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Judgment
Dr. D.M. Misra, Member (J)
None present for the appellants.
The matter had been adjourned on all these occasions i.e. on 30.05.2023, 20.06.2023, 30.06.2023, 01.08.2023, 29.08.2023, 18.09.2023 and 03.11.2023. Accordingly, the matter is taken up for hearing after hearing learned Authorised Representative for the Revenue and records.
Briefly stated the facts of the case are that the appellant had imported wood working machines falling under Customs Tariff Heading 8465 9990. On the basis of intelligence that the appellant was involved in import of wood working machines from various suppliers at Taiwan, Spain and Italy by under invoicing the imported goods to the extent of 40% and later, the amount was transferred to the suppliers by means of non-banking channels; investigations were initiated against the appellant by recording statements of Shri Madan Raj, Marketing Director and others. On completion of the investigation, a show-cause notice dated 5.11.2008 proposing enhancement of value and demanding differential duty of Rs.14,97,179/- under the proviso to Section 28 of the Customs Act, 1962 along with interest and penalty under various provisions of Customs Act, 1962; also, it is proposed to appropriate an amount of Rs.17,53,595/- paid by them during the course of investigation. On adjudication, the demand was confirmed by enhancing the assessable value to Rs.1,56,71,221/- with interest; imposed penalty of Rs.14,97,179/- and equal interest under Section 114A of the Customs Act, 1962; also, he has imposed penalty of Rs.3,00,000/- on Shri T. Gopi, Managing Director and Rs.2,00,000/- on Shri D. Madan Raj under Section 112(b) of the Customs Act, 1962.
In the present appeal, the appellant had not challenged the payment of differential duty along with interest but vehemently contested imposition of penalty on the appellants. They have argued that since the amount has been paid with interest before issuance of show-cause notice, therefore, imposition of penalty under Section 114A of the Customs Act, 1962 cannot be sustained. It is their contention that their case is squarely covered under provisions of Section 28(2B) of the Customs Act, 1962. Also, they have submitted that personal penalty on other appellants cannot be imposed.
The learned Authorised Representative for the Revenue has submitted that in the present appeal, the appellants have challenged imposition of penalty of Rs.14,97,179/- under Section 114A of the Customs Act, 1962. It is his contention that appellant had knowingly mis-declared the value and fraudulently transferred the excess amount of the value to the overseas sellers by non-banking channels. In their statements furnished, the Managing Director Shri T. Gopi as well as other persons conceded to the said undervaluation and transferring the under invoiced amount to the overseas sellers. It is his contention that during the period, they had accepted that they had imported totally 14 consignments and suppressed the value, hence imposition of penalty on the appellant under Section 114A of the Customs Act, 1962; as also imposition of penalty on other appellants under Section 112(b) of the Customs Act, 1962 is justified.
I have carefully gone through the records of the case and submissions advanced by the learned Authorised Representative by the Revenue. The short issue involved in the present appeal is whether the penalty on the appellant-company is rightly imposed under Section 114A equivalent to the duty short-paid and personal penalty of other appellants under Section 112(b) of the Customs Act, 1962. The undisputed facts are that the appellants are engaged in the business of import of wood working machines falling under Customs Tariff Heading 8465 9990 from countries like Taiwan, Spain, Italy, etc. During the relevant period, they have suppressed/mis-declared the correct value of the imported goods, hence, investigation was initiated against them for ascertaining the correct assessable value. After recording the statements and analysing the evidences, later a show-cause notice was issued to the appellant for enhancement of the value to Rs.1,56,71,221/- and differential duty of Rs.14,97,179/- payable on the enhanced value was demanded under proviso to Section 28 of the Customs Act, 1962. The learned Commissioner while confirming the allegations of the department observed as follows:
“23. The main issue for decision before me is whether the value of the woodworking machines and parts imported by M/s WCPL vide 14 Bills of Entry should be revised to include the extra consideration paid to the suppliers in cash, in terms of Section 14 of the Customs Act, 1962 and whether the differential duty has to be demanded from them. It is evident that M/s. WCPL imported a total of fourteen consignments of wood working machines and parts through ICD, Bangalore as detailed in the worksheet and filed Bills of Entry at Inland Container Depot, Bangalore, seeking customs clearance of the said goods after declaring the value which was approximately about 40% less than the actual value of the goods paid by them to their suppliers. The differential value of the imported goods was transferred to the suppliers abroad by means of non banking channels. They have, made payments through Bank for only 60% of the total value of the machinery and the balance 40% was paid to the supplier in cash through an agent by name M/s. Shivam Forex. They have also accepted that they had imported machineries or an agreed consideration and in reality not declared the actual consideration paid to the suppliers but undervalued the machineries for the purpose of assessment under various statutes including the provisions of Customs Act, 1962and thus failed to discharge full duty and levies payable on such imports and evaded payment of appropriate duties by suppression of facts. It is also seen that when the party was confronted with all documentary evidences of their fraud and wilful mis-statement and suppression of facts, they agreed to pay the duty on the value of the extra consideration i.e. 40% of the value which was paid to the supplier through other than banking channels. It is also seen that the party after clearance of the goods had added the above said 40% of the value so under-invoiced in the import documents, to their sales invoices along with other costs and had charged the total amount to their customers. The noticees have not challenged the revaluation of the goods at any time during the proceedings and have accepted the duty liability. M/s. WCPL have contravened the provisions of Section 14 of the Customs Act, 1962 in not declaring the correct value of goods for the purpose of payment of duty. They are liable to pay the differential duty. The actual price of the goods was wilfully mis-stated and payment towards imported goods was effected through non-banking channels, which was suppressed with an intention to defraud the Revenue. Since M/s WCPL had mis-declared the value of the said goods, the same are liable to confiscation in terms of Section 111(m) of the Customs Act, 1962.
The next issue which has to be decided is whether M/s WCPL are liable to penalty under Section 112 (a) and Section 114A of the Customs Act, 1962. As discussed above since M/s WCPL have rendered the goods liable to confiscation in terms of Section 111(m) of the Customs Act, 1962 they are liable to penalty under Section 112 (a) of the Customs Act, 1962. Since the short levy/levy of the duty/interest has arisen due to the wilful misstatement and suppression of the facts, M/s WCPL are liable to pay penalty equal to the duty and interest under Section 114A of the Customs Act, 1962.
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From the facts of the case as it emerges, it is amply clear that the party had wilfully committed the fraud by deliberately suppressing the value of the goods with an intention to evade duty. The party had further made its fraudulent intentions clear by making conscious efforts to suppress the invoice value by 40%which was subsequently paid to the suppliers through non banking channels by misrepresenting the facts to the Forex Dealer. Further, the party after getting the goods cleared from Customs added back the said undervalued amount into their sales invoices along with their other charges, sold the goods to their buyers. This goes to prove that the party had only one intention, and that was to defraud the Revenue. The case laws cited above squarely answers to the schemings and machinations utilized by the party to evade duty.”
From the aforesaid findings of the learned Commissioner, it is clear that the mis-declaration of the assessable value by the appellant resulted into short-payment of Rs.14,97,179/-, hence imposition of penalty equivalent to the said differential duty of Rs.14,97,179/- under Section 114A of the Customs Act, 1962 on the appellant is justified. I do not find any error of facts or in application of law in arriving at the said conclusion by the learned Commissioner when the allegation of gross undervaluation of the product and transferring the suppressed amount later through non-banking channels have been accepted in the statements of the Managing Director and other persons of the appellant-company; consequently, the penalty imposed on the appellant-company is hereby upheld. Also, I do not find any reason to interfere with the findings of the learned Commissioner on the personal penalties imposed on each of other appellants who were actively involved in the gross undervaluation. However, considering the gravity of offence committed and the facts and circumstances of the case, the penalty imposed on Shri T. Gopi, Managing Director is reduced to Rs.2,00,000/- (Rupees Two Lakhs Only) and the penalty imposed on Shri D. Madan Raj, Marketing Director is reduced to Rs.1,00,000/- (Rupees One Lakh Only) under Section 112(b) of the Customs Act, 1962 to meet the ends of justice.
In the result, the appeal filed by the appellant-company is dismissed and the appeals of other appellants are partially allowed to the extent mentioned as above
All the appeals are disposed of accordingly.