1997 (4) TMI 260 - AT - Customs

Tribunal sets aside order, remands case for fresh decision. Appeal allowed.

The tribunal set aside the impugned order and remanded the case to the jurisdictional adjudicating authority for a fresh decision in accordance with the ... Confiscation for misdeclaration of quantity - misdeclaration of description - valuation and misdeclaration of value - natural justice - failure to disclose material facts in show cause notice - remand for fresh adjudicationConfiscation for misdeclaration of quantity - misdeclaration of description - description of imported goods - Confiscation of two undeclared sets of CDs as confiscated for misdeclaration of quantity was unsustainable. - HELD THAT: - The Bill of Entry and invoice described the consignment as VDP-1 set and MVD-25. The court examined the product literature produced by the appellant and found that the VDP (Varsity Developer Package) description necessarily encompasses two sets of CDs as part of the package. Since the import documents and the literature showed that every VDP package includes two sets of CDs, the additional two sets found on examination were part of the described consignment and not intentionally suppressed. The Commissioner therefore erred in holding that there was misdeclaration of quantity, and the confiscation of those two sets cannot be sustained. [Paras 5]Confiscation of the two sets of CDs set aside; no misdeclaration of quantity established.Valuation and misdeclaration of value - natural justice - failure to disclose material facts in show cause notice - remand for fresh adjudication - Valuation dispute (rejection of declared low price and fixation of a higher commercial value) was not finally adjudicated and is remanded for fresh consideration. - HELD THAT: - The Commissioner rejected the declared value and treated the goods at a higher commercial price relying on several factual inferences (enumerated in the impugned order as clauses (a)-(i)). The appellate court found that (i) the appellant had offered explanations on grounds (a)-(f) which were not adequately considered, and (ii) material factual matters and inferences drawn by the Commissioner in grounds (g)-(i) (relating to specific transactions and thirdparty invoices) were not disclosed in the show cause notice, producing a breach of natural justice. Given these deficiencies and the failure to give the appellant an opportunity to meet the factual material relied upon, the matter requires fresh adjudication. The court permitted the adjudicating authority to consider the data and grounds referred to in the impugned order in the light of any new documents and explanations the appellant may submit. [Paras 6, 9, 10, 11]Impugned valuation finding set aside and matter remanded to the jurisdictional adjudicating authority for fresh decision in accordance with law and the observations in the order.Final Conclusion: Appeal allowed. The confiscation of the two sets of CDs is set aside for lack of misdeclaration of quantity; the valuation/misdeclaration of value finding is set aside and remitted to the adjudicating authority for fresh consideration after giving the appellant opportunity to meet the material relied upon. Issues Involved:1. Misdeclaration of description.2. Misdeclaration of value.3. Confiscation of goods.4. Imposition of penalty.5. Violation of principles of natural justice.Issue-wise Detailed Analysis:1. Misdeclaration of Description:The appellant was accused of misdeclaring the description of the imported goods, specifically, that the consignment included 2 sets of Media Varsity Developer packs (MVDP) more than the declared quantity of 25. The Bill of Entry and invoice described the consignment as consisting of 'VDP-1 set and MVD-25.' The department argued that this meant only 25 sets of MVD, but examination revealed two additional sets. The appellant contended that the Varsity pack itself consists of 25 right-to-use licenses and two sets of 20 CDs for a consolidated price of US $3500. The literature produced by the appellant indicated that every package consists of 2 sets of CDs containing software. The tribunal agreed with the appellant, concluding that there was no misdeclaration of quantity and the Commissioner erred in holding that the appellant had misdeclared the quantity of CDs. Hence, the confiscation of the 2 sets of CDs was not sustainable.2. Misdeclaration of Value:The Commissioner upheld the charge of misdeclaration of value based on several circumstances, including the commercial value of the software being US $10032.50 per set while the appellant declared US $100 per set, and the goods being supplied at throw-away prices as a sales promotion strategy. The appellant argued that the price shown in the price list (US $10032.50) was for commercial buyers, while SGI offered special prices for educational and research institutions. The appellant was the distributor in India for SGI and imported the package with 25 RUL together with 25 separate sets of media, allowing each set of media to be operated by one separate RUL, drastically affecting the price. The tribunal noted that the Commissioner did not provide a good reason to conclude that the lower price was a market promotion strategy and that the explanation offered by the appellant was not considered. Therefore, the case deserved fresh consideration.3. Confiscation of Goods:The Commissioner confiscated the goods under Section 111(1) and Section 111(m) of the Customs Act, 1962, on account of misdeclaration of description and value, with an option to redeem on payment of a fine of Rs. 10,00,000.00. Given the tribunal's findings on the misdeclaration of description and value, the confiscation of the goods was not sustainable as it was based on erroneous conclusions.4. Imposition of Penalty:A penalty of Rs. 5,00,000.00 was imposed under Section 112(a) of the Customs Act, 1962. Since the tribunal found that the conclusions regarding misdeclaration of description and value were flawed and required fresh consideration, the imposition of the penalty was also not sustainable.5. Violation of Principles of Natural Justice:The appellant contended that specific facts and information collected by the Commissioner and the inferences drawn were not disclosed in the show cause notice, denying the appellant an opportunity to offer an explanation. The tribunal agreed, noting that there was serious violation of principles of natural justice, especially regarding the grounds related to specific facts and inferences not disclosed to the appellant. This warranted a fresh consideration of the case.Conclusion:The tribunal set aside the impugned order and remanded the case to the jurisdictional adjudicating authority for fresh decision in accordance with the law and the observations contained in the tribunal's order. The appeal was allowed accordingly.