Legal principle

If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer and the invoice price has to be accepted as the transaction value.

Court decision

The Tribunal held that the appellants succeed both on limitation and on merits; it set aside the demand, the impugned Order-in-Original and the Rs.5,00,000 penalties imposed on the 2nd and 3rd appellants, allowed all three appeals with consequential benefits, and held that the Revenue had failed to prove the alleged undervaluation so that the re-determination of the declared value lacked support.

Facts

M/s. Navakar Impex Pvt. Ltd. imported 94 consignments of Clear Drawn Sheet Glass and Reflective Sheet Glass of various sizes/thicknesses from Chinese suppliers between May 2006 and June 2008, declaring, for example, US$0.57 per SQM for 1.8 mm and 1.69 mm clear drawn sheet glass. Acting on intelligence of rampant undervaluation and parallel invoices in such imports, DRI searched the appellant's office and godown and compared the declared values with NIDB data of contemporaneous imports by other importers, alleging higher actual prices (e.g., $0.92–$1.45 per SQM for clear drawn sheet glass). A Show Cause Notice dated 04.05.2011 proposed rejection of the declared/transaction value, its re-determination by invoking the larger period of limitation, and penalty under Section 112(a) on the 2nd and 3rd appellants. The Commissioner, by Order-in-Original No.24730/2014 dated 17.04.2014, confirmed the demands and imposed penalties of Rs.5,00,000 each on the 2nd and 3rd appellants, leading to these appeals before the Tribunal.

Key provisions

• Section 14, Customs Act, 1962 — Valuation of goods
• Section 2(41), Customs Act, 1962 — Definitions
• Section 28(1), Customs Act, 1962 — Recovery of duties not levied or not paid or short-levied or short- paid or erroneously refunded
• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value
• Section 46, Customs Act, 1962 — Entry of goods on importation