1998 (7) TMI 321 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration and under-valuation of imported goods.
2. Confiscation of goods and imposition of penalties.
3. Admissibility and evaluation of additional evidence.
4. Eligibility for exemption notifications.
5. Valuation of imported goods.
6. ITC contravention.

Issue-Wise Detailed Analysis:

1. Misdeclaration and Under-Valuation of Imported Goods:
M/s. Sigma Electronics filed two Bills of Entry dated 21-10-1992 for goods under Bill of Lading dated 24-8-1992, declaring them as parts of Stepper Motor and components of clock movements. The goods were seized on 28-11-1992 for being allegedly complete CKD quartz clock movements misdeclared and under-invoiced. M/s. Sagar Electronics filed a Bill of Entry dated 20-10-1992 for Balloon Catheters, which were also seized on suspicion of under-valuation. A show cause notice dated 18-5-1993 proposed confiscation and penalties under Section 111(d) and (m) of the Customs Act, 1962.

2. Confiscation of Goods and Imposition of Penalties:
The Collector of Customs upheld the charges of misdeclaration and under-valuation, confiscated the goods with an option to redeem them on payment of a fine, loaded the CIF value of Catheters, and imposed penalties on the firms and individuals involved. The Tribunal, however, set aside the confiscation of CKD quartz clock movements and balloon catheters but upheld the confiscation of electronic circuit boards under Section 111(d) of the Customs Act. Penalties were proportionately reduced for the parties involved.

3. Admissibility and Evaluation of Additional Evidence:
Both the Revenue and appellants sought to introduce additional evidence under Rule 23 of the CEGAT (Procedure) Rules, 1982. The Tribunal allowed these documents to be taken on record, subject to evaluation of their evidentiary value during the hearing. The Department's additional evidence included reports from Hong Kong Customs, which were objected to by the appellants on grounds of non-disclosure of primary documents and claimed privilege due to international understanding.

4. Eligibility for Exemption Notifications:
The Tribunal found that parts of stepper motors were eligible for exemption under Notification No. 62/88-Cus., as they were not imported assembled with other parts of clock movements. For balloon catheters, although the appellants conceded they were not eligible for Notification No. 208/81-Cus., they claimed exemption under Notification No. 339/86-C.E., which the Tribunal extended on merits.

5. Valuation of Imported Goods:
The Department's case for under-valuation relied on quotations from M/s. OAM International, which were found unreliable due to inconsistencies and lack of contemporaneous relevance. The Tribunal held that quotations must be genuine, reliable, relevant, and contemporaneous, and should meet the requirements of Section 14 of the Customs Act and Customs Valuation Rules, 1988. The valuation of balloon catheters based on AIIMS's letter was also found unsatisfactory as it did not meet the conditions of Rule 7 of the Customs Valuation Rules.

6. ITC Contravention:
The Tribunal confirmed the findings of the Collector regarding the confiscation of electronic circuit boards due to their inclusion in the negative list at the material time and the absence of a specific import license, thus contravening Section 111(d) of the Customs Act.

Separate Judgments:
The Vice-President and Member (Judicial) differed in their conclusions. The Vice-President upheld the claim of privilege for documents from Hong Kong Customs and proposed remanding the matter for de novo consideration to ensure principles of natural justice. The Member (Judicial) evaluated the evidentiary value of additional evidence and proposed setting aside the confiscation of certain goods and reducing penalties. The Third Member agreed with the Vice-President, leading to a majority decision to remand the matter for de novo consideration.