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

The Tribunal set aside the Adjudication Authority's decision on the valuation of imported Opal glassware, citing lack of proper consideration of evidence ... Valuation of imported goods - Opal glassware - evidence of contemporaneous import dismissed on the ground that the document purportedly showing the value of contemporaneous import being unauthenticated & unsigned - HELD THAT:- While remanding the matter this Tribunal has not directed the Adjudication Authority to consider any specific ground but directed to reconsider the issue afresh. In such situation there is no infirmity in reopening the entire issue. However, the Adjudication Authority ought to have considered the findings given by this Tribunal regarding the sustainability of the finding regarding statement recorded from the Managing partner. Moreover in spite of furnishing details like port of import, Bill of Entry number, date, country of origin, imported items etc. for the relevant period and even after specific directions to consider the evidence produced by the appellant regarding contemporaneous import by this Tribunal, no efforts were made by the Adjudication Authority to call for the records available in the data bank regarding said imports to verify the facts after sharing such information with appellant before de-novo adjudication. As regard the findings related to overseas remittance, the Adjudication Authority has stated that the importer did not produce statement covering the entire period of import. The Hon’ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI [2000 (11) TMI 139 - SUPREME COURT] held that the transaction value cannot be rejected unless the imports attract any of the exceptions noted in Rule 3(2) of Customs Valuation Rules, 2007. Revenue has not been able to establish that imported goods attracts exception noted in Rule 3(2) of Valuation Rules. Regarding trade discounts claimed by the appellant, this Tribunal in M/S. OZURT SYSTEMS PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS [2015 (11) TMI 1090 - CESTAT BANGALORE] considered the claimed discount at the range of 87% to 97% from the supplier’s price list and following the judgment of Hon’ble Supreme Court in MIRAH EXPORTS PVT. LTD. VERSUS COLLECTOR OF CUSTOMS [1998 (2) TMI 124 - SUPREME COURT] and in METAL BOX INDIA LTD. VERSUS COLLECTOR OF CENTRAL EXCISE, MADRAS [1995 (1) TMI 380 - SUPREME COURT] held that, it is not unusual for foreign supplier to give a higher discount when imports are in much larger quantity and in such cases, it cannot be said that there has been undervaluation in the invoice. There has not been sufficient evidence with the Department to reject the transaction value - the appeals are allowed, penalty imposed on appellants are set aside with consequential relief if any. 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.