Declared Value in Bills of Entry cannot be Rejected Relying on Proforma Invoice, Penalty u/s 114AA not Imposable: CESTAT [Read Order]

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the penalty imposed under Section 114AA of the Customs Act and held that declared value in bills of entry cannot be rejected relying on proforma invoice.

Sunny Sales, the appellant/assessee had imported 129 consignments of Sewing Machinery and parts of various brands through Kolkata port and one consignment of sewing machinery at ICD Tughlakabad, between the years 2012 and 2014. All the Bills of Entry were assessed/ reassessed to duty finally by accepting the transaction value declared by the appellant in the respective Bills of Entry.

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During a search in the premises of appellant, the officers of Directorate of Revenue Intelligence (DRI), seized the import documents relating to the 130 consignments. After initial verification of the documents, DRI, transferred the documents to DRI, Kolkata for further investigation at their end in the year 2015.

On completion of the investigation, a Show Cause Notice was issued to the appellant proposing to reject the transaction value declared by them in all the 130 Bills of Entry and demanded differential customs duty. The Notice also proposed to demand interest and impose penalty under Section112(a) and (b) and Section 114AA of the Customs Act, 1962.

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The Notice was adjudicated , wherein the Commissioner has confirmed the demand of customs duty of Rs.2,57,27,920/- along with interest and ordered for confiscation of the goods imported and imposed equal amount of duty as penalty on the appellant-company. A penalty of Rs. 50,00,000/- has also been imposed on Shri Sanjay Mehta, Partner of the appellant-company, under Section 114AA of the Customs Act.

The appellants submited that the initial investigation was conducted by DRI, Bangalore and they could not find any undervaluation; subsequently, when the case was transferred to DRI, Kolkata, they started fresh investigation; DRI Kolkata presented two documents: one was a mail allegedly found with one Mr. Mahesh Agarwal at Bangalore and another was a proforma invoice in the name of Jaiswal Trading Company.

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The two member bench of Shriashok Jindal (Judicial Member) and K. Anpazhakan, (Technical Member) has held that the declared value in the Bills of Entry cannot be rejected on the basis of some details mentioned in the Proforma Invoice and documents attached with the said email.

The bench observed that the ingredients required for imposing penalty on him under Section 114AA of the Customs Act are not existing in this case and held that the penalty imposed on him is liable to be set aside.

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The tribunal viewed that demand cannot be raised without challenging the assessment orders. The order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable.

To Read the full text of the Order CLICK HERE 

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