2009 (6) TMI 849 - AT - Central Excise

Summary

Issues Involved:
1. Allegation of undervaluation of imported tyres.
2. Evidence supporting undervaluation.
3. Methodology for determining the correct assessable value.
4. Imposition of differential customs duty.
5. Confiscation of goods.
6. Imposition of penalties and interest.

Issue-Wise Detailed Analysis:

1. Allegation of Undervaluation of Imported Tyres:
The appellant-firm was accused of undervaluing tyres imported from China to pay less customs duty. The Directorate of Revenue Intelligence (DRI) initiated an investigation based on specific information, revealing that the appellant declared lower values to customs compared to actual prices negotiated with Chinese suppliers.

2. Evidence Supporting Undervaluation:
The evidence included:
- Invoices showing lesser values than actual prices.
- Emails from Chinese suppliers indicating actual prices.
- Handwritten invoices by the appellant's representative.
- Telegraphic transfers (TTs) arranged from Dubai to pay the differential amounts.
- Systematic accounts maintained by the appellant, indicating payments made through formal banking channels and actual values of consignments.
- Statements from the appellant's representatives admitting undervaluation.

3. Methodology for Determining the Correct Assessable Value:
The appellant suggested three alternative methods for valuation:
(i) Accepting the value declared for the first consignment at Nhava Sheva Port as the correct value.
(ii) Using the total amount of TTs made to Chinese suppliers as the differential value.
(iii) Applying a method where the declared value was 60-70% of the actual value, as stated by the appellant's representatives.
The adjudicating authority, however, did not consider these methods and based the valuation on documents like the GEQD report and register 13/R, which were deemed credible.

4. Imposition of Differential Customs Duty:
The adjudicating authority ordered the revaluation of the consignments, rejecting the declared assessable values and adopting revised values. Consequently, a differential customs duty amounting to Rs. 2,61,89,711/- was demanded from the appellant.

5. Confiscation of Goods:
The tyres imported under Bill of Entry No. 397 were confiscated, with an option for redemption upon payment of Rs. 8,50,000/-. The 38 other consignments, although liable for confiscation, were not confiscated as they had not been released under a bond.

6. Imposition of Penalties and Interest:
Penalties were imposed on the appellant and its representatives under Sections 112(a) and 114A of the Customs Act. Interest was also demanded under Section 28AB of the Customs Act.

Conclusion:
The Tribunal upheld the finding of undervaluation but remanded the matter back to the adjudicating authority for re-quantification of the differential duty. The authority was directed to consider any one of the alternative methods suggested by the appellant for valuation. The adjudicating authority was also instructed to reconsider the imposition of penalties and interest based on the revised quantification. The appeals were disposed of accordingly.