2003 (12) TMI 345 - AT - Customs

Summary

Issues Involved:

1. Non-acceptance of declared value in terms of Bill of Entry and enhancement of the same.
2. Allegation of under-invoicing and non-declaration of full quantity of goods.
3. Relationship between the importer and the supplier affecting transaction value.
4. Seizure of undeclared goods and imposition of penalty.

Issue-wise Detailed Analysis:

1. Non-acceptance of Declared Value:
The appellants were aggrieved by the Commissioner's decision to not accept the declared value in the Bill of Entry and to enhance it. The Commissioner based this decision on the grounds that the declared value was not reflective of the true transaction value, and the importer had not declared all goods covered under the import documents. The discrepancy was found in the invoice values and the unit prices of goods, which did not align with normal trade practices.

2. Allegation of Under-invoicing and Non-declaration of Full Quantity of Goods:
The Customs Intelligence Unit found that the importer was under-invoicing and not declaring the full quantity of goods. A physical examination revealed undeclared goods valued at Rs. 2,15,792/-. The entire consignment was seized, and the importer was asked to furnish a bond and bank guarantee for provisional release. The importer did not take delivery of the undeclared goods, arguing that the department's valuation was too high.

3. Relationship Between Importer and Supplier Affecting Transaction Value:
The department alleged that the importer and the supplier were related parties, as the supplier's director was also a director in the importer's sister concern. This relationship was used to argue that the transaction value was influenced and not at arm's length, leading to the rejection of the declared value under Rule 4 of the Customs Valuation Rules, 1988. The importer contended that mere common directorship does not justify revising the value without evidence of mutual interest affecting the transaction value. They cited several judgments to support their argument that the declared value should be accepted unless there is clear evidence of under-valuation or mutual interest.

4. Seizure of Undeclared Goods and Imposition of Penalty:
The Commissioner confirmed the seizure of undeclared goods and imposed a penalty of Rs. 5 lakhs on the importer and Rs. 50,000 on the Custom House Agent. The importer did not contest the seizure but argued that the penalty was excessive and should be reduced to reflect the value of the undeclared goods and the duty confirmed. The Tribunal agreed with the importer, reducing the penalty to Rs. 25,000, while confirming the charge of undeclared goods and the duty confirmed.

Conclusion:
The Tribunal found that the Revenue had not provided sufficient evidence to justify the revision of the declared value based on the alleged relationship between the importer and the supplier. The mere fact of common directorship was not enough to establish mutual interest affecting the transaction value. The Tribunal set aside the Commissioner's order to revise the valuation and reduced the penalty for undeclared goods to Rs. 25,000. The appeal was disposed of accordingly.