The Delhi Bench of the Customs, Excise & Service Tax Appellate Tribunal(CESTAT) upheld the Penalty under section 114 AA of the Customs Act, 1962 as there was a huge difference in the actual value of identical goods imported and Chinese customs declaration value.
M/s.Decor Rubber Industries, the appellant, has been importing goods namely unbranded “Reflective Sheets”. Acting on intelligence, the containers covered under the bill of entry filed by the appellant through its Customs Broker M/s. Sajeev Kumar was preliminarily examined. The imported goods were found to be supplied by M/s. Changzhou Hua R Sheng Reflective Materials Co. Ltd., China.
The goods were found to be rolls of branded Reflective Sheets of the brand name “Sablite”. Two types of reflective sheets of series TM3200 AB and TM1800 of 1219 and 5 rolls respectively were found. The value of these goods declared in the Bill of Entry was Rs.15,41,721.53 (USD 32758.58). The examining officer doubted these values as they were too low. The goods were detained and a market survey was done which showed that the price of similar Reflective Sheets was Rs.8,000 per roll and other reflective sheets were priced at Rs.36,000/- to Rs.39,000/- per roll.
During the investigation, it was also found that the appellant had imported the same goods through fourteen other bills of entries in the past declaring similar prices. It was felt that the goods imported under these past Bills of Entry were also undervalued and were, therefore, liable to confiscation.
The Values in consignments of goods were found to be undervalued. It was alleged that the importer-appellant had fraudulently suppressed the correct transaction value of the imported goods by fabricating import documents with the intent to evade payment of appropriate duties of customs.
A show cause notice was issued demanding differential duty under the proviso to section 28(1) of the Act alongwith interest under Sections 28AA and 28AB. The Goods were proposed to be confiscated under section 111 (m) of the Customs Act, 1962. In addition, the penalty was proposed to be imposed on them under sections 112 (a), 112 (b), 114A and 114AA of the Act ibid. The proposals in the SCN were confirmed by the impugned order.
The Commissioner rejected the transaction value, firstly because, while the invoice and the Bill of Entry declared only 1219 rolls of TM 3200, on examination, it was found that there were five additional rolls of TM 1800which were not at all declared in the invoice and the Bill of Entry. Shri Virendar Singh, owner of the importer firm admitted to having imported but not declaring these five rolls in the bill of Entry.
The market enquiry was conducted and it was found that the price of TM 3200 was Rs. 8,000/- per roll, the price of TM 1800. Further, overseas enquiry into four past Bills of Entry by the appellant also showed that the actual values of identical goods imported by the appellant declared by the exporter before the Chinese Customs were four times the values declared for the same consignment before the Indian Customs by the appellant. The Comissioner rejected the value and confirmed the demand for differential duty of customs under section 28.
“Since there was a mis-declaration of the goods both in terms of value and quantity the confiscation under section 111(m) must be upheld. The redemption fine of Rs. 5,00,000/- imposed under section 125 on the goods valued at Rs.64, 86,108/- is very fair and reasonable and calls for no interference.”, the two-member bench of Dr Rachna Gupta, Member (Judicial) And Mr P V Subba Rao, Member (Technical) held.
The Tribunal held that the appellant was liable to penalty under section 114AA of the Customs Act and dismissed the appeal of the assessee.
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