2019 (5) TMI 1775 - AT - Customs

Tribunal remands case for re-examination of evidence on transaction value, confiscation, and penalties.

The Tribunal remanded the case back to the adjudicating authorities for re-examination of the evidence related to the rejection and re-determination of ... Valuation of imported goods - different parts and accessories of mobile handsets, i.e. LCD panel, LCD Display, PCBA, Speakers, battery, LCD, Antennas, etc. alongwith IMEI stickers - mis-declaration of description of goods - rejection of transaction value - absolute confiscation of goods - quantum of penalty. Redetermination of transaction value - HELD THAT:- The transaction value as mentioned in Rule 3 is doubted or proposed to be rejected, the value has to be determined in accordance of Rule 4 to 9 of the CVR. Since the goods appeared to be of superior quality and from the documents were found to be meant for manufacturing the mobile sets of the brand not belonging to the appellants, the Government approved Chartered Engineer/ Valuer Report was sought by the Department. The perusal of his report dated 09.04.2018 shows that the approver has examined the representative samples of goods, the type, quality, physical appearance and usage, viz-a-viz, country of origin whereof was compared. In addition, the average selling price of each as applicable in India was also compared - when the transaction value of Rule 3 is proposed to be rejected, it is Rule 4 & Rule 5 which is to be invoked first, i.e., comparison with the value of identical or similar goods. The valuer’s report is absolutely silent about such comparison. At least there is no specific mention to that effect in the report. It is rather stated that Rule 7 has been invoked by the approver/valuer to arrive at the re-determined value. It stands clear that Rule 7 requires a specific procedure as has to be followed. The report dated 09.04.2018 is silent about proper application of this Rule. There is no mention of unit price at which the imported goods or identical or similar imported goods are sold. There is no whisper about deductions as to be made prior arriving at the re-determined value - Thus, the data on which is based the valuer’s report need to be re-examined and it has to be decided afresh as to whether Rules 4-7 CVR, 2007 have duly been complied with while re-determining the price. Hence, the matter need to be remanded back. Absolute Confiscation of Intercepted Goods - HELD THAT:- The Foreign Trade Regulation Rules, 1993, Rule 11 thereof speaks about declaration as to value and quality of imported goods - As per the import policy, the import of GSM mobile handsets without International Mobile Equipment Identity (IMEI) No., with all zeros IMEI, duplicate or fake IMEI was made prohibited. It is apparent from record that the subject import IMEI Nos. on the goods intercepted belong to the manufacturer, M/s. Shenzhen Yifang Communications Technology Co., China were with respect to the brand name “KGTEL”, whereas, the appellants were engaged in the manufacture of brands “Strawberry” and “Crona” - The original adjudicating authority had observed that even the original copies of those letters were not produced by the appellants. Thus, the clinching evidence has not been impressed upon by the original adjudicating authorities. Hence, the conclusion that appellants were not authorised to use the impugned IMEI No. for their own brands, i.e. “Strawberry” and “Crona” is opined to be based upon the presumption due to lack of details about IMEI Nos. in the letter referred to by the appellants. Also, it is the submission of the appellant that they were authorised to import from such companies who were the TAC holders of M/s. Shenzhen Yifang Communications Technology Co., China, the Company who had issued those letters - the adjudicating authorities below have absolutely ignored the said submission and have merely relied upon MSAI report. The issue of confiscation of goods with IMEI number is also opined to be re-examined and decided afresh by the Adjudicating Authority. Matter remanded to the adjudicating authorities below for appreciating the evidence with respect to data as is required to apply Rule 7 of CVR also w.r.t. goods having IMEI Nos./stickers and to denovo adjudicate the impugned show cause notice including the issue that of imposition of penalties - appeal allowed by way of remand. Issues Involved:1. Rejection and re-determination of the transaction value of imported goods.2. Confiscation of goods with IMEI numbers/stickers.3. Imposition of penalties.Detailed Analysis of the Judgment:1. Rejection and Re-determination of the Transaction Value:The primary issue concerns whether the transaction value declared by the importer was correctly rejected and re-determined. According to Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR), the value of imported goods should be accepted unless there are specific restrictions or non-compliance with laws. Rule 12 of CVR allows the rejection of the declared value if the proper officer has reasons to doubt its truth or accuracy. The Department sought a Government-approved Chartered Engineer/Valuer Report, which re-determined the value based on an average fair valuation amount CIF multiplied by the respective quantity of goods, arriving at Rs. 4,96,87,859.However, the Tribunal noted that the valuer’s report did not properly apply Rules 4 and 5, which require comparison with the value of identical or similar goods. The report was silent on such comparisons and did not mention the unit price or necessary deductions as required by Rule 7 (Deductive Value). Consequently, the Tribunal opined that the data on which the valuer’s report was based needed re-examination and remanded the matter back for a fresh decision.2. Confiscation of Goods with IMEI Numbers/Stickers:The second issue pertains to the confiscation of goods with IMEI numbers/stickers. The Foreign Trade Regulation Rules, 1993, Rule 11 mandates that importers must state the value, quality, and description of imported goods accurately. The import of GSM mobile handsets without valid IMEI numbers or with fake IMEI numbers is prohibited. The intercepted goods had IMEI numbers belonging to M/s. Shenzhen Yifang Communications Technology Co., China, for the brand 'KGTEL,' while the appellants were manufacturing 'Strawberry' and 'Crona' brands. The Tribunal noted that the appellants failed to provide clinching evidence to prove authorization to use the impugned IMEI numbers for their brands.The Tribunal found that the adjudicating authorities had relied solely on the Mobile Standard Alliance India (MSAI) report and ignored the appellant's submission that they were authorized to import from TAC holders of M/s. Shenzhen Yifang Communications Technology Co., China. Hence, the issue of confiscation of goods with IMEI numbers required re-examination and a fresh decision by the Adjudicating Authority.3. Imposition of Penalties:The third issue involves the imposition of penalties. Initially, penalties of Rs. 15 Lakhs on M/s. Suich Industries Pvt. Ltd. and Rs. 5 Lakhs each on its Directors were imposed. Upon appeal, the penalties were reduced to Rs. 8 Lakhs for the company and Rs. 3 Lakhs for each Director under Section 112(i) of the Customs Act, while penalties under Section 114 (AA) were dropped. The Tribunal noted that the adjudicating authorities needed to re-evaluate the evidence concerning the application of Rule 7 of CVR and the issue of goods with IMEI numbers, which would also impact the imposition of penalties. Therefore, the matter was remanded for de novo adjudication of the show cause notice, including the issue of penalties.Conclusion:The Tribunal remanded the matter to the adjudicating authorities for re-examination of the evidence related to the re-determination of the transaction value, confiscation of goods with IMEI numbers, and imposition of penalties. The appeals were allowed by way of remand, requiring a fresh adjudication of the issues based on the proper application of the relevant rules and consideration of all evidence.