2024 (9) TMI 1853 - AT - Customs

Authority upholds duty demands for under-valued hop imports, finds fraud and rejects transaction value u/s 14 Customs Act

CESTAT rejected the appellant-importers' challenge to customs duty demands and penalties arising from under-valuation of imported HOP pellets and HOP ... Under-valuation of imported goods - HOP Extracts & HOP Pallets - failure to declare actual transaction value - evasion of Customs Duty - ex-parte order - notices of hearing were never received by the appellant - appellant was never heard by the adjudicating authority prior passing of the impugned orders - violation of principles of natural justice. Whether the appellant has been denied the right of personal hearing? - HELD THAT:- Appellants did not take any steps nor made any efforts to file any reply subsequent to receiving those documents till the another Order-in-Original passed on 23.12.2019. While making submissions before the Bench though appellant has denied receiving those documents but we observe that there is no denial about receiving the letters dated 25.02.2019 vide which the department supplied the document to the appellant. These observations are sufficient for us to hold that appellant had sufficient time to make the representation challenging the allegation of the impugned Show Cause Notices but they deliberately kept avoiding the same on one pretext or the other. Thus it can not be said that appellant was not opportunity of being heard. Coming to the aspect of request of cross-examination of witnesses. The cross-examination of Mr. Jeffry Makhani only was rejected, that too, on the ground that vide his statement recorded under section 108 of Customs Act 1962 dated 10.08.2016 and 06.02.2017, he merely had stated about handing over the relevant documents to the Department, which were received in the sealed condition from the suppliers country - Apparently and admittedly there is no rejection to cross-examine the other witnesses but there is no effort on the part of the appellant to get any of them cross-examined. The incriminating records, laptops and a desktop computer CPU were recovered from the search of premises of both the importers vide Panchnama dated 29.02.2016 itself. The appellant had enough time to place on record documents revealing their bonafide but till the date of the impugned orders under challenge, no single document falsifying the allegations in the impugned Show Cause Notices were produced by the appellants - there is no violation of principles of natural justice as has been alleged by the appellant - the issue stands decided against the appellant. Whether the appellants have undervalued the HOP pallets/HOP extracts imported by him while submitting the respective Bills of Entry? - HELD THAT:- From the data recovered from the various premises belonging to the different appellants the documents with respect to each Bills of Entry and the respective invoices were retrieved / recovered. It got revealed that the invoices received from the overseas suppliers and the invoices as were submitted by the importers have a different value for the imported goods lesser values were shown in the invoices as were submitted with the Bills of Entry. Both the adjudicating authorities have observed that the comparison of the documents clearly establish that all shipment details with reference to nature, classification, origin etc. in the documents as retrieved from soft data recovered from appellants’ premises and those received with overseas enquiry report are same as mentioned in the invoices submitted with the Bills of Entry except that the value of the imported goods and the quantity thereof were different - It is only the value declared in the invoices filed by both the importers with the respective Bills of Entry which is different and is highly undervalued as compared to rest of the above mentioned documents. The declarations annexed with other documents including invoices are such documents to which presumption of correctness is attached. The appellants have failed to rebut the said presumption. The fact that payments were being transferred through banking channels cannot rebut this presumption as the amount which was transferred is the value shown in invoices submitted, by the appellants themselves, along with the Bill of Entry and that the said value has been rejected. No other export declarations have falsified the documents obtained by the Department are placed on record by the appellant - the export declarations as received through overseas inquiries are well admissible into evidence. Those documents have sufficiently proved the alleged forgery / fraud committed by the appellant. There remains no doubt as far as the authenticity of the documents obtained by DRI through Government channel and from concerned Department of exporting countries are concerned. The documents obtained by the Departments during investigation and also with overseas inquiry report when were compared with the invoices filed by the appellants along with the bill of entry have sufficiently proved that the appellants have undervalued their product while importing the same. We do not find any infirmity when the Department has rejected the said declared value and re-assessed the same. Thus we hold that the order based such admissible documents, rejecting the import value declared in bills of entry is sustainable. Above all Department not to prove actual value with mathematical precision - Reliance on documents proper when transaction veiled in secrecy as per Section 14 of the Customs Act, 1962. Also present is held to be a case of fraud by forging transaction values to have illegal gain of Customs duty ”Fraud” as is well known vitiates every solemn act. Fraud and justice never dwell together. Fraud is a conduct either by letter or words, which includes the other person or authority to take a definite determinative stand as a response to the conduct of the former either by words or letter. It is also well settled that misrepresentation itself amounts to fraud. Indeed, innocent misrepresentation may also give reason to claim relief against fraud - A collusion or conspiracy with a view to deprive the rights of the others in relation to a property would render the transaction void ab initio. Fraud and deception are synonymous. Although in a given case a deception may not amount to fraud, fraud is anathema to all equitable principles and any affair tainted with fraud cannot be perpetuated or saved by the application of any equitable doctrine including res judicata. There are no infirmity in the order. Not even vis-à-vis imposition of penalty as the present case is observed to be a clear cut case of fraud forgery and manipulation - appeal dismissed. Issues: (i) Whether the appellants were denied the right of personal hearing; (ii) Whether the appellants undervalued the imported HOP pallets/HOP extracts and whether the re-determination of value and penalties imposed are sustainable.Issue (i): Whether the appellants were denied the right of personal hearing.Analysis: Multiple show cause notices were issued and correspondence and opportunities to file replies and seek cross-examination were recorded. Documents requested by the appellants were supplied by the Department. Only limited requests for cross-examination were refused on stated grounds; other requests were not pursued by the appellants. Records show searches and recovery of incriminating material predating the contested orders.Conclusion: Issue decided against the appellants; there was no denial of the right of personal hearing.Issue (ii): Whether the appellants undervalued the imported consignments and whether re-determination of value and penalties are sustainable.Analysis: Comparison of invoices submitted with bills of entry and invoices obtained through overseas inquiries and from airlines/consignors showed identical shipment particulars except for unit prices and total values. Documents recovered during searches, statements recorded in investigation, and overseas inquiry reports supported the conclusion that submitted invoices were forged or fabricated to show lower values. Section 139 presumptions attached to documents received from abroad were not rebutted. Valuation was reassessed invoking Rule 12 and Section 17, following the sequence under Rule 3 of the valuation rules. Findings of fraud and forgery supported invocation of penalty and confiscation provisions.Conclusion: Issue decided in favour of the Revenue; the undervaluation, re-determination of value and penalties are sustainable.Final Conclusion: The orders confirming differential customs duty, interest and penalties are upheld and all appeals are dismissed.Ratio Decidendi: Where documents obtained through overseas inquiry and investigation prima facie establish that invoices submitted at import are forged or understated and the presumption under Section 139 is not rebutted, the declared value may be rejected under Rule 12 and re-determined under Section 17 and the Customs Valuation Rules, and penalties for fraud and forgery may be sustained.