2001 (3) TMI 974 - Commission - Customs

Issues Involved:
1. Under-invoicing and misclassification of imported goods.
2. Determination of assessable value and duty liability.
3. Eligibility for immunity under Section 127H of the Customs Act, 1962.
4. Penalty imposition under Section 114A of the Customs Act, 1962.
5. Compliance with the High Court's order for release of goods.

Issue-wise Detailed Analysis:

1. Under-invoicing and Misclassification of Imported Goods:
The applicant filed a Bill of Entry for various components, which were suspected by the Directorate of Revenue Intelligence (DRI) to be under-invoiced and misclassified to avoid full duty payment. The DRI's investigation revealed that these components were essentially complete sets of Pioneer brand CD players and cassette players, imported as parts to circumvent classification as complete products. The Show Cause Notice (SCN) proposed reclassification under Customs tariff headings 851993, 851999, and 851822 and alleged that the import required a special import license, making the goods liable for confiscation under Sections 111(d) and 111(m) of the Customs Act, 1962.

2. Determination of Assessable Value and Duty Liability:
The declared assessable value was Rs. 4,72,700.68, but the DRI proposed higher values based on market prices. The SCN suggested adopting Rs. 9,000 per set for the CD player and Rs. 6,000 per piece for the cassette player, based on a quotation dated 17-12-1999 from M/s. Modern Electronics, Calicut. The Commissioner (Inv.) was directed to verify the market price and the genuineness of the proforma invoice from M/s. Cybernetics, Calcutta. The investigation confirmed that the proforma invoice was not genuine, and the market prices during July 1999 were Rs. 8,500 for the CD player and Rs. 5,000 for the cassette player. The final assessable value was determined at Rs. 7,03,920, with a duty liability of Rs. 4,84,973.

3. Eligibility for Immunity under Section 127H of the Customs Act, 1962:
The applicant's eligibility for immunity was questioned due to the non-genuine proforma invoice. However, the applicant cooperated by accepting the market prices determined by the Commissioner (Inv.) and agreed to settle the duty liability. The Settlement Commission found that the applicant had extended cooperation and made a full and true disclosure of duty liability, thereby qualifying for immunity under Section 127H.

4. Penalty Imposition under Section 114A of the Customs Act, 1962:
A token penalty of Rs. 1,000 was imposed on the applicant under Section 114A. The Commission granted immunity from any penalty exceeding this amount, as well as from interest, fine, and prosecution under the Customs Act, 1962, provided the duty and penalty were paid within the stipulated time.

5. Compliance with the High Court's Order for Release of Goods:
The High Court of Kerala had directed the release of goods upon the applicant furnishing a bank guarantee of Rs. 15,00,000 and executing a surety bond for the balance amount. The applicant complied, and the goods were released. The Settlement Commission ordered the release of the bank guarantee upon payment of the remaining duty.

Conclusion:
The Settlement Commission settled the case by determining the total duty payable as Rs. 6,53,865, deducting the already paid amounts, and requiring the applicant to pay the balance of Rs. 1,68,177 within 30 days. Immunities were granted under Section 127H, with conditions for withdrawal if the duty and penalty were not paid or if it was found that the settlement was obtained by fraud or misrepresentation. The settlement would become void if obtained by fraud or misrepresentation of facts, as per Section 127C(9) of the Customs Act, 1962.

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