KONIA TRADING CO. Vs. COMMISSIONER OF CUSTOMS

JUDGEMENT

(1.) The appellant challenges the order of the Commissioner dated 11 -7 -2001 confiscating the impugned goods -reduced size -toys and dolls of plastic, of actual value of Rs. 25,71,726/ - (declared value of Rs. 8,35,964/ -), and as the goods were not available for confiscation, imposing redemption fine of Rs. 10,00,000/ - under Section 125(1) of the Customs Act, 1962, and demanding duty of Rs. 5,20,729/ - from the appellant company under Section 28 of the said Act in addition to the duty already paid and imposing penalty of Rs. 10,00,000/ - under Section 112(a) of the said Act on the appellant company.

(2.) Show cause notice dated 29 -11 -2000 was issued on the appellant alleging that the consignment imported by the appellant company vide Bill of Entry No. 74, dated 7 -5 -98 and invoice No. KT -1071 -98, dated 25 -3 -98 was examined on 9 -5 -98 by the Customs in the presence of the officers of DRI and it was found to contain reduced size (scale) toys and dolls made of plastics, the total CIF value of which, as declared in the Bill of Entry, was US 12,622.80 (equivalent to Rs. 5,04,281/ -. This consignment was provisionally, released on payment of duty on the declared value against bond No. 2/98, dated 29 -5 -98 for Rs. 25 lacs and a bank gurantee of Rs. 5 lacs. The appellant had also imported a similar consignment of reduced size (scale) toys vide Bill of Entry No. 95, dated 30 -9 -97 and invoice No. KT -1298 -97, dated 13 -8 -97, the CIF value of which as declared in the Bill of Entry was US 8938.80 equivalent to Rs. 3,23,406/ -. This consignment was also released on payment of duty on the declared value. The DRI initiated enquiries with Hong Kong Customs and Excise Department through the Consulate General of India, Hong Kong, for ascertaining the actual value of goods declared before them by the supplier. In pursuance of such enquiries, it transpired that there was gross variance in the value stated in the invoices issued by the supplier, M/s. Zaptron (HK) Ltd. to the appellant vis -a -vis the actual value of the goods as intimated by the Hong Kong Customs and Excise Department. It was also reported by the Hong Kong Customs and Excise Department that the overseas supplier issued false invoices at the request of the Indian importer and the amounts were settled on D/P terms while the balance was paid by cheque or telegraphic transfer. As per the variation between the value declared by the appellant and the actual value declared before the Hong Kong Customs Department reported them by their letter dated 24 -7 -99, the assessable value of the goods imported vide Bill of Entry No. 95, dated 30 -9 -97 came to Rs. 10,45,640/ - and Rs. 10,56,096/ - respectively as against Rs. 3,23,406/ - and Rs. 3,26,640/ - respectively. Similarly, the actual CIF value and the assessable value in respect of the goods imported vide Bill of Entry No. 74, dated 7 -5 -98 was worked out to Rs. 15,00,624/ - and Rs. 15,15,630/ - respectively as against Rs. 5,04,281/ - and Rs. 5,09,324/ - respectively. The appellant was required to explain the difference in value declared by them and the actual value ascertained by the DRI during course of investigation, but could not explain the reason for the difference in the value given in the invoice submitted by them and the value ascertained by the DRI. The appellant was asked to produce the manufacturer's invoice in respect of the goods imported by the appellant as per the provisions laid down in Rule 10 of the Customs (Valuation Rules), 1988, but failed to produce the same.

(3.) In its reply dated 1 -3 -2001, the appellant raised the contention that the show cause notice raising demand in respect of Bill of Entry dated 30 -9 -97 was time barred as it was issued beyond the period of six months prescribed under Section 28(1) of the said Act. It was also contended that the show cause notice was issued beyond the jurisdiction of the Additional Director General of the Directorate of Revenue Intelligence in so far it related to the demand in respect of Bill of Entry dated 30 -9 -97. It was alleged that the Additional Director General of DRI was not the "proper officer", as defined under Section 34(2) of the said Act. The appellant further contended that the transaction value declared by the appellant ought to be accepted in view of the provisions of Section 14(1) of the said Act read with Rule 4(1) of the Valuation Rules. According to the appellant, there was nothing on record to indicate that the transaction fell in any of the exceptions specified in Rule 4(2) of the Valuation Rules. As regards the report of the Trade Licensing Bureau of Customs and Excise Department, Hong Kong dated 24 -7 -99, it was contended that there was no basis given in the report for arriving at the CIF value of the goods or to show as to how and on what basis the purported actual CIF value was ascertained. It was stated that there was nothing on record to support the conjectural statement regarding issuance of false invoices at the request of the Indian importer, other than the report of the Hong Kong Customs official Ms. Y.Y. Chui. It was stated that the appellant would like to cross -examine Ms. Y.Y. Chui to bring out the correct and true facts of the case. It was also contended that the burden was on the department to prove under -valuation.