TaxTMI 
TaxTMI 
2026 (6) TMI 21
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....Babu, while the second appeal is by Shri N.C. Alexander. 1.2 The facts, in brief, are that the importer had imported apples from USA during the period March 2001 to March 2003 and declared values ranging from USD 10.5 to USD 12 per carton. Investigation conducted by the Directorate of Revenue Intelligence alleged that the importer had undervalued the goods by arranging for two sets of invoices-one reflecting actual higher value and another reflecting lower value for customs purposes. The case of the Department is built upon e-mails, alleged parallel invoices, insurance documents and overseas verification. Based on these materials, the adjudicating authority rejected the transaction value under Section 14 of the Customs Act, 1962 and re-determined the value under the Customs Valuation Rules, 1988, resulting in demand of differential duty of approximately Rs. 98 lakhs, confiscation of goods valued at approximately Rs. 7.35 crores and imposition of penalties on both appellants. 2. Aggrieved by the Order-in-Original, the appellants have challenged the impugned order on facts and law and filed the present appeals before this Tribunal. 3. The Ld. Advocate Shri B. Satish Sundar a....
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....is absolutely no evidence to establish abetment. Mere correspondence or association with the importer cannot attract penalty under Section 112(a). The penalty imposed is therefore liable to be set aside. 5.1 The Ld. Authorized Representative Smt. Anandalakshmi Ganeshram appearing for the Revenue reiterated the findings of the adjudicating authority and further submitted that the investigation conducted by the Directorate of Revenue Intelligence has clearly established that the importer had undervalued the goods. It was contended that the evidence gathered during investigation, including e-mails, overseas verification reports and parallel invoices, clearly demonstrates that two sets of invoices were maintained and that the declared value was not the actual transaction value. 5.2 The Ld. Authorized Representative submitted that the existence of parallel invoices stands corroborated by overseas verification and insurance documents indicating higher values. It is argued that such documentary evidence, read together with statements recorded under Section 108 of the Customs Act, clearly establishes undervaluation. 5.3 It was further submitted that the retraction of statements is....
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....nstrating that the declared price is not the price actually paid or payable. The burden to establish such circumstances lies squarely upon the Department. 9.3 In the present case, the rejection of transaction value is founded upon alleged parallel invoices which are admittedly unsigned computer-generated documents. Their origin, authenticity and evidentiary value remain unestablished. No person has been examined to prove these documents and no cross-examination has been afforded to the appellants. Such documents, in the absence of proof, cannot form the basis of adverse findings. 9.4 The overseas verification reports relied upon by the Department could not be treated as valid evidence as these are selective in nature, lack correlation with the specific consignments under dispute and have not been subjected to cross-examination. The denial of cross-examination, despite request, constitutes a violation of principles of natural justice. 9.5 We find that Insurance documents have been relied upon to suggest higher value; however, it is settled law that insurance values cannot be equated with transaction value. Similarly, the e-mails relied upon have not been authenticated and r....
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....or financial flowback, the declared transaction value cannot be rejected. 9.12 We find that the issue is squarely covered by the decision of this very Bench in National Fruits Agency v. Commissioner of Customs (Export), Chennai, 2016 (337) E.L.T. 232 (Tri.-Chennai), relied upon by the appellants, wherein on identical facts it was held that enhancement of value based on unsigned parallel invoices, uncorroborated overseas data and retracted statements is unsustainable. It is noted that the Department has filed an appeal against the said decision before the Hon'ble Supreme Court; however, no stay has been granted. Therefore, the said decision continues to hold the field and is binding on this Bench. 9.13 The Hon'ble Supreme Court in Union of India v. Kamlakshi Finance Corporation Ltd., 1991 (55) E.L.T. 433 (S.C.), has held that decisions of coordinate benches must be followed unless stayed. 9.14 The appellants have also relied upon the following decisions: - i. Truwoods Private Limited v. Commissioner of Customs, 2006 (204) E.L.T. 288 (Tri.-Bang.), affirmed in 2016 (331) E.L.T. 15 (S.C.) ii. Mihir Enterprises v. Commissioner of Customs, 2008 (227) E.L.T. 75 ....
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....of undervaluation and suppression of facts. In the absence of proof of undervaluation and in view of the failure of the Department to establish any additional consideration or financial flowback, the imposition of penalty on the importer cannot be justified. 10.4 As regards the penalty imposed on Shri N.C. Alexander under Section 112(a) of the Customs Act, it is observed that the allegation of abetment is not supported by any independent, cogent or corroborative evidence. The entire case against him is based on assumptions and on statements which have been retracted and remain uncorroborated. Mere association, communication or correspondence with the importer does not establish active involvement or knowledge of any alleged undervaluation. In an identical factual matrix, this Tribunal in National Fruits Agency v. Commissioner of Customs (Export), Chennai, 2016 (337) E.L.T. 232 (Tri.-Chennai), set aside the penalty imposed on the importer/abettors, holding that in the absence of evidence of abetment, penalty is not sustainable. The said decision squarely applies to the present case. 10.5 Further, the Hon'ble Supreme Court in Hindustan Steel Ltd. v. State of Orissa, 1978 (2) E.....
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....ennai, 2016 (337) E.L.T. 232 (Tri.-Chennai), on identical facts, this Tribunal held that in the absence of reliable evidence of undervaluation and suppression, invocation of the extended period is not sustainable. The said decision is directly applicable to the present case. 11.6 When the very foundation of the demand is based on allegations of suppression which have not been established, the invocation of the extended period necessarily fails. Consequently, the demand is liable to be held as time-barred. 11.8 In view of the foregoing, it is held that the invocation of extended period under Section 28 is not justified and the entire demand is liable to be set aside and, on this ground, also, the impugned demand cannot be sustained. 12. In view of the foregoing detailed findings on all the issues framed for determination, it emerges that the entire case of the Department is founded on assumptions, unverified documents and uncorroborated material. The rejection of transaction value under Section 14 of the Customs Act has been held to be unsustainable in the absence of cogent evidence of additional consideration or financial flowback. The alleged parallel invoices remain unpr....