M/s Global Technology & Research @APPELLANT @Hash Principal Commissioner of Customs (Import) @RESPONDENT

P.V. Subba Rao, J

M/s. Global Technologies and Research, Appellant filed this appeal assailing the order-in-original, Impugned order dated 31.10.2019 passed by the Principal Commissioner whereby he decided the proposals in the show cause notice, SCN dated16.10.2018.

We have heard Shri B L Garg, learned counsel for the appellant and Shri Rajesh Singh, learned authorised representative for the Department and perused the records. The facts which led to the issue of the impugned order are as follows.

Receiving intelligence that the appellant was grossly undervaluing the goods which it imported, the officers of the Special Intelligence and Investigation Branch, SIIB examined 100% live consignment of camera stabilizers imported through the Air Cargo Complex (Import) Delhi and filed Bill of Entry No. 5233199 dated 16.02.2018 and found that the goods were under-valued and seized them. After retrieving the values of the same goods imported by the same party from the Customs Electronic Data Interchange, EDI, SIIB found that the respondent had imported identical/similar goods at much higher prices. It investigated the matter further, recorded statements and conducted a market survey. The claim of the appellant was that the goods imported in this Bill of Entry were unpopular brands and of lower versions than the goods imported by it at much higher prices before and therefore, the prices of goods imported in this Bill of Entry were much lower.

Shri Mayank Chachra, the proprietor of the importer firm submitted letters dated 27.3.2018 & 28.3.2018 requesting for early release of his shipment without being issued a Show Cause Notice or being granted a personal hearing. Accordingly, the Joint Commissioner adjudicated the matter. He compared the brand and model numbers of the goods imported in this Bill of Entry dated 16.2.2018 and the brands and model numbers of the goods imported before. He also examined the specific features of each model of the goods imported in this Bill of Entry with those of the previous imports and found that they were same or similar. He passed order-in-original in which he rejected the transaction value of the goods under Rule 12 of the Customs Valuation (Determination of value of imported goods) Rules, Valuation Rules 2007 and re-determined the assessable value under Rules 4 & 5 and ordered recovery of differential duty of Rs 16,22,228/- under Section 28(1) of the Customs Act, 1962, Act. He also confiscated the imported goods confiscated under Section 111(l) and 111(m) and imposed penalties under section 112(a) and section 114AA on this appellant. On an appeal by the appellant, the Commissioner (Appeals) by order dated 17.12.2020, set aside the order-in-original passed by the Joint Commissioner. Revenue filed appeal no. C/51848/ 2021 and by order dated 29.9.2022 this Tribunal examined the claims of both sides and examined the features of the goods imported in the Bill of Entry dated 16.2.2018 with those of the goods imported before and allowed the appeal of the Revenue, set aside the order of Commissioner (Appeals) and restored the order passed by the Joint Commissioner.

Aggrieved by the order of this Tribunal, the appellant filed Civil Appeal No. 9385 of 2022 and by judgment dated 15 March 2024, the Supreme Court dismissed the civil appeal and upheld the order of this Tribunal. Paragraph 10 of this judgment reads as follows:

“10. Hence, in view of the findings recorded by the CESTAT, we find no error in the view taken. No fault can be found in the imposition of penalties. Hence, there is no merit in the appeal and the same is dismissed with no order as to costs.”

Thus, the issue attained finality insofar as the Bill of Entry dated 16.2.2018 is concerned.

The officers of SIIB also investigated the past Bills of Entry filed by the appellant and found it had filed the following seven Bills of Entry during January and February 2018 as follows in which it found the same undervaluation.

S.No.

Bill of Entry

Date

1

4684794

15.1.2018

2

4687100

5.1.2018

3

4729014

9.1.2018

4

5011432

31.1.2018

5

5083301

6.2.2018

6

5213953

15.2.2018

7

5214459

15.2.2018

SCN dated 16.10.2018 was issued by the Commissioner covering the above seven bills of Entry proposing to recover the differential duty short paid on account of undervaluation under section 28(4) and impose penalties. The goods imported in these Bills of Entry included the goods imported in Bill of Entry dated 16.2.2018 (which attained finality with the judgment of the Supreme Court) and also some other goods.

The proposals in this SCN were confirmed by the Principal Commissioner in the impugned order the operative part of which is as follows:

“(i) I invoke the extended period of limitation in terms of provisions of section 28 (4) of the Customs Act, 1962 for willful misstatement, suppression of facts & collusion in deliberate attempt to deprive the department of legitimate revenue by presenting false invoice as originals and suppressing the true and correct material information from the department in violation of the section 14, section 17 and section 46 of the Customs Act, 1962 against M/s Global Technology & Research.

(ii) I reject the transaction value of all the goods as detailed in Table – E above declared by the importer on the basis of false invoices in respect of goods imported by them amounting to Rs. 71,65,650/- (Rupees Seventy One Lakh Sixty Five Thousand Six Hundred Fifty only), under Rule 12(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and re-determine it as Rs. 2,62,60,195/- (Rupees Two Crore Sixty Two Lakh Sixty Thousand One Hundred and Ninety Five only) on the basis of value declared by M/s Global Technology & Research in previous bills of entry filed for import of identical goods in accordance with Rule 4 & for Zhiyun Smooth 3 on the basis of market price ascertained during market enquiry in accordance with Rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with section 14 of the Customs Act, 1962.

(iii) I reject the duty self-assessed on the above said Bills of Entry filed by M/s Global Technology & Research in terms of section 17 (1) of the Customs Act, 1962 being vitiated by use of false invoices and suppression of brand & model number of the same and order re-assessment in terms of section 17 (4) of the Customs Act, 1962 as detailed in Table – F above.

(iv) I order confiscation of the goods imported and already cleared by M/s Global Technology & Research under different Bills of Entry as detailed in Table G above totally valued at Rs. 2,62,60,195/- (Rupees Two Crore Sixty Two Lakh Sixty Thousand One Hundred and Ninety Five only) under section 111 (m) of the Customs Act, 1962. Since the goods have already been cleared & were never seized, therefore, I refrain myself from imposing any redemption fine under section 125(1) of the Customs Act, 1962.

(v) I confirm the demand of differential customs duty amount of Rs. 57,15,514/- (Rupees Fifty Seven Lakhs Fifteen Thousand Five Hundred and fourteen only) from M/s Global Technology & Research under section 28 (4) of the Customs Act, 1962.

(vi) I confirm the demand for interest on total differential customs duty amount of Rs. 57,15,514/- (Rupees Fifty Seven Lakhs Fifteen Thousand Five Hundred and fourteen only) from M/s Global Technology & Research under section 28 AA of the Customs Act, 1962.

(vii) I impose penalty of Rs. 57,15,514/- (Rupees Fifty Seven Lakhs Fifteen Thousand Five Hundred and fourteen only) from M/s Global Technology & Research under section 114A of the Customs Act, 1962 for their acts of willful misstatement, suppression of facts and collusion with the supplier for short payment of customs duty.

(viii) I impose penalty of Rs. 6,00,000/- (Rupees Six Lakhs only) on M/s Global Technology & Research under section 114AA of the Customs Act, 1962 for the act of mis-declaration of transaction value, suppression of brand & model number in the Bills of Entry.

(ix) I refrain from imposing penalty as per the provisions of Regulation 18 read with Regulation 22 of the Customs Broker Licensing Regulations, 2013 upon Shri Sanjay Kumar Singhal for reasons mentioned in Para 60 & 61 above.

Learned counsel for the appellant, made the following submissions.

a) The appellant regularly imports camera stands and camera stabilizers from Guilin Shishen Information Technology Co. Ltd., China.

b) In February 2018, a consignment was intercepted and its declared value was rejected and differential duty was demanded and penalties were imposed by the Joint Commissioner which, on their appeal were set aside by the Commissioner (Appeals). On Revenue’s appeal, this Tribunal by Final Order dated 29.9.2022, restored the order of the Joint Commissioner. The appellant’s civil appeal assailing the Tribunal’s order was dismissed by the Supreme Court on 15 March 2024.

c) Following up, seven Bills of Entry filed by the appellant during January and February 2018 were taken out, investigated and demands were confirmed by the Commissioner through the impugned order which are the subject matter of this appeal.

d) The demand was confirmed in the impugned order comparing the prices of the imported goods with other goods but they were not actually comparable.

e) The Commissioner incorrectly rejected the discounted sales promotion price declared by the supplier for a limited period.

f) The provisions of section 14 which requires the valuation to be done on the basis of transaction value, i.e., the price actually paid or payable was not followed by the Commissioner.

g) The Commissioner wrongly applied Rule 4 of the Customs Valuation Rules, 2007 because the imported goods and the goods whose values were used for comparison were not identical.

h) The Commissioner incorrectly applied Rule 7 (deductive method of valuation) in case of some goods.

i) The SCN contained definitive conclusions and the adjudicating authority merely confirmed the conclusions.

j) There is no evidence in support of the allegation that the appellant had acted in collusion with the supplier.

k) Penalties under section 114 and 114AA were wrongly imposed on the appellant.

l) The appeal may be allowed and the impugned order may be set aside.

Learned authorised representative for the Revenue, made the following submissions.

a) The question in this appeal is whether the Commissioner was correct in rejecting the transaction value and re-determining the value of the imported goods on the basis of imports of the same model goods by the same importer earlier.

b) The impugned order was issued in pursuance of a follow up SCN. The issue was already decided by this Tribunal in appeal C/51848/ 2021 by order dated 29.9.2022. This decision was upheld by the Supreme Courtin Civil Appeal No. 9385 of 2022 by judgment dated 15 March 2024.

c) Since the issue has attained finality, this appeal may be rejected and the impugned order may be upheld.

d) The impugned goods were admittedly of “Zhiyun” brand only. Goods of the same brand were imported earlier but in these Bills of Entry they have been declared them as of „unpopular brand’ instead of „Zhiyunbrand’. Investigation revealed that there was no product of Zhiyunknown as „unpopular brand’, neither was any „low version’ of the product available in the market, and no product of the said brand was available at such low price. Thus, it is a case of declaration of drastically reduced value of the goods.

The previous imports were of similar or even higher quantities in some cases.

e) The appellant failed to justify the drastically reduced price of the impugned goods. Claims of „low version goods’, „goods imported for demo and promotional purpose’, and production of „a letter dated 16.01.2018 from the supplier’long after the goods were seized on 21.02.2018 are only afterthoughts. In absence of reliable documentary or digital evidence (particularly the Wechat which was supposedly received by the Respondents on 17th/18th January 2018) to support such claims, and in the face of

much higher value of appellant’s own contemporaneous imports and availability of Zhiyunbrand goods at much higher value at e-commerce websites, this is a case of gross undervaluation of goods.

We have considered the submissions on both sides and perused the records. The question to be answered in this appeal are:

“Was the Commissioner correct in rejecting the declared transaction value under Rule 12 and re-determining it under Rules 4& 5 and confirming the demand of differential duty with interest and penalty in respect of these 7 Bills of Entry?”

We find that some of the goods imported in these 7 Bills of Entry were the same as those imported in the Bills of Entry dated 16.2.2018 and so were the declared prices. The reasons for rejecting the declared prices and re-assessing the duty, the comparison of the features of the models of the imported goods and those whose values were adopted were also same. Other goods imported in these seven Bills of Entry were not covered by the Bill of Entry dated 16.2.2018.

Insofar as the goods which were the same as those imported under Bill of Entry dated 16.2.2018 are concerned, the reasons for rejection of the declared values and their re-determination under the Valuation Rules as well as the comparison of features of these goods with those imported earlier whose values were reckoned for re-determination of values are the same as those decided by this Tribunal in Final Order dated 29.9.2022 in Revenue’s appeal C/51848/2021 which has been upheld by the Supreme Court in Civil Appeal No. 9385 of 2022. Thus, the issue has attained finality. These goods are as follows:

Table 1: Goods covered by the previous Final Order of this Tribunal and upheld by the Supreme Court

Goods

Quantity

Declared Unit Rate ($)

Declared total assesable value (Rs.)

Duty paid (Rs.)

Re-determined rate ($) CIF

Redetermined total assesable value (Rs.)

Duty redetermined (Rs.)

Differential duty demanded (Rs.)

Basis for redetermi ned value

Bill of Entry No. 4684794 dated 5.1.2018 (Features of the model compared in Table B of the impugned order)

Camera stand (3 Axis stabiliser with follow focus-unpopular brand)

100

50

390628

1177 90

385

2483250

748799

631009

Invoice GRT2912 dated 4.12.201 7

Bill of Entry No. 4687100 dated 5.1.2018 ( Features of the model compared in Table B of the impugned order)

Camera stand (3 Axis stabiliser with follow focus-unpopular brand)

200

50

781256

235580

385

4966500

1497598

1262018

Invoice GRT2912 dated 4.12.201 7

Bill of Entry No. 4729014 dated 9.1.2018 (Features of the model compared in Table B of the impugned order)

Camera stand (3 Axis stabiliser with follow focus-unpopular brand)

200

50

781256

235580

385

4966500

1497598

1262018

Invoice GRT2912 dated 4.12.201 7

Bill of Entry No. 5011432 dated 31.1.2018 ( Features of the model compared in Table B of the impugned order)

Camera stand (3 Axis stabiliser - unpopular brand)

100

55

356400

107468

385

2483250

748799

641330

Invoice GRT2912 dated 4.12.201 7

Bill of Entry No. 5213953 dated 15.2.2018Features of the model compared in Tables A & C of the impugned order)

Camera stand (3 Axis stabiliser - Crane 2- unpopular brand)

182

55

782037

242275

385

1362814

1120539

631009

Invoice GRT2912 dated 4.12.2017

Dual handle (unpopular brand, part of camera stand)

100

12

87077

12101

50

161250

48623

36521

PI/5917/ ZH dated 5.11.201 7

Bill of Entry No. 5214459 dated 15.2.2018 (Features of the model compared in Table C of the impugned order)

Dual handle A (part of camera stand)

100

12

87077

26976

50

322500

97246

70269

PI/5917/ ZH dated 5.11.2017

Dual handle B (part of camera stand)

100

12

87077

26976

50

322500

97246

70269

PI/5917/ ZH dated 5.11.2017

The goods imported in these seven Bills of Entry which are not covered by the earlier Final order of this Tribunal are as

Table 2: Goods not covered by the earlier Final Order of this Tribunal

Goods

Qu ant ity

Decl are d Unit Rat

e ($)

Declar ed total assesa ble

value (Rs.)

Duty paid (Rs.)

Re- dete rmin ed rate

($) CIF

Re- deter mined total assesa ble value

(Rs.)

Duty re- deter mined

(Rs.)

Differen tial duty demand

ed (Rs.)

Basis for re- determi ned

value

Bill of Entry No. 4684794 dated 5.1.2018

Camera stand (3 Axis smart phone stabiliser- unpopular brand)

210

15

246095

7420

7

65

880425

265483

191275

PI/5917/ ZH

dated 5.11.2017

Camera stand (3 Axis stabiliser- Smooth 3

unpopular brand)

53

25

103516

31214

578230

174359

143145

Market Enquiry

Mini- Camera stand (3 Axis Gimbal stabilizer for Gopro)

27

20

42187

31214

100

52513

31214

21298

Invoice GRT- 2912

dated 4.12.2017

Bill of Entry No. 5011432 dated 31.1.2018

Camera stand (3 Axis smart phone stabiliser- Smooth Q)

500

49

158760

0

4787

24

65

209625

0

632103

153378

PI/5917/ ZH

dated 5.11.201

7

Bill of Entry No. 5083301 dated 6.2.2018

Camera stand (3 Axis smart phone stabiliser- Smooth Q)

550

49

1881453

582874

65

2305875

695313

112439

PI/5917/ ZH

dated 5.11.2017

follows.

In respect of these goods, it is necessary to examine if the Principal Commissioner had reasons for rejecting the transaction values under Rule 12 and their re-determination based on contemporaneous imports of other goods. These goods are as follows:

(a) Camera stand (3 Axis smart phone stabiliser-unpopular brand):These were imported by Bill of Entry No. 4684794 dated 5.1.2018; declaring value as US$15 per piece which was re-determined as US$ 65 per piece in the impugned order based on contemporaneous imports as per invoice PI/5917/ZH dated 5.11.2017.

(b) Camera stand (3 Axis stabiliser-Smooth 3 unpopular brand): 53 pieces of this good were imported by Bill of Entry No. 4684794 dated 5.1.2018; declaring value as US$15 per piece and total assessable value as Rs.1,03,516/-. In the impugned order the assessable value was re-determined as Rs. 5,78,230/- based on market enquiry.

(c) Mini- Camera stand (3 Axis Gimbal stabilizer for Gopro): These were imported by Bill of Entry No. 4684794 dated 5.1.2018; declaring value as US$20 per piece which was re-determined as US$ 100 per piece in the impugned order based on contemporaneous imports as per invoice Invoice GRT-2912 dated 4.12.2017

(d) Camera stand (3 Axis smart phone stabiliser-Smooth Q): These were imported under Bills of Entry No. 5011432 dated 31.1.2018 and 5083301 dated 6.2.2018 and the declared value was US$ 49 per piece which has been re-determined in the impugned order as US$65 per piece based on contemporaneous imports by invoice no. PI/5917/ZH dated 5.11.2017.

We find that in the impugned order in respect of the above four goods, only the invoice number of the goods whose value is adopted is given. There is no discussion as to why the declared values were rejected under Rule 12 of the Valuation Rules nor any details of the Bills of Entry under which identical or similar goods were imported. There is also no comparison of the features of the goods which were imported and the features of the goods based on whose values the values were re-determined.

We, therefore, find that the rejection of transaction value, re-determination of values, demand of differential duty, holding the imported goods liable for confiscation and imposition of penalties cannot be sustained in respect of these four goods.

In view of the above, we partly allow the appeal and modify the impugned order to the extent of setting aside the re-determination of the value, demand of differential duty and interest and equivalent mandatory penalty under section 114A in respect of the goods covered by Table 2 above. We also reduce the penalty under imposed in the impugned order section 114AA to rupees four lakhs. We uphold the rest of the impugned order and remand the matter to the Principal Commissioner solely for the purpose of calculation.

(Order pronounced in open court on 03/10/2024.)