2023 (6) TMI 19 - AT - Customs

Tribunal overturns Appeal Commissioner's decision on misdeclaration of imported goods

The Tribunal set aside the Commissioner (Appeals) order in a case involving misdeclaration of imported goods, imposition of Anti-Dumping Duty, and alleged ... Valuation of imported goods - Polyethylene Laminated in Rolls - PVC Flex Fabrics - rejection of declared value - rejection of request for re-export of the goods - burden to prove - demand of differential duty on enhanced value - confiscation - redemption fine - penalty - wrong supply made by the supplier or not - HELD THAT:- When irregularity was pointed out by the Revenue to the importer, the importer immediately waived issuance of Show Cause Notice, thereby preventing the Revenue from highlighting the case against them, for which they had to answer, in writing. That situation was very decisively/conveniently avoided by the importer! During personal hearing also, they appear to have made only formal representation, again perhaps trying to avoid the possible further probing/digging by the Adjudicating Authority, except requesting for permission to re-export. There are no reference to the e-mail sent by the supplier admitting wrong supply anywhere in the order of the Adjudicating Authority, though we are not suspecting the very existence of such e-mail from supplier at that stage. We do not want to guess here, that it was because they were not filed since the only ground urged was for re-export - That makes it clear that their claim of ‘wrong supply’ could possibly be an after-thought, which gave birth to the e-mail from supplier! It is thus clear that the Department or at least the Adjudicating Authority never had any chance to address/examine this issue of ‘wrong supply’ and hence, there was nothing for the Adjudicating Authority to prove or disprove on this, at the time of adjudication. When an irregularity was pointed out, instead of discharging the same, the respondent simply evaded by requesting for re-export. So, if we go by the findings of the Commissioner (Appeals), then it was for the Adjudicating Authority to even explain the irregularity, not just ‘wrong supply’. Thus, the burden which was on the respondent was never discharged and hence, there is no question of onus shifting on to the Revenue, to prove, what the learned Commissioner (Appeals) wanted or as desired by the respondent, that there was no ‘wrong supply’ - The requirements under the burden of proof are covered in Chapter VII of the Indian Evidence Act. Section 123 of the Customs Act requires burden of proof in certain cases and in the light of our above discussion, the ‘burden of proof’ which has not been defined under the Customs Act, therefore, has to be looked into from the point of the Indian Evidence Act. When a statutory authority entertains a doubt, a Show Cause Notice will be naturally issued based on certain observations and it is for the noticee to satisfy and to prove that the observations / allegations of the statutory authority issuing such Show Cause Notice is wrong. The burden of proof, therefore, is always there on the noticee initially, which has to be discharged in the first place - the fact as to the ‘wrong supply’ was advanced by the importer and hence, the burden of proof is always on the importer to prove the wrong supply to the satisfaction of the authority. The Commissioner (Appeals) was clearly in error to observe that the Department did not bring on record any material to contradict the contention of ‘wrong supply’ which, is not the intention or spirit of law - there are no attempt being made by the importer to furnish any other piece of evidence to justify its claim as to the wrong supply. The Commissioner (Appeals) committed an error in allowing the appeal of the importer without there being any evidence in support of the importer’s claim and hence, the impugned order cannot sustain - appeal of Revenue allowed. Issues Involved:1. Misdeclaration of imported goods.2. Imposition of Anti-Dumping Duty (ADD).3. Violation of principles of natural justice.4. Burden of proof regarding wrong supply.5. Legality of the Commissioner (Appeals) order.Summary:1. Misdeclaration of Imported Goods:The respondent declared the imported goods as 'Polyethylene Laminated in Rolls' under CTH 3921 1900. However, upon examination, the goods were found to be 'PVC Flex Fabrics,' which attracted Anti-Dumping Duty (ADD) under Notification No. 79/2010-Cus. dated 30.07.2010. The Adjudicating Authority rejected the declared description and value, redetermined the value, imposed ADD, and ordered confiscation of the goods under Section 111(l) and 111(m) of the Customs Act, 1962.2. Imposition of Anti-Dumping Duty (ADD):The Adjudicating Authority imposed ADD of Rs.11,14,122/- under Notification No. 82/2011-Cus. dated 25.08.2011 and differential customs duties of Rs.2,80,168/- on the enhanced value. The goods were also confiscated with an option to redeem on payment of a fine and penalty under Section 114A of the Customs Act, 1962.3. Violation of Principles of Natural Justice:The respondent argued that the Department failed to issue a Show Cause Notice or offer a personal hearing, thus violating the principles of natural justice. However, the Tribunal found that the respondent had waived the Show Cause Notice and participated in the personal hearing, thus the finding of the Commissioner (Appeals) on this ground was unsustainable.4. Burden of Proof Regarding Wrong Supply:The respondent claimed that the wrong consignment was sent by the foreign supplier and requested permission to re-export the goods. The Commissioner (Appeals) accepted this claim without conclusive evidence. The Tribunal emphasized that the burden of proof lies on the importer to prove the wrong supply, which was not adequately discharged by the respondent.5. Legality of the Commissioner (Appeals) Order:The Tribunal found that the Commissioner (Appeals) erred in granting relief without substantial evidence and in stepping into the shoes of the Adjudicating Authority. The Commissioner (Appeals) also failed to cross-check the veracity of the supplier's letter and did not follow the principles of natural justice. Consequently, the Tribunal set aside the impugned order and allowed the Revenue's appeal.Conclusion:The Tribunal concluded that the Commissioner (Appeals) committed an error in allowing the respondent's appeal without sufficient evidence, thereby setting aside the impugned order and allowing the Revenue's appeal.