2016 (2) TMI 616 - AT - Customs

Tribunal upholds Customs Act penalties for misdeclaration and undervaluation

Shri Dharam Pal Aggarwal, Shri Parveen Kumar And Shri Salil Kumar Magoo Versus Commissioner of Customs, Delhi

The tribunal upheld the order of confiscation, duty demand, and penalties imposed on various parties under the Customs Act, 1962. The reclassification of ... Valuation - mis-declaration of import of 100% nylon lurex yarn (CTH 5602) as 100% nylon yarn - import against advance authorisation licence - It also came out during the investigation that the appellant did not have necessary machinery to carry out the manufacture of export goods, from 100% nylon yarn allowed to be imported duty free under advance authorisation and was also sending the differential amount to the supplier to cover undervaluation via hawala transaction. Held that:- In the present case, there existed DRI alert Notes and also NIDB data to doubt the declared value. Indeed Explanation (iii) in the said Rule makes it clear that in the sector stances it was totally reasonable to doubt the transaction value. Indeed the Ld. advocate for the appellant during the arguments conceded that there existed reasonable doubt to reject the transaction value but he questioned the enhancement of value saying that there was no legal basis for doing so. Thus none of the judgements cited by the appellant come to its rescue in as much as rejection of the transaction value was clearly within the competence of the primary adjudicating authority. To enhance the value to the same level at which the goods were assessed in the appellants own case and with his consent when imported just a couple of months earlier can in no way be called unreasonable comparison with contemporaneous imports. - Demand confirmed - Decided against the assessee. The primary adjudication order is not a detailed one because the appellant did not want to reply the Show Cause Notice or appeared for hearing and therefore there was no arguments to rebut from the appellants side. Issues Involved:1. Classification of imported goods.2. Rejection and enhancement of the declared assessable value.3. Confiscation of goods and imposition of redemption fine.4. Demand for duty and interest.5. Imposition of penalties on various parties.6. Validity and reliability of chemical test reports.7. Admissibility and voluntariness of statements made by involved parties.8. Role and liability of individuals involved in the misdeclaration and undervaluation.Detailed Analysis:1. Classification of Imported Goods:The adjudicating authority classified the imported goods, 8,000 kgs and 10,000 kgs of 100% Nylon Lurex Yarn, under CTH 56060090 instead of 100% Nylon Yarn under CTH 54021990 as declared by the importer. This reclassification was based on the chemical examination report and the statements made by the involved parties.2. Rejection and Enhancement of Declared Assessable Value:The declared assessable value of Rs. 9,06,091/- and Rs. 11,26,958/- for the imported goods was rejected under Section 14 of the Customs Act, 1962, read with Rules 4 and 10A of the Customs Valuation (Determination of Prices of the Imported Goods) Rules, 1988. The value was enhanced to Rs. 17,79,822/- and Rs. 21,93,543/- respectively. This enhancement was based on concrete evidence of undervaluation found in various emails and statements of the parties involved.3. Confiscation of Goods and Imposition of Redemption Fine:The imported goods were confiscated under sections 111(d), 111(o), and 111(m) of the Customs Act, 1962. However, the adjudicating authority allowed the option to redeem the goods on payment of a redemption fine of Rs. 4,50,000/- and Rs. 5,50,000/- respectively.4. Demand for Duty and Interest:Duty amounting to Rs. 4,34,655/- and Rs. 5,37,023/- was demanded and ordered to be recovered under the proviso to Section 28 of the Customs Act, 1962, along with interest payable under Section 28AB of the Customs Act, 1962. The duty demand was based on the reassessed value of the imported goods.5. Imposition of Penalties on Various Parties:Penalties were imposed under different sections of the Customs Act, 1962:- Rs. 4,34,655/- on Shri Parveen Kumar under Section 114A.- Rs. 2,00,000/- on Shri Salil Kumar Magoo under Section 112(a) and (b).- Rs. 1,00,000/- on Shri Dharam Pal Aggarwal under Section 112(a).- Rs. 1,00,000/- on Shri Gagandeep Singh under Section 112(a).6. Validity and Reliability of Chemical Test Reports:The appellants contended that the chemical test report was not trustworthy. However, the tribunal found that the chemical examination report was in conformity with the statements of Shri SK Magoo and Shri Dharam Pal Aggarwal, who admitted to the misdeclaration of the goods.7. Admissibility and Voluntariness of Statements:Shri SK Magoo admitted in his statements that the goods were misdeclared, undervalued, and the differential amount was sent through hawala transactions. He later claimed that his statements were made under duress, but the tribunal found no evidence to support this claim. The tribunal noted that the statements were voluntary and corroborated by other evidence.8. Role and Liability of Individuals:Shri Dharam Pal Aggarwal admitted that he had advised the supplier to misdeclare the goods as 100% nylon yarn instead of 100% nylon lurex yarn at the request of Shri Praveen Kumar. The tribunal found that his actions made him liable under Section 112(a) of the Customs Act, 1962.Conclusion:The tribunal upheld the order of confiscation, demand of duty, and imposition of penalties, finding them justified, reasonable, and sustainable. The appeals were dismissed, affirming the findings and actions of the adjudicating authority. The enhancement of value was based on concrete evidence and was in accordance with the Customs Valuation Rules, without any legal infirmity.