KOTTARAM TRADING CO. Vs. COMMISSIONER OF CUSTOMS, COCHIN

JUDGEMENT

(1.) THESE appeals are directed against Order -in -Original No. 5/2008 dated 4 -3 -2008.

(2.) THE relevant facts that arise for consideration are the appellant herein is engaged in the business of import and sale of opal glassware. The imports were made by the appellants for the first time in India, and with a view to penetrate the market, the price of the items imported was negotiated and imports were made. The invoices which were raised by the foreign supplier were for the amount, which was negotiated and agreed upon between the two parties. The prices agreed accordingly were mutually negotiated for the purpose of market penetration, which resulted in offering higher discounts to the normally offered in the pricelist/quotation of the foreign supplier. On an investigation which was done by the DRI, 53 consignments imported by the appellant were investigated. The said 53 consignments were already allowed and cleared, as per the value declared in the relevant Bills of Entry. After an investigation by the lower authorities and recording of the statements, the lower authorities came to the conclusion that there was a mis -declaration of the value of the goods and relying upon the statement given by the Managing Partner, a show cause notice dated 30 -10 -2007 was issued alleging undervaluation demanding differential duty not paid, confiscation of goods and for imposition of penalties. The said show cause notice was contested by the appellant mainly on the ground that the prices which were agreed and billed by the foreign supplier was a negotiated price and there is no evidence which would indicate that the appellant had transmitted amount more than whatever has been mentioned in the invoices. It was also submitted before the authorities that the said price which was declared for the first time was gradually increased till the year 2006. It was also submitted to the reply to show cause notice that it is placing erroneous reliance on the statements of the partners. They also relied upon the contemporaneous imports which were done of identical goods from other ICDs. The Adjudicating Authority after considering the written and oral submissions made by the appellant before him, came to the conclusion that there was an undervaluation and the same has been accepted by the partner of the importer and therefore, the allegations made in the show cause notice stands proved. Coming to such a conclusion, the Adjudicating Authority confirmed the demand or differential duty of Rs. 72,91,775/ - along with the interest under Section 28AB of the Customs Act, 1962. He also imposed equivalent penalty of Rs. 72,91,775/ - under Section 114A of the Customs Act, 1962. A further penalty of Rs. 10,00,000/ - was also imposed on the partner i.e., Shri Anthony Thomas under Section 112 of the Customs Act, 1962. Aggrieved by such an order, the appellants are before us in these appeals.

(3.) LEARNED Counsel Shri Parameshwaran along with advocate Shri Balagopal appeared on behalf of the appellants. The learned counsel took us through the Order -in -Original and the entire show cause notice. Ld. Counsel mainly argued that the entire order is based upon the statement of Shri Antony. He draws our attention to that portion of the statement which was given by Mr. Anthony wherein it indicated that it was mutually agreed between the companies to declare a lower value approximately nearly to 50% of the negotiated price. This was for saving the part customs duty, so that we could compete with other similar products marketed in India. It is his submission that the said portion has been misconceived and mis -interpreted to assume that there has been acceptance of evasion of duty or mis -declaration of the value. It was submitted that the prices which was mutually negotiated as per the invoice has been correctly declared by the appellant and there was nothing to indicate that the negotiated prices were further reduced to 50% for saving that part of the customs duty. It is his submission that alleged mis -declaration of the value can be sustained only if it is established with the evidences. It is his submission that this is an accepted normal commercial transaction value between the importer and the supplier. For this purpose, he relies upon the decision of the Honble Supreme Court in the case of Mirah Exports Pvt. Ltd. v. CCE - 1998 (98) E.L.T. 3. It is also his submission that the amount paid to the overseas supplier is the same amount as was declared in the bills of entry and the invoices. He would also submit that the invoices which were received by the importer and as submitted to the customs were accepted correct. It is also submitted that there is no allegation of remittance of money over and above the price declared in the respective bills of entry or any other invoice has been found during the investigation. It is his submission that in any case, the statement and other evidences relied upon could at best be considered as tax planning and certainly not as tax evasion, which would get further established by the tact that every year the price of the items has been increasing and during the year 2006, it had reached a stage of offering normal discounts in terms of the said pricelist/quotation. It was his submission that the whole basis adopted for alleging undervaluation seems to be totally misconceived. It is also his submission that department has not produced any evidence of contemporaneous imports. On the contrary, it is his submission that appellant had placed on record contemporaneous import detail before the Adjudicating Authority, which he has not even considered. It is his submission that it was summarily dismissed as being not authenticated copies. He would submit that the details furnished were of reference of bills of entry number and date etc., which could have been easily verified by the Adjudicating Authority from the customs department itself. It is also his submission that the full and complete factual position was not at all appreciated by the Adjudicating Authority in the proper prospective and in any case could not have arrived at the alleged undervaluation merely based on the pricelist and normal discounts offered, that too without any evidence of contemporaneous import. It is his submission that the entire demand of the differential customs duty with interest and the equivalent penalty therein imposed deserves to be set aside in toto. Similarly the penalty of Rs. 10,00,000/ - imposed on the partner also needs to be set aside.