Custom, Excise & Service Tax Tribunal
Tecmax Electronics vs New Delhi(Icd Tkd) on 30 September, 2022
Author: Dilip Gupta
Bench: Dilip Gupta
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL
NEW DELHI.
PRINCIPAL BENCH,
COURT NO. 1
CUSTOMS APPEAL NO. 51544 OF 2019
[Arising out of the Order-in-Appeal No. CC (A) CUS/D-II/ICD-TKD/IMPORT/
412/2019-20 dated 14/06/2019 passed by The Commissioner of Customs
(Appeals), New Customs House, New Delhi - 110 037.]
M/s Tecmax Electronics, ...Appellant
A - 12, Plot No. 71/7, Rama Road
Industrial Area, Najafgarh Road,
New Delhi - 110 048.
Versus
Commissioner of Customs (Import), ...Respondent
Inland Container Depot, Tughlakabad,
New Delhi.
APPEARANCE:
Shri L.B. Yadav, Consultant for the appellant.
Shri Rakesh Kumar, Authorized Representative for the
Department
CORAM:
HON'BLE MR. JUSTICE DILIP GUPTA, PRESIDENT
HON'BLE MR. P.V. SUBBA RAO, MEMBER (TECHNICAL)
FINAL ORDER NO. 50944/2022
DATE OF HEARING : 21.09.2022
DATE OF DECISION: 30.09.2022
P.V. SUBBA RAO
M/s Tecmax Electronics, New Delhi1 filed this appeal to
assail order-in-appeal dated 14.06.20192 passed by the
Commissioner of Customs (Appeals), New Customs House, New
Delhi, whereby he upheld the order-in-original dated 11.12.2018
1
appellant
2
impugned order
2 CUS/51544 OF 2019
passed by the Joint Commissioner except to the extent of
reducing the penalty imposed upon the appellant under section
114AA from Rs. 25,00,000/- to Rs. 13,68,819/- and reducing the
redemption fine imposed under section 125 from Rs. 10,00,000/-
to Rs. 5,00,000/-. There is no appeal by the Revenue against the
impugned order assailing these reductions.
2. The appellant imported goods, viz., Tecmax LPD TV Model
- 40 and filed Bill of Entry No. 6226399 dated 03.05.2018
declaring the value of U.S. $ 66 per piece. However, in the Bill of
Entry it classified the imported goods as parts of TV under 8529
of the Customs Tariff attracting duty @ 37.47% instead of
classifying them under 8528 as complete TVs attracting duty @
56.16%. The Bill of Entry was processed by the Customs Risk
Management System3 and it was not marked for either
assessment or examination or for giving out of charge by the
Customs officer. However, the appellant doubted the authenticity
of the documents and the consignment and on its own requested
the officers to recall the Bill of Entry. Accordingly, the Bill of Entry
was recalled and goods were examined 100% and it was found
that they were complete smart LED TVs and not LED TVs, as
declared by the appellant or parts of LED TVs as classified by the
appellant. As the goods were different from what was described
in the import documents and declared in the Bill of Entry, their
value was re-determined @ U.S. $ 163 per smart TV. Further, the
total quantity of imported televisions was 742 and not 740 as
3
RMS
3 CUS/51544 OF 2019
declared by the appellant. The value was thus enhanced by the
Assessing Officer and the appellant had agreed to the enhanced
value and waived the issue of show cause notice in writing but
sought an order. To this effect, it submitted letters dated
08.10.2018 and 12.10.2018 requesting to adjudicate the case at
the earliest and agreed to the re-determined duty and agreed to
pay the same along with fine and penalty. It is recorded in the
order-in-original passed by the Joint Commissioner as follows :-
―13. The importer vide letter dated 08.10.2018 and 12.10.2018
and subsequent letters requested to adjudicate the instant case at
the earliest and waiver of Show Cause Notice as they admitted the
redetermination of duty and that he admitted to pay the differential
duty along with applicable fine and penalty on the redetermined
value imposed by the adjudicating authority. They have submitted 5
letters to this effect in which the improper time and again submitted
that the case may be adjudicated and that they have already
admitted the redetermination of value and duty‖.
3. Thereafter, the Joint Commissioner passed order-in-original
dated 11.12.2018. Although the value proposed initially was U.S.
$ 163 per piece and which the appellant had agreed to, the Joint
Commissioner had, while passing the order, found that there was
an import of 39 Inch smart HD ATV with Wifi and HDD at U.S. $
147.5 during the contemporaneous times in comparable
quantities. Thus, as per Rule 5 of the Customs Valuation
(Determination of Value of Imported Goods) Rules, 20074 he
adopted the lower value of U.S. $ 147.5 per smart LED TV
imported by the appellant. Accordingly, he passed the order
rejecting the self-assessed and declared transaction value and re-
determined the value reckoning FOB value of U.S. $ 147.5 per
4
Valuation Rules
4 CUS/51544 OF 2019
TV, classifying the goods under 85287216 (as televisions)
chargeable to duty @ 56.16%. He ordered confiscation of the
goods under section 111 (m) and the packing materials under
section 118 of the Act and allowed their redemption on payment
of redemption fine of Rs. 10,00,000/- under section 125.
4. He re-assessed the duty at Rs. 42,16,963/- and as the
importer had already deposited Rs. 28,48,144/- ordered payment
of differential duty of Rs. 13,68,819/-. He imposed a penalty of
Rs. 1,30,000/- on the appellant through its Proprietor Shri
Sandeep Kumar Goyal under section 112 (a) (ii). He also
imposed a penalty of Rs. 25,00,000/- upon the appellant through
its Proprietor Shri Sandeep Kumar Goyal under section 114AA.
5. Aggrieved, the appellant appealed to the Commissioner
(Appeals) who, by the impugned order, upheld the order the
lower authority except to the extent of reducing fine under
section 125 to Rs. 5,00,000/- and reducing the penalty under
section 114AA to Rs. 13,68,819/-. Hence this appeal.
6. Learned Consultant for the appellant Shri B.L. Yadav made
the following submissions :-
(i) The bill of entry was filed by the appellant and it was
cleared by the RMS without examination, assessment or
out of charge being given by the officers. However, on a
bonafide doubt about the authenticity of the documents
as well as the consignment, the appellant itself had
requested the officers to recall the bill of entry and re-
assessed the goods. The goods were re-assessed on the
basis of an SIIB Circular of the Commissionerate to U.S.
$ 163 per piece instead of U.S $ 66 per piece as
declared by the appellant ;
5 CUS/51544 OF 2019
(ii) During examination 742 pieces of smart LED TVs were
found instead of 740 pieces of LED TVs declared by the
appellant. The appellant had contacted its overseas
supplier who said that it had inadvertently wrongly sent
smart LED TVs instead of LED TVs and requested it to
remit an additional amount of U.S. $ 6810 @ U.S. $ 9
per TV;
(iii) During investigation the appellant was shown files of
other importers of similar goods and due to constant
increase in demurrage and detention charges, the
appellant agreed to pay the differential duty and
accepted the value and waived the show cause notice
and also accepted to pay the fine and penalty, if any,
imposed. However, the appellant had not waived the
opportunity of personal hearing ;
(iv) The Adjudicating Authority re-determined the value @
U.S. $ 147.5 FOB per TV based on a some contract of
M/s Mittal Impex a copy of which was not provided to
the appellant ;
(v) The acceptance of the value at the time of assessment
was not voluntary and there was no waiver of the
opportunity of personal hearing. There is no estoppel in
law against the party in matters of taxation as held in
the following :-
―(a) Dunlop India Ltd. and Madras Rubber Factory
Ltd. versus Union of India5
(b) Commissioner of Customs Delhi versus Mohalti
Fabric Impex6
(c) Digitech Photocopier versus Commissioner of
Customs, Mumbai7
(vi) The value declared by the appellant has been enhanced
not on the basis of his transaction value, but on the
basis of transaction value of another importer. A copy of
the contract has not been provided to the appellant and
it is not known that there was any discounts allowed in
that contract.
(vii) As per Rule 5 (1) of the Valuation Rules, the
contemporaneous data has to be of at or about the
5
1983 (13) E.L.T. 1566 (S.C.)
6
2016 (343) E.L.T. 963 (Tri. - Del.)
7
2009 (233) E.L.T. 425 (Del.)
6 CUS/51544 OF 2019
same time and the sale contract of M/s Mittal Impex
was about six months old .
(viii) There was no evidence of any flow back of cash in
addition to the invoice value. Revenue has failed to
bring in contemporaneous invoice/data relating to the
imported goods. If Revenue is not willing to accept the
declared price it must adduce the evidence of under
valuation so that the importer can rebut.
(ix) The penalty under Section 114AA is not imposable in
the case, at any rate, for the reason that this section
requires a falls declaration or statement or document to
be submitted knowingly or intentionally. The
Commissioner (Appeals) has recorded in the impugned
order at paragraph 5.8 that the appellant had no such
intention. Therefore, he should not have confirmed any
penalty under Section 114AA.
(x) The bill of entry was filed on the basis of documents and
supplied by the foreign supplier and therefore there was
no intentional or deliberate wrong declaration or mis-
declaration and, therefore, the goods were not liable for
confiscation under section 111 (m). Consequently, the
penalty under section 112 (a) (ii) could not have been
imposed upon the appellant.
7. In view of the above, learned Consultant for the appellant
prayed that the impugned order may be set aside with
consequential relief.
8. Learned Authorized Representative appearing for the
Department supports the impugned order. He submits that :
(i) In the bill of entry dated 03.05.2018 the goods were
declared as ―Teckmax LED TV Model - 40 and were
classified under CTH 85299090 and a value of U.S. $ 66
per unit was declared. The tariff heading 85299090
pertains to parts of television and not to televisions. On
examination, not only was it found that there were 742
pieces of television instead of 740 pieces as declared,
but the model of the TV was also completely different.
Instead of LED TVs, as declared, smart LED TVs with
additional features including Wifi one GB RAM 8 GB HDD
were found. Thus, the nature of the goods, which were
7 CUS/51544 OF 2019
declared were wrong. The quantity declared was also
wrong and they were classified as parts of TV when they
were actually complete LED TVs.
(ii) The appellant had accepted the mis-declaration and
waived the issue of show cause notice in writing before
the Assessing Authorities.
(iii) While the value declared in the invoice by the appellant
was U.S $ 66 per unit. The contemporaneous data of
other imports showed the value was U.S. $ 163 per
unit. The appellant agreed to this enhancement in
writing. Accordingly, the value was enhanced by the
Assessing Officer. However, while passing the order-in-
original the Adjudicating Authority has found another
contemporaneous value of imports in the case of M/s
Mittal Impex where the value was U.S. $ 147.5 which
he adopted.
(iv) Therefore, there was nothing incorrect in the
Adjudicating Authority reassessing the duty.
(v) It has been held by this Tribunal in the case of
Commissioner of Customs versus Hanuman Prasad
& Sons8 that once the importers have accepted the
value of the goods proposed by the Revenue, they have
waived the right to speaking order. The relevant
paragraph of this order are reproduced below :-
―41. A perusal of the aforesaid decision also does not indicate that
the importer had accepted the declared value in writing or that the
importer had waived his right to a speaking order. In fact, only a
general statement has been made that the assessing officer have
been making enhancement in a routine manner and that an importer
has no choice but to sign in order to save demurrage charges.
42. It has to be noted that the two importers, Hanuman Prasad
and Niraj Silk, had not made any statement that they have accepted
the value of the goods proposed by the Revenue to save demurrage
charges nor did they state in the letter that the value was being
accepted by them under protest and they would agitate the matter in
appeal. It is only in this appeal that it has been suggested that the
value was accepted to save demurrage charges, perhaps prompted
by the observations made by the Tribunal in Artex Textile Private
Limited.
.....
48. Thus, for all the reasons above, the Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry.
49. When on merits it has been found that the Commissioner (Appeals) committed an error in allowing the appeals, it is not 8 MANU/CE/0151/2020 8 CUS/51544 OF 2019 necessary to decide whether the appeals against the accepted transaction value were maintainable or not.
50. All the 36 orders passed by the Commissioner (Appeals) that have been impugned, therefore, deserve to be set aside and are, accordingly, set aside and the 36 Appeals filed by the Commissioner of Customs are allowed‖.
9. He further submits that the High Court of Allahabad has also held in M/s S.S. Overseas and others versus Union of India9 that where the petitioners had confirmed in writing the acceptance of re-assessment they are exists no occasion to pass a speaking order on the re-assessment and accordingly dismissed the batch of writ-petitions. Therefore, the appellant, having accepted the assessable value of U.S. $ 163 per piece through several letters, cannot now assail the same. Although, the appellant have agreed to U.S. $ 163 per piece as the value, the Adjudicating Authority adopted a still lower price of U.S. $ 147.5 per piece. However, since there is no Department's appeal against this reduction, he is not contesting this reduction of price.
10. He, therefore, prays that the appeal may be rejected.
11. We have considered the submissions from both sides and perused the records.
12. The questions which we need to decide in this appeal are :
(I) Was the Commissioner (Appeals) correct in upholding the order of the Original Authority in rejecting the 9 2022 (8) TMI 344 - Allahabad High Court 9 CUS/51544 OF 2019 declared assessable value of U.S. $ 66 and re-
determining the value of U.S. $ 147.5 per piece in the factual matrix of this case;
(II) Was the Commissioner (Appeals) correct in upholding the confiscation of the imported goods under section 111 (m) by the lower authority and allowing the redemption on payment of fine of Rs. 5,00,000/-; (III) Was the Commissioner (Appeals) correct in upholding the imposition of penalty of Rs. 1,30,000/- on the appellant under section 112 (a) (ii) ;
(IV) Was the Commissioner (Appeals) correct in imposing the reduced penalty of Rs. 13,68,819/- under section 114AA of the Customs Act upon the appellant.
13. Learned Consultant for the appellant submits that Revenue was not correct in rejecting its transaction value and re- determining the value @ U.S. $ 147.5 per piece. He submitted that there was no evidence of additional consideration for sale and hence the transaction value should have been accepted. He further been submitted that the contract of M/s Mittal Impex whose import value was relied upon by the Adjudicating Authority was not provided to the appellant.
14. We find in this case, the invoice value was correctly rejected by the Adjudicating Authority for the reason the goods which were imported were completely different from those which were declared. The price declared in the invoice was for LED TVs 10 CUS/51544 OF 2019 whereas what were imported were smart LED TVs. Further, what was declared was 740 pieces and what was actually imported was 742 pieces. During investigation, the appellant has submitted five letters to the Department accepting the re-determination of the duty and agreeing to pay the differential duty along with applicable fine and penalty on the re-determined value. It further waived the issuance of the show cause notice. In his statement before the officers on 28.08.2018, Shri Sandeep Kumar Goyal, Proprietor of the appellant firm has, in response to question 13, stated as follows :-
―We had placed the order for LED TV, but it was the mistake on the part of the supplier that they had sent us smart TV and also made mistake in the quantity, as they sent 742 pieces instead of ordered 740 pieces. I wish to say that there is very small difference between LED TV and smart TV that we import i.e. smart TV has Wifi feature.
Although we accept our mistake and we undertake to pay the differential duty and penalty, as applicable‖.
15. In a subsequent statement recorded on 05.09.2018, the following question was asked, Question 7 : You have seen case files of M/s Mittal Impex, M/s KML Electronics Pvt. Ltd. and M/s Air Tec Electro Vision Ltd., these TVs and your TVs are of same reputation. What should the unit price of your smart TV?
11 CUS/51544 OF 2019 Answer : I have seen the above case file and after observing these, I accept that unit value/price of over 40 Inch TV should be 163 U.S. $ and I undertake to pay differential duty on it.
16. Both the above statements were certified as having been tendered without fear or pressure or any buress. They have not been retracted.
17. We thus, find that based on the information and evidence produced in the form of files before the appellant by the officers, the appellant has voluntarily suggested/accepted that the price of smart LED TVs imported by it must be U.S. $ 163 per unit.
Following the ratio of the order of this Tribunal in the case of Hanuman Prasad and the judgment of Allahabad High Court in S.S. Overseas, we find that the correct assessable value of the goods in question was not the value declared in the invoice and the bill of entry but it was U.S. $ 163 per piece. The value declared in the invoice is not of the goods which were actually imported. It is not open for the appellant to question that the price having accepted the same and further having undertaken to pay the differential duty accordingly. Therefore, even the reduction of the assessable value to U.S. $ 147.5 by the Joint Commissioner does not appear to be correct. Nevertheless, this reduction has not been assailed by the Revenue and is said to be based on another value found in another case of M/s Mittal Impex. The contention of the learned Consultant for the appellant 12 CUS/51544 OF 2019 is that the basis of this reduced price was not provided to it. This contention cannot be accepted for the reason that in the statement the appellant had studied the files of other importers and thereafter in response to the question by the officer has suggested that U.S. $ 163 per piece was the correct price of its goods. We, therefore, find that the redetermination of the assessable value and consequently the determination of the duty liability by the Adjudicating Authority as upheld by the Commissioner (Appeals) in the impugned order is correct and calls for no interference.
18. The next question is confiscation of the goods under section 111 (m) of the Customs Act. It reads as follows :-
SECTION 111. : Confiscation of improperly imported goods, etc.
-- The following goods brought from a place outside India shall be liable to confiscation : --
(m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the case of goods under transhipment, with the declaration for transhipment referred to in the proviso to sub-section (1) of section 54‖;
19. As may be seen, any goods which do not correspond in respect of value or in any other particular with the entry made under the Customs Act are liable for confiscation under this section. It is undisputed that both the nature of the goods imported and the quantity of the goods imported did not correspond to the declaration made in this case. Further, the value declared was also much lower and was, even according to the documents produced by the appellant, not the price of smart 13 CUS/51544 OF 2019 LED TVs which were imported. We, therefore, find no infirmity in the confiscation of the imported goods under section 111 (m) or in giving the option of redemption under section 125 by the Original Authority. While fine of Rs. 10,00,000/- was imposed by the Original Authority it was reduced to Rs. 5,00,000/- by the Commissioner (Appeals) in the impugned order. This reduction of fine has not been assailed by the Revenue. We, therefore, find no infirmity in both the confiscation of the goods and also in the imposition of redemption fine of Rs. 5,00,000/-.
20. Section 112 (a) (ii) reads as follows :
"SECTION 112. Penalty for improper importation of goods, etc. -- Any person, -
(a) who, in relation to any goods, does or omits to do any act which act or omission would render such goods liable to confiscation under section 111, or abets the doing or omission of such an act, or
(ii) in the case of dutiable goods, other than prohibited goods, subject to the provisions of section 114A, to a penalty not exceeding ten per cent. of the duty sought to be evaded or five thousand rupees, whichever is higher‖
21. As may be seen any person who does not omits to do anything which renders the goods liable for confiscation shall be liable to a penalty not exceeding the duty sought to be evaded or Rs. 5,000/- whichever is higher. In this case, the differential duty sought to be evaded was Rs. 13,68,819/-. We have already held that the goods are liable for confiscation under section 111 (m). The penalty imposed by the Adjudicating Authority was Rs. 1,30,000/- which is only 10% of the differential duty. In the factual matrix of this case, we find that this amount of penalty is 14 CUS/51544 OF 2019 just and fair and we find no reason to interfere with the order of the Commissioner (Appeals) in upholding the same.
22. The last issue to be decided is whether the Commissioner (Appeals) was correct upholding the imposition of penalty under section 114AA although he reduced it from Rs. 25,00,000/- to Rs. 13,68,819/-. Section 114AA reads as follows :-
"SECTION 114AA. Penalty for use of false and incorrect material. - If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods‖.
23. As may be seen, the knowledge and intention of the person is absolutely essential to impose any penalty under section 114AA. We find that the Commissioner (Appeals) has recorded as follows:
―5.8 In view of the above, it is evident that the Appellant's please on enhancement of valuation of the mis-declared imported goods are not sustainable in the eyes of law. Regarding imposition of penalty, I find certain force in the Appellant's please that the Adjudicating Authority failed to appreciate undisputed facts of the case that Appellant filed the subject B/E which was cleared under RMS for SRP and out of charge without assessment and examination by the Customs. The Appellant on his own, on a bonafide doubt about authenticity of documents as well as the consignment, sought the recall of B/E vide letter dated 03.05.2018 submitted before Customs through their CHA vide letter dated 04.05.2018, and hence suspecting the Appellant of intentional mis-declaration with an intention to evade duty seems to be stretched too far and misconceived; that if they had any malafide intention they would have taken the goods out of charge which was already cleared under SRP system. In view of the above, I find a reason for interference in imposition of penalties on the Appellant. Redemption fine of Rs. Ten Lakhs is also high and excessive keeping in view the value enhanced by Rs. 42,51,208/- (Rs. 75,08,836.00 - Rs. 32,57,628.00). Hence, I reduce the redemption fine to Rs. Five Lakhs only under Section 125 of the Customs Act, 1962‖.
15 CUS/51544 OF 2019
24. The specific finding of the Commissioner (Appeals) was that the appellant had, on his own, sought recall of the Bill of Entry and, therefore, had no malafide intention. There is no appeal by the Revenue against this finding. Having found that the appellant had no intention, the Commissioner (Appeals) has still proceed to confirmed a reduced penalty under section 114AA upon the appellant. We find that this cannot be sustained because once the intention is lacking, no penalty can be imposed upon the appellant under section 114AA.
25. In view of the above, the appeal by the appellant is partly allowed to the extent that the penalty imposed under section 114AA is set aside. The remaining part of the impugned order is, however, upheld.
26. The appeal is partly allowed, to the extent indicated above, with consequential benefits.
(Order pronounced in open court on 30/09/2022.) (JUSTICE DILIP GUPTA) PRESIDENT (P.V. SUBBA RAO) MEMBER (TECHNICAL) PK