TaxTMI 
TaxTMI 
2026 (1) TMI 1296
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....elevant period, imports were effected through Air Cargo Complex, Chennai, from suppliers located in China, Korea, Singapore and Italy. 2.2 On receipt of specific intelligence, the DRI, Bangalore initiated investigation alleging systematic undervaluation of imports by about 25% of the actual transaction value and remittance of the differential consideration to overseas suppliers through unauthorised channels. Searches conducted at the business and residential premises of the appellant led to seizure of incriminating documents, and statements under Section 108 of the Customs Act, 1962 were recorded from the appellant, foreign exchange dealers and other connected persons. 2.3 The investigation revealed that only about 75% of the actual value was declared in the Bills of Entry, while the balance consideration was remitted outside the banking system through hawala channels. 2.4 Accordingly, a Show Cause Notice was issued proposing rejection of the declared value of Rs.40,34,895/-, re-determination of assessable value as Rs.46,55,070/- under the Customs Valuation Rules, demand of differential customs duty of Rs.1,83,164/- with interest, confiscation under Section 111(m), and imp....
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.... Authorized Representative Ms. Rajini Menon appearing for the Revenue supported the impugned orders and submitted that the case is based on overwhelming documentary and oral evidence, including multiple voluntary statements of the appellant admitting under-invoicing and payment of differential amounts through unauthorized channels. 5.2 It was submitted that the appellant not only admitted undervaluation in his statements dated 19.03.2012, 10.04.2012 and 09.05.2012, but also withdrew his retraction, clearly acknowledging that the statements were voluntary and truthful. These admissions are corroborated by statements of foreign exchange dealers and records seized by the Enforcement Directorate. 5.3 The Ld. AR submits that once it is established that consideration in excess of the declared invoice value was paid, the declared transaction value automatically fails the test of Section 14 of the Customs Act, 1962, and rejection under Rule 12 is mandatory. 5.4 Further, it is argued that since the actual value of imports was admitted by the appellant himself, redetermination under the residual method by adding the under-invoiced portion is fully consistent with Rule 9 of the Custo....
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....Rule 12 of the Customs Valuation Rules can be invoked only when the declared value is demonstrably false, which, according to them, has not been established. 9.2 The Revenue adverted that the declared invoice value does not represent the "price actually paid or payable" as mandated under Section 14. The investigation has unearthed a consistent and admitted practice of under-invoicing to the extent of approximately 25%, and that consideration being remitted through unauthorized channels. The Revenue emphasizes that the appellant himself admitted undervaluation in multiple statements recorded under Section 108 of the Customs Act and also in statements recorded before the Enforcement Directorate. These statements are corroborated by statements of forex operators and documentary evidence seized during investigation. Hence, the declared transaction value was rightly rejected under Rule 10A/Rule 12 of the Valuation Rules. 9.3 We have carefully examined the rival submissions. Section 14 of the Customs Act mandates adoption of the price actually paid or payable. The transaction value concept is premised on the assumption that the entire consideration for the goods is reflected in the....
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....pugned order. In the present case, this assumption of declaring transaction value stands decisively rebutted. The appellant has, in clear and unequivocal terms, admitted that only about 75% of the actual value was reflected in the invoices and that the balance was remitted through nonbanking channels. These admissions are not isolated or stray statements; they are repeated, consistent, and corroborated by statements of Shri Sanjeev Yadav and Shri Ratan Das, both of whom were instrumental in arranging unauthorized foreign exchange remittances. 9.6 Once it is established that part of the consideration flowed outside banking channels, the declared invoice price cannot, by any stretch, be treated as the transaction value. In such circumstances, rejection of declared value under Rule 12 of the Customs Valuation Rules becomes inevitable. We therefore hold that the rejection of the declared transaction value is legally sound and unassailable. Question (ii) Whether the re-determination of assessable value under the residual method is proper and in accordance with law? 10.1 We find that although the Customs Valuation Rules, 1988/2007 envisage sequential application of valuation met....
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....on of the actual transaction value. It was contended that the appellant intentionally declared only a part of the consideration in the Bills of Entry and remitted the balance amount to overseas suppliers through unauthorized hawala channels. Such conduct, it is argued, squarely attracts the provisions of Section 28(4) of the Customs Act. 11.3 We have carefully considered the rival submissions and find no merit in the appellants' contention that the extended period is not invocable. Suppression in valuation matters does not hinge on secrecy of import or non-filing of documents, but on non-disclosure of material facts having a direct bearing on assessment. Section 46(4) of the Customs Act casts a statutory obligation on the importer to make a true, correct, and complete declaration, including disclosure of the full consideration actually paid or payable. In the present case, it is undisputed that a substantial portion of the consideration was paid outside the banking channels and was never disclosed to the Customs authorities. The declared invoice value therefore did not represent the true transaction value within the meaning of Section 14 of the Customs Act, constituting delibera....
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....corded by the adjudicating authority and upheld by the Commissioner (Appeals) are not found merely on conjecture or assumptions but are amply corroborated by independent evidence unearthed during parallel proceedings conducted by the Directorate of Enforcement under the Foreign Exchange Management Act, 1999. The records and statements forwarded by the Enforcement Directorate clearly establish that 25% of value representing the differential consideration was remitted to overseas suppliers through unauthorised channels, outside the banking system. 12.3 The statements recorded by the Enforcement Directorate from the appellant and the foreign exchange intermediaries clearly establish that only a part of the consideration was routed through banking channels and declared in the import documents, while the balance amount was remitted through hawala mechanism. These admissions lend strong corroborative support to the conclusion that the value declared in the Bills of Entry did not represent the "price actually paid or payable" within the meaning of Section 14 of the Customs Act, 1962. It is well settled that evidence gathered by one statutory authority can be relied upon by another, pro....
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....n of penalty under Section 114A stands firmly established. 13.4 Section 114A mandates imposition of penalty equal to the duty (and interest, as applicable) where duty has not been levied or has been short-levied by reason of collusion, wilful mis-statement, or suppression of facts. Once these ingredients are satisfied, imposition of penalty is not discretionary but automatic in nature. 13.5 In the present case, the appellants consciously declared only a part of the actual consideration in the Bills of Entry and remitted the balance through hawala channels, a fact established not only through Customs investigation but also independently corroborated by Enforcement Directorate proceedings under FEMA. As held under Issue (iii), such ED material is legally admissible and provides strong corroboration of deliberate suppression and intent to evade duty. 13.6 We find that in the present case, the appellant's admissions regarding under-invoicing and unauthorised remittances, read with ED findings, leave no manner of doubt as to the deliberate nature of the offence. The plea of bona fide belief or absence of mens rea is therefore untenable. Bona fide belief presupposes full and tru....