By TIOL News Service

NEW DELHI, SEPT 28, 2017: THE appellants import foreign liquor for sale to Hotels and retail outlets in India. During the relevant period, they imported liquor from two dealers / traders in Dubai.

The Customs Department compared the import prices of the appellants with those of M/s. Delhi Duty Free Shop Pvt. Ltd. (DDFSPL). It has been alleged that since DDFSPL import the same products from manufacturers/brand-name owners and in much larger quantities their prices are genuine; that since the prices of the importer-appellants were much below than the declared prices of DDFSPL, the Department has entertained the view that there was deliberate attempt to undervalue the goods and evade substantial customs duty.

SCN was issued and which culminated in the impugned order, rejecting the declared value, and confirming the differential duty of Rs.4,25,42,082/- alongwith interest and imposition of penalties of Rs. 4,25,42,082/- and Rs.50,00,000/- on appellants M/s.R.E.D. and Shri Amit Goel, Director of R.E.D. respectively.

In appeal before the CESTAT, it is submitted that the proceedings initiated by the Department are barred by limitation of time inasmuch as the disputed period involved is from August 2009 to November 2012, whereas the show cause notice was issued on 21.07.2014; that in absence of any allegation of mis-declaration, invoice manipulation, concealment, additional foreign exchange repatriation or admission of evasion, the duty demand cannot be fastened beyond the normal period as provided under Section 28 of the Customs Act, 1962. Reliance is placed on the decision in Uniworth Textiles Ltd. - 2013-TIOL-13-SC-CUS .

It is further submitted that as there is no finding as regards the country of production of the goods imported by DDFSPL, the import price by some other importer cannot be used for comparison purpose with regard to the goods imported by the appellant; that the goods sold by DDFSPL are not at the same commercial levels as that of the sale effected by the importer – appellants, inasmuch as, DDFSPL sells liquor only within the Customs area of International Airport to the International passengers; whereas, no such restrictions have been imposed on the importer with regard to the sales only to specified buyers; therefore, rejection of declared value under Rule 12 of the Customs Valuation Rules, 2007 and re-determination of the value under Rule 4/5 of the Rules is not proper and justified.

The AR reiterated the findings of the original authority for upholding the demand.

The Bench observed –

“9. It is an un-disputed fact on record that the importer-appellants had filed the Bills of Entries based on the invoices and other import documents supplied by the overseas seller. The said Bills of Entries were first assessed by the assessing officer on the price declared by the importer-appellants, cleared by concurrent audit and countersigned by the proper officer. Further, the imported liquor was also subjected to examination before allowing out of charge, which, admittedly, has been done by the Department. The Department has also not contested the value of the goods declared by the importer-appellants at the time of filing Warehouse Bills of Entry and subsequently, even at the time of filing Ex-Bond Bills of Entry. Thus, it is not the case of the Department that the appellant had manipulated, concealed or altered any material evidence shown in the import documents filed before the authorities at the port of import. More importantly, there is no specific allegation that over and above the invoice price, the importer-appellants had paid any additional consideration in respect of the imported goods, other than payments through the approved banking channel. Thus, in such eventuality, the burden of proof of involvement of the ingredients such as, collusion, wilful mis-statement and suppression of facts entirely rests with the Department and it is not for the importer-appellants to establish the contrary. Perusal of the relevant documents available in the case records proves beyond any shadow of doubt that in view of change of opinion by the Department amongst its officers, the show cause proceedings were initiated beyond the normal period of limitation. The enhancement of value is not due to any evidence of fraudulent valuation/invoices submitted by the appellant- importer, but due to comparison of value with other importer. Such "comparable imports? were all along available with assessing authorities. In other words, no new evidence cropped up belatedly, which established a fraudulent or wilful misstatement on the part of the appellant – importer. The imports were regular, both by the appellant – importer as well as by DDFSPL during the material time. Both were assessed by the same authority in the same Customs Port."

Adverting to the apex court decision cited by the appellant, the CESTAT further observed –

"11. … in view of the fact that the Department has not brought on any iota of evidence of the involvement of the importer-appellants in the fraudulent activities, concerning collusion, wilful mis-statement and suppression of facts with reference to value of imported goods, in our considered view, the demand could not have been issued for extended period. In the case in hand, it is an admitted fact that the show cause notice has been issued beyond the period of one year from the date of filing the Bills of Entries and payment of duty on the declared value. Thus, the proceedings are wholly barred by limitation of time as per the dictates of Section 28 ibid."

Without going into the merits of the case, the appeals were allowed on the ground of limitation.

(See 2017-TIOL-3514-CESTAT-DEL)