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2019 (6) TMI 576 - AT - CustomsImposition of penalties u/s 112 and section 114AA of Customs Act, 1962 - fraudulent import of ‘drawings’ ostensibly for modernization and expansion of their shipyard and also for construction of vessels - Allegation that the ploy was hatched solely to enable the illegal transaction in money. - HELD THAT:- There can be no doubt that arguments have been advanced on behalf of the appellants that were not before the adjudicating authority or did find a place in the grounds as preferred at the time of filing of the appeal. The submissions that are now put forth arise from questions of law that have been settled subsequently and which was not available when the impugned order was issued. Moreover, there is a substantial difference between raising fresh grounds of law and fresh grounds of fact at the appellate stage; as the latter must needs be verified before being accepted and such verification is not normally feasible for an appellate authority to undertake, fresh factual grounds are not admitted for settlement of disputes at the appellate stage. In the present dispute, we find that the discharge of onus to establish mis-declaration is only peripheral as a presumed relationship between the exporter and the importer was held to suffice for indulging in re-valuation. Though such has not been argued before us, we are of the opinion that even this relationship between the two has not been tested against the touchstone of rule 2(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and has, instead, relied upon certain presumptions derived from the enunciation in the report of the investigation agency. The argument of Revenue in defence of the order herein was that detrimental consequence of overvaluation and creation of a purported cross-border transaction could be visited upon importers with the penal provisions in section 112 of Customs Act, 1962 and section 114AA of Customs Act, 1962. It was posited that section 111(m) of Customs Act, 1962 was specifically endowed with the provision pertaining to value in order to check overvaluation. We have no doubt that this was so. However, the Tribunal did not find it justifiable for that provision to be invoked when the allegation of overvaluation flows from a fictional assumption of incorrect declaration incorporated in the valuation mechanism for the limited purpose of levy of duty. Undoubtedly, overvaluation, when established with sufficient evidence of money flow to beneficiaries, other than the seller, would justify the invoking of section 111 (m) of Customs Act, 1962 as enacted by the sovereign legislature of the Union. Any other circumstantial evidence which may justify the invoking of the Rules flowing from section 14 of Customs Act, 1962 will not suffice for the purpose. The allegation that the ‘drawings’ were manufactured in India and exported is based on certain premises and inferences; while we forbear from venturing into the legality and propriety of such conclusion in the absence of an appeal with appropriate locus, the legal consequences of such an assumption cannot go unnoticed. Under section 20 of Customs Act, 1962, goods that have originated in India are, on subsequent import, to be given the same treatment as any other imported goods. There is a privilege that flows from such origin and that privilege is the abatement of certain duties to be claimed by the importer with reference to the exemption notification issued under section 25 of Customs Act, 1962. There is no doubt that this privilege has not been sought for and the declining of this privilege cannot be construed as an offence or be held against any person. In the absence of a claim for such privilege, the appropriate rule in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 must needs to be invoked for ascertaining the assessable value. That has not been carried out in the impugned order - There can be no offence in re-import of validly exported goods. Though facts have been collated to consider the impugned goods as re-imported, there is no evidence on record of exports having taken place. It would be reasonable to presume that re-import must be evidenced by the factum of export or, in the absence of such, by allegation of wrongful export. In the clear absence of record of export, no credence can be given to this assumption, without invoking the consequence of illicit export, and which has then gone on to attribute responsibility for such to the appellants herein. The penalties must fail on that flimsiness too. Whether on a claim for exemption under notification no. 12/2012-Cus dated 17 March 2012 (or the predecessor exemption) or the exemption governing goods of Indian origin, there is no duty implication. The declaration, acceptable or otherwise, in the bill of entry is, therefore, of no consequence. In these circumstances, the scope for imposition of penalty under section 112 of Customs Act, 1962 does not arise. Penalties set aside - appeal allowed - decided in favor of appellant.
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