2009 (4) TMI 163 - AT - Customs

Valuation Transaction Value - Adjudicating allegations of misdeclaration of description value and import contravening prohibition in the Foreign Trade (Development and Regulation) Act the Commissioner of Customs enhanced the assessable value to Rs. 31, 20, 616/- from US 28000 and demanded differential duty of Rs. 8, 66, 485 held that - We find that the Commissioner erred in adopting the value of a different model to assess the impugned imports without making any effort to find out if the higher price of Model Zs88Q was not on account of superior features and functions of that model. In the circumstances we set aside the finding of under valuation by the appellants as well as the demand of differential duty of Rs. 8, 66, 485/- on account of enhancement of value. There is no dispute that the import was in contravention of prohibition in exim policy. The importer had adduced documentary evidence to show that what they had ordered were stocklot goods and no order had been placed for Samsung brand VCD players confiscation upheld but fine reduced

Summary

Issues:
1. Misdeclaration of goods description, value, and import contravening prohibition in the Foreign Trade (Development and Regulation) Act.
2. Enhanced assessable value by the Commissioner of Customs.
3. Confiscation of goods under Sections 111(d) and 111(m) of the Customs Act.
4. Imposition of fine and penalty on the importer.

Analysis:
1. The appellant filed a Bill of Entry for clearance of 1400 pieces of VCD players, but upon examination, it was found to comprise a mix of Atlantis and Samsung brands. The Commissioner enhanced the assessable value based on contemporaneous imports of a different model of Samsung VCD players. The Tribunal noted discrepancies in the comparison, lack of disclosure of features, and errors in adopting a different model's value. Consequently, the finding of undervaluation and the demand for differential duty were set aside.

2. While the import was found to contravene prohibition under the exim policy, the Tribunal upheld the confiscation of the consignment only under Section 111(d) of the Customs Act. The order lacked details on how the fine was determined, with no inquiry into the likely profit margin. Citing a previous decision, the Tribunal reduced the imposed fine and penalty to align with the precedent, emphasizing the need for proportionality in such cases.

3. The Tribunal's decision was influenced by the lack of effort to establish comparability between the models, leading to errors in valuation. The appellant provided evidence that the goods were stocklot items, not specifically ordered Samsung brand VCD players. The Tribunal, following a consistent approach in similar cases, reduced the fine and penalty imposed on the importer, partially allowing the appeal and emphasizing the need for fair and proportionate penalties in customs cases.