The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that penalty under the customs act is not imposable when the misdeclaration of values of imported goods is not established conclusively.
The Revenue challenging the Order-in-Appeal which involved the issue of valuation of imported silk by M/s. Sree Rajendra Textiles, the respondent.
The appellant has filed various Bills of Entry for clearance of Thrown Silk Yarn/ Raw Silk classifying under CTH 50040090 and 50020010. Covering these imports, invoices were raised by M/s. Oingdao Yijia E.T.I.I./E Co., Ltd., Qingdao, China, K-Sun International Trade Co, Limited, Hongkong, M/s. Guangdong Silique International Group Gold Silk Co. Ltd., Guangzhou, China and M/s. Avanti Trading Co. Ltd., Jordan, Kowloon, Hong Kong with recorded unit price
The Revenue noticed the contemporaneous import of the same goods of the same description were assessed at higher values and on the presumption that the importer had undervalued the goods to evade payment of appropriate duty the importer was requested to justify the values declared. Aggrieved by the above, the importer filed a writ petition before the High Court of Madras wherein ordered to release the goods subject to the conditions.
Based on the conditions, the importer has furnished bank guarantees for 50% of the differential duty and furnished personal bond for the remaining 50% of the differential duty and bills of entry were assessed provisionally and the goods were cleared.
It was observed that a Proper officer can therefore reject the declared transactional value based on ‘certain reasons to doubt the truth or accuracy of the declared value in which event the proper officer is entitled to assess as per Rules 4 to 9 of the 2007 Rules.
Crucial commercial details of these consignments on which reliance is placed to determine contemporaneous prices as to the type, quality, and quantity imported whether under any contract or whether any advance was paid or whether the supply from the manufacturer or trader or whether the import is from any stock lot, etc., are not ascertainable.
There was no discussion by the original adjudicating authority as to how the values of contemporaneous imports of identical/similar goods have been arrived at. Further, the respondent has intimated the clearances of the same commodity by other importers nearly at or around the same price during the relevant period during the adjudication proceedings.
It was observed that there was no allegation that the importer has mis-declared the description of goods or whether any excess quantity was found or whether there is any other misdeclaration as to any other aspect of imported goods. All the silk was imported in terms of the contracts entered with various suppliers as agreed upon with the contracting parties.
A two-member bench comprising of Mr P Dinesha, Member (Judicial)and Mr Vasa Seshagiri Rao, Member (Technical) held that “order of lower appellate authority is not required to be interfered with. As such, there is no need to discuss the confiscability of impugned goods. Neither there is any justification for the imposition of penalty when misdeclaration of the values of impugned goods is not established conclusively.”
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