2023 (8) TMI 1053 - AT - Customs

Tribunal overturns valuation decision, emphasizes burden of proof for undervaluation allegations. Penalties overturned, appeals allowed.

M/s Kottaram Trading Co. and Mr. Anthony Thomas Versus Commissioner of Customs, Cochin

M/s Kottaram Trading Co. and Mr. Anthony Thomas Versus Commissioner of Customs, Cochin - TMI Issues Involved:1. Valuation of imported goods.2. Allegation of undervaluation.3. Discounts offered to the appellant.4. Statements recorded under Section 108 of the Customs Act, 1962.5. Evidence of contemporaneous imports.6. Overseas remittance findings.Summary:1. Valuation of Imported Goods:The primary issue was the valuation of 53 consignments of Opal glassware imported by the appellant from July 2003 to August 2006. The Adjudication Authority re-determined the value of the goods to Rs.7,32,47,482/- against the declared value of Rs.4,97,68,335/-, confirming a differential duty of Rs.72,91,775/- with interest and imposing penalties under Sections 114A and 112(a) of the Customs Act, 1962.2. Allegation of Undervaluation:The Tribunal observed that the Adjudication Authority's conclusion of undervaluation was based solely on the Managing Partner's statement and did not adequately address the revaluation of goods after rejecting the invoice value. The Tribunal found the approach of the Adjudicating Authority irregular, as it did not consider the evidence of contemporaneous imports provided by the appellant.3. Discounts Offered to the Appellant:The Tribunal noted that the Adjudicating Authority failed to justify why the explanation regarding higher initial discounts for market penetration, followed by subsequent price increases, was not considered. The Tribunal emphasized that the Adjudicating Authority did not appreciate the evidence regarding the discounts offered by the foreign supplier.4. Statements Recorded Under Section 108 of the Customs Act, 1962:The Tribunal found that the statements recorded from the Managing Partner did not indicate any admission of undervaluation or repatriation of extra payments. The Tribunal criticized the Adjudicating Authority for drawing conclusions without proper evidence or questioning the Managing Partner about the mode of transferring excess payments.5. Evidence of Contemporaneous Imports:The Tribunal held that the Adjudicating Authority summarily dismissed the evidence of contemporaneous imports without proper verification. The Tribunal highlighted that the details provided by the appellant, such as port of import, Bill of Entry number, date, country of origin, and imported items, were not adequately considered.6. Overseas Remittance Findings:The Tribunal found that the Adjudicating Authority's findings on foreign remittance were extraneous to the allegations in the Show Cause Notice. The Tribunal noted that all payments were made through LC or bank remittance, making it illogical to assume repatriation of unaccounted money through these channels.Conclusion:The Tribunal set aside the impugned order and remanded the matter back to the Adjudicating Authority to reconsider the issue afresh, appreciating the evidence presented by the appellant. The Tribunal emphasized that the burden of proving undervaluation lies with the revenue, and in this case, the evidence was insufficient to reject the transaction value. The appeals were allowed, and the penalties imposed on the appellants were set aside with consequential relief.