The Delhi bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has held that penalty under the Customs Act is not invokable in the absence of evidence of tax evasion.
The appellant M/s.Veera Fragrances Pvt. Ltd. is a manufacturer of Aromatic Compounds and was importing aromatic chemicals for perfumery preparation from Givaudan, Switzerland. Mr. Vaibhav Jain-another appellant is the Director of M/s. Veera Fragrances Pvt. Ltd. Under information about some contravention by the appellants the searches were conducted in the premises of the appellants and also in the premises of M/s. Ajit Traders on 10.08.2017. At all these premises drums/containers of different weights and sizes were found with “Aroma Chemical K100”. When those stickers of description were removed another sticker underneath was found, wherein the contents of the container were described as “safranal”.
It was alleged that the appellants have declared the lower value of “safranal” from USD 428 per Kg. to USD 408 per kg. within a very small period without any reason. Hence the value of “safranal” need to be re-determined.
A Show Cause Notice No. 4237 of 01.02.2018 was served upon the appellants for redetermination of the value of “safranal” and the recovery of the re-assessed value. The differential demand due to misdeclaration, amounting to Rs.19,61,808/-, was proposed to be recovered to be appropriated from the amount of INR 98,81,642/- already deposited by the appellant. The seized “Aroma Chemical K -100” was reassessed at I.N.Rs. 7,09,75,150/-. The proposal has fully been confirmed vide the order under challenge.
Shri S. Jaina, Counsel appeared for the appellants and Shri Rakesh Kumar, Authorised Representative appeared for the Revenue.
It was submitted that the appellant has not misdeclared the price paid. The bench viewed that the transaction value of Aroma Chemical when imported as “Aroma Chemical K-100” also cannot be rejected. The decision to reject the transaction value and reassess the same without following the sequence of Rules 4-9 of Valuation Rules as discussed above is not sustainable.
Further held that the change of name from “safranal” to K-100 does not amount to be an act of misdeclaration as there is no evidence of evasion of customs duty while mentioning “safranal” as D-100 on the consignments as well as on the storage tins/containers.
A two member bench Dr Rachna Gupta, Member (Judicial) and Hemambika R Priya, Member (Technical) held that “the entire case made out against the appellant is therefore, held to be an act of misunderstanding and the findings are nothing but the result of presumptions and assumptions. Once there was no intent to evade the customs duty and the required duty has already been paid by the appellant. Once, there is no evidence of alleged misdeclaration and undervaluation for the reasons discussed above, there arises no question of imposition of penalty either on the importing firm or on its director. Hence, the orders under challenge cannot be sustained.”
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