Mydream Properties Pvt. Ltd Vs Commissioner of Customs (CESTAT Mumbai)
Revenue has not made out any case of mis-declaration and consequential undervaluation. Therefore, we find no merit in the re-determination of the value of the yacht and confirmation of differential duty thereon.
Facts-
The appellant had imported the goods, described as “Brand New Azimut 68 Motor Yachtwith Accessories” from Italy and filed the BOE for duty assessment and clearance of the said imported consignments. The BOE was recalled and an examination was conducted by the officers of the Central Intelligence Unit (CIU). The BOE in question was provisionally assessed for want of the relevant import documents.
Based on detailed investigation, the department had concluded that the importer had mis-declared the description of the imported goods in respect of its model as well as actual value, which resulted in evasion of legitimate customs duty payable on higher import price for the imported goods yacht of model ‘Azimut 68 Evolution’, instead of model ‘Azimut68’, as declared in the subject BOE.
The customs department initiated show cause proceedings against the appellant which was confirmed vide the impugned order. Being aggrieved, the appellant preferred an appeal before the Tribunal.
Conclusion-
Tribunal, in case of NPT Papers Pvt. Ltd. & others V. C. C., Mundra & Others, held that there should be evidence on record to show that the importers have paid directly or indirectly any amount over and above the invoice value. Once it is proved that there is no evidence of extra remittance, transaction value cannot be discarded.
Held that we are of the considered opinion that in so far as the valuation of the yacht is concerned, Revenue has not made out any case of mis-declaration and consequential undervaluation of the same. Therefore, we find no merit in the re-determination of the value of the yacht and confirmation of differential duty thereon. To this extent, we find that the impugned order is not maintainable. As the charge of mis-declaration and undervaluation of the yacht falls flat, confiscation and penalties imposed also do not survive. Accordingly, the same are set aside.
FULL TEXT OF THE CESTAT MUMBAI ORDER
Brief facts of the case, leading to these appeals, are summarized herein below:
2. The appellant herein, M/s Mydream Properties Pvt. Ltd, had imported the goods, described as “Brand New Azimut 68 Motor Yacht with Accessories” from Italy and filed the Bill of Entry before the jurisdictional Customs authorities for duty assessment and for clearance of the said imported consignments. Initially, the Bill of Entry was assessed by RMS and thereafter, based on intelligence with regard to alleged mis-declaration of description and value of the imported goods, the Bill of Entry was recalled and examination conducted by the officers of Central Intelligence Unit (CIU) as per the instructions contained in letter dated 23.09.2009. The Bill of Entry in question was provisionally assessed for want of the relevant import documents. During the course of investigation, the appellant had submitted the detailed import documents including the certificate and catalogue of the imported yacht. The Customs department had recorded statement of various persons under Section 108 of the Customs Act, 1962 in respect of importation of the subject goods. Based on detailed investigation into the matter, the department had concluded that the importer (the appellant herein) had mis-declared the description of the imported goods in respect of its model as well as actual value, which resulted in evasion of legitimate customs duty payable on higher import price for the actually imported goods i.e. yacht of model ‘Azimut 68 Evolution’, instead of model ‘Azimut68’, as declared in the subject Bill of Entry. Further, it had also been concluded that the declared import price of Euro 1400000.00 does not seem to be actual value for levying of customs duty inasmuch as the said price had been arrived at by the importer-appellant after availing/claiming discount of approximately 43% on the initial price of Euro 2410300.00 quoted by the manufacturer-supplier M/s Azimut-Benetti SPA, Italy. On the basis of above analysis, it has been inferred that the declared import price of the subject goods at Euro 1400000.00 did not appear genuine and accordingly not acceptable and that the duty liability is required to be computed on the initial price of Euro 2410300.00 i.e. Rs. 17, 04, 08,210/- CIF quoted by the manufacturer-supplier, without extending any discount on the said price.
2.1. On the basis of above analysis, the Customs department initiated show cause proceedings against the appellant, seeking rejection of the declared assessable value and re-determination of the same under sub-Rule (1) of Rule 3 of the Customs Valuation Rules, 2007; confirmation of the differential duty demand along with interest under the proviso to Section 28(1) and 28AB respectively of the Customs Act, 1962; confiscation of the subject goods, with option to redeem the same and for imposition of penalties on the appellant’s company, including the other appellants involved in these cases. The matter arising out of the Show Cause Notice dated 05.09.2014 read with subsequent corrigendum dated 09.12.2014 was adjudicated vide Order-in-Original No. 31/2015/CAC/CC-I/A/AB/GR.VB dated 22.05.2015, in confirming the proposals made in the notice. Being aggrieved with the said adjudication order, the appellants have filed the appeal before this Tribunal. The appeals were disposed of vide Final Order No. A/87398-87400/2019 dated 02.12.2019, by setting aside the adjudication order and allowing the appeals by way of remand to the original authority. While remanding the matter, the Tribunal had kept open all the issues for consideration by the original authority.
2.2. Pursuant to the order dated 02.12.2019 passed by this Tribunal, the original authority took-up de novo adjudication proceedings and passed the Order-in-Original No. 98/2020-21/CAC/CC (IMPORT-I)/MKK dated 15.03.2021 (for short, referred to as “the impugned order”), wherein, the learned adjudicating authority confirmed the allegations in the Show Cause Notice and has -Rejected the declared Assessable Value of Rs.9,99,69,800/- of the subject goods i.e. Yacht imported vide Bill of Entry No. 911190 dated 11.09.2009 under Rule 12 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962.
(i) Re-determined the value of Yacht at Rs.17,74,67,817/- taking the transaction value of Euro 2485300.00 CIF on the basis of initial price quoted by supplier for Azimut 68/156 2 x MAN 1360 HP of Euro 2410300.00 FOB and Freight+ Insurance of Euro 75000.00 under Rule 9 of the Customs Valuation Rules, 2007.
(ii) Determined the value of ‘V-SAT connection with dish antenna’ which has not been declared in the subject Import Invoice and the Bill of Entry as Rs.14,78,125/- under the provisions of Rule 9 of the Customs Valuation Rules, 2007 at the CIF Value of Euro 20700.00 which was the quoted price of these goods by supplier manufacturer M/s. Azimut Benetti SPA, Italy and accepted by the importer in its purchase order.
(iii) Confirmed and demanded the total differential duty amounting to Rs.1, 91, 14,774/- (Rupees One Crore Ninety One Lakhs Fourteen Thousands Seven Hundred Seventy Four only) under proviso to then Section 28(1) of the Customs Act, 1962 (now section 28(4) of the Customs Act, 1962) along with due interest under erstwhile Section 11AB ibid (now section 28AA of the Customs Act, 1962).
(iv) Ordered for appropriation of an amount of Rs.76,00,000/- already paid by the importer M/s My dream Properties Pvt. Ltd. against the differential duty & interest.
(v) Ordered to assess the Bill of Entry No. 911190 dated 11.09.2009 finally under section 18(2) of the Customs Act, 1962.
(vi) Confiscated the Yacht of ascertained Assessable Value of Rs.17,74,67,817/- imported under the Bill of Entry No. 911190 dated 11.09.2009 under the provisions of Section 111(m) of the Customs Act, 1962 and the ‘V-SAT connection with dish antenna’ of ascertained assessable value of Rs.14,78,125/- imported on board the yacht vide the Bill of Entry No. 911190 dated 11.09.2009 under the provisions of Section 111 (I) of the of the Customs Act, 1962 (Total ascertained assessable value Rs.17,89,45,942/-). However, an option was given to the importer to redeem the goods on payment of redemption fine of Rs.1,00,00,000/- (Rupees One Crore Only) under Section 125 of the Customs Act, 1962.
(vii) Imposed penalty of Rs.1,91,14,774/- (Rupees One Crore Ninety One Lakhs Fourteen Thousands Seven Hundred and Seventy Four only) plus appropriate interest under erstwhile section 28AB of the Customs Act, 1962, (under section 28AA from 08.04.2011 onwards) on M/s My dream Properties Pvt. Ltd. under Section 114A of the Customs Act, 1962. It has further been ordered that if the duty and interest as demanded above is paid within 30 days of communication of this order, the amount of penalty imposed would be 25% of the duty and interest as per first proviso to Section 114A ibid subject to the condition that the amount of penalty so determined is also paid within the said period of thirty days.
(viii) Imposed Penalty of Rs.10,00,000/- (Rupees Ten Lakhs only) on Shri. V. Manivannan Vice-President (CPE) of M/s. Afcons Infrastructure Ltd. under Section 112(a) of the Customs Act, 1962.
(ix) Imposed Penalty of Rs.10,00,000/- (Rupees Ten Lakhs only) on Shri V. Manivannan Vice-President (CPE) of M/s. Afcons Infrastructure Ltd. under Section 114AA of the Customs Act, 1962.
(x) Imposed Penalty of Rs.5,00,000/- (Rupees Five Lakhs only) on Shri. Vinay P. Karve- Director of M/s. Mydream Properties Pvt. Ltd. under Section 112(a) of the Customs Act, 1962.
(xi) Imposed Penalty of Rs.5,00,000/- (Rupees Five Lakhs only) on Shri Vinay P. Karve Director of M/s. Mydream Properties Pvt. Ltd. under Section 114AA of the Customs Act, 1962.
(xii) Ordered for enforcement of the Provisional Duty (PD) Bond and Bank Guarantee of Rs.50 Lakhs executed by the importer for the provisional release of the subject vessel is adjusted towards differential customs duty, applicable interest, fine and penalty.
2.3. Learned Commissioner, inter alia, observed that the goods declared and goods imported by the appellants are two different products inasmuch as the value declared by the importer in the Bill of Entry was for the yacht ‘Azimut 68’ and not of the imported product i.e. ‘Azimut 68 Evolution’ ; thus, there is mis-declaration of the goods and therefore, value declared under Section 14 ibid by the importer cannot be considered as the transaction value and as such, the same is liable to be rejected as per Rule 12 of the Customs Valuation Rules, 2007; arguments placed by the appellant that during the relevant period stating that there was sudden dip of price in ship building industry; therefore, the importer was able to negotiate a much lower price were not acceptable as the same was just a verbal one and no documentary evidence for the same was placed by the importer; there is ‘connivance’ between the overseas manufacturer and the appellant, which resulted in mis-declaration of goods, with the intent to evade payment of appropriate Customs duty. The impugned order has also recorded the findings that the value of ‘V-SAT connection with dish antenna’ of the value of Euro 20700 was not included in the value mentioned in the purchase order or in the commercial invoice and the same was also not declared in the Bill of Entry.
3. Being dissatisfied with the impugned order dated 15.03.2021, the appellants have preferred these appeals before the Tribunal. Shri Hormaz Daruwalla, learned Advocate appearing for the appellants submitted a written note of arguments which is summarized as below.
3.1. There was no mis-declaration as Purchase Order, Invoice and Bill of Entry, all contain a detailed description of the higher version of Azimut 68 Yacht, i.e. Evolution; the User’s Manual, admittedly on board the Yacht, presented for inspection clearly stated that the Yacht is of the higher version, Evolution.
3.2. The findings of the commissioner are factually erroneous and legally non-tenable as follows:
