2019 (4) TMI 1093 - AT - Customs

Tribunal Overturns Confiscation and Penalties, Emphasizes Need for Evidence and Valid Reasons

The Tribunal allowed the appeals, setting aside the lower authorities' orders. It held that the rejection of the declared value was unjustified, as there ... Rejection of declared value - short paid the duty on the imported consignment by misdeclaring the value - Penalty - benefit of first proviso to Section 114A of the Customs Act - HELD THAT:- We do not know what was consideration of the evidence and submissions made by the appellant which lead to rejection of the declared value by the Appellants. Rejection of declared value on Bill of Entry is a serious affair and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons. Neither the adjudicating authority or Commissioner (Appeal), have pointed to such special circumstance warranting the rejection of the declared transaction value by the Appellant on Bill of Entry. From plain reading of the rule 12 it is quite evident that the word “doubt” used in the rule do not refers to the doubt of a doubting Thomas, but said doubt has to be based on cogent reasons and evidences. No cogent evidence or reason has been put forth in the present case to justify the “doubt” of the assessing officer. If the case of the revenue was that contemporaneous imports were at higher price, could they have proceeded without referring to NIDB maintained by the revenue itself. Without even referring to their own database both adjudicating authority and Commissioner (Appeal) have rejected the declared value on the basis of the certain emails which were not with the reference to imports under consideration. Appeal allowed - decided in favor of appellant. Issues Involved:1. Rejection of declared value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.2. Confiscation of goods under Section 111(m) of the Customs Act, 1962.3. Imposition of penalties under Sections 114A and 114AA of the Customs Act, 1962.4. Recovery of short-paid duty along with interest under Section 28(1) read with Section 28AB of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Rejection of Declared Value:The appellants challenged the rejection of the declared value under Rule 12, arguing that it was erroneous and without justification. They contended that the emails and documents relied upon for alleging misdeclaration did not pertain to them, and the values indicated in the Bill of Entry (B/E) were identical to those in the sale contract. The appellants also argued that the value declared compared favorably with contemporaneous imports as per NIDB data and that there was no sequential application of Rules 4 to 9. The Tribunal noted that the adjudicating authority and Commissioner (Appeal) failed to provide cogent reasons or evidence to justify the rejection of the declared value. The Tribunal referenced the Supreme Court's decision in Eicher Tractors, emphasizing that the transaction value should be accepted unless specific exceptions apply. The Tribunal concluded that the rejection of the declared value was not justified and set aside the order.2. Confiscation of Goods:The adjudicating authority ordered the confiscation of the imported goods under Section 111(m) on the grounds of suppression and misdeclaration of the actual transaction value. However, the Tribunal found that the authorities did not provide sufficient evidence to support the claim of misdeclaration. The Tribunal noted that the emails relied upon were not directly related to the imports in question and were from different periods. Consequently, the Tribunal held that the order of confiscation could not be sustained.3. Imposition of Penalties:The adjudicating authority imposed penalties on the appellants under Sections 114A and 114AA. The Tribunal, however, found that the penalties were not justified as the rejection of the declared value and the allegations of misdeclaration were not substantiated. The Tribunal referenced the Supreme Court's decisions in similar cases, emphasizing that penalties should only be imposed when there is clear evidence of wrongdoing. The Tribunal set aside the penalties imposed on the appellants.4. Recovery of Short-paid Duty:The adjudicating authority ordered the recovery of the short-paid duty along with interest under Section 28(1) read with Section 28AB. The Tribunal found that the short-paid duty was calculated based on the incorrect rejection of the declared value. Since the rejection of the declared value was not justified, the Tribunal held that the recovery of short-paid duty and interest could not be upheld.Conclusion:The Tribunal allowed the appeals filed by the appellants, setting aside the orders of the lower authorities. The Tribunal emphasized the need for cogent reasons and evidence to justify the rejection of declared value and the imposition of penalties. The Tribunal's decision was based on established legal principles and precedents set by the Supreme Court. The appellants were granted consequential relief.