants did not bring forth any credible evidence to counter the allegations.Conclusion:The Tribunal found no reason to interfere with the impugned order-in-original and upheld the same. The three appeals filed by the appellants were rejected, confirming the duty, interest, and penalties imposed by the Commissioner. The judgment emphasized the importance of proper documentation and evidence in international trade transactions and reinforced the legal principles regarding the admissibility of documents and the burden of proof in cases of alleged undervaluation.