The Customs, Excise and Service Tax Appellate Tribunal (CESTAT) while quashing the enhancement of assessable value and imposition of redemption fine in lieu of confiscation held that Price quoted in Proforma invoice can’t be Actual Price as it is settled after negotiation.
The appellant, M/s. Trading Syndicate is engaged in the business of imports and exports. In the normal course of business, he imported “Ball Valves” made of metal like Zinc and Brass during the period 2009-10 through Kolkata Port. Pursuant to an investigation conducted by Mumbai DRI against various importers of such items, a Show Cause Notice was issued alleging under- valuation of the imported goods. The Adjudicating authority rejected the declared assessable value and accepted the re-determined assessable value and held the goods liable for confiscation under Section 111(m) of the Customs Act, 1962. The differential duty of Rs.13,19,538/- was confirmed in respect of two consignments imported under Bills of Entry No.509039 dated 03.12.2009 and 511166 dated 14.12.2009 under Section 28(8) along with applicable interest. Penalty of Rs.13,19,538/- was imposed under Section 114A on M/s.Trading Syndicate and a penalty of Rs.1,80,00,000/- was imposed separately on the proprietor. A Redemption Fine of Rs.5.00 Lakhs has also been imposed in respect of goods confiscated under Bill of Entry. On appeal, the Commissioner (Appeals) upheld the Order-in-Original and rejected the appeal before him.
The appellant submitted that in the matter of re-determination of value, the proper officer must proceed sequentially from Rule 5 to Rule 8 of Customs Valuation as has been held in various decisions that Customs Valuation Rules must be proceeded with sequentially. Once transaction value was to be rejected under Rule 4, the Officer must have proceeded first to Rule 5 and then to Rule 6 and onwards.
On the other hand, the Department submitted that the investigation was undertaken on the basis of certain information regarding under valuation of Ball Valves against a number of importers at the material time. During the course of enquiry, various discrepancies were observed on the part of the importer, the CHA and the transporter. The proceeding was initiated against all of them including the importer. The appellant evaded appearance and examination by the investigating agency which supports the allegation made out in the proceeding.
The coram of Judicial Member, P.K.Choudhary and Technical Member, Raju ruled that in the course of enquiry, a proforma invoice was recovered showing a different price from that as shown in the invoice submitted at the time of import. However, it is observed that the proforma invoice is not issued in the name of the appellant. Otherwise also the price quoted in a proforma invoice cannot be held as the actual price since the price of goods are settled after negotiation between the two parties. The Revenue has not produced any document to prove that there was any extra payment made by the appellant towards purchase of the said goods.
“The confiscation of the goods and imposition of penalty are consequential to the alleged under-valuation of the imported goods by the appellant. Since we do not find sufficient grounds as required for enhancement of assessable value, imposition of redemption fine in lieu of confiscation under section 125 of the Customs Act, 1962 and imposition of penalty under section 114A on M/s.Trading Syndicate and under section 114AA on Shri Mohinder Goel, proprietor of M/s.Trading Syndicate is not sustainable. The appeal filed by the appellant is allowed with consequential relief, if any, as per law,” the CESTAT said.
Subscribe Taxscan Premium to view the JudgmentSupport our journalism by subscribing to Taxscan AdFree. Follow us on Telegram for quick updates.
