By TIOL News Service

MUMBAI, JAN 22, 2018: THE issue is valuation of cut & polished diamonds imported by the appellants from Hong Kong.

The value declared was USD 1347000 CIF equivalent to Indian rupee of 5,44,86,150/-.

When testing of the sample was done by the notified Expert Trade Panel Members, C.I.F. value of the consignment was suggested by the panel to be USD 890977.95 which was equivalent to Indian rupee of Rs.3,60,40,060/-. There arose difference of Rs.1,79,01,350/- between the invoice value of USD 1333533.44 equivalent to Indian Rs.5,39,41,410/- and the above suggested value of Rs.3,60,40,060/-.

Accordingly, the Customs alleged overvaluation of the goods.

The adjudicating authority noted that there was variance in value by 79.21% declared by the importer in respect of category of the diamonds mentioned at Sr. No. 8 of the packing list. On an overall assessment, he recorded in his order that the value suggested was 33.19% lower than the declared value. Accordingly, the assessable value of the consignment was arrived at USD 904444.51 equivalent to Indian Rs.3,65,84,780.43.

When cross-examination of Expert Trade Panel Members was made by appellant, they failed to find any basis to contradict stand of the Panel Members. Further, broker Prakash Shah (one of the appellants) in his statement on 08.05.2008 mentioned that if the diamonds imported shall be subject to second valuation by any other person, there would be a variation of difference of 5 to 10%.

Revenue was of the opinion that the value suggested by the Expert Trade Panel Members was correct and method of valuation adopted by the panel also remained uncontroverted by appellant.

Against this order, the appellants are before the CESTAT.

None appeared for the appellants.

The Bench, after considering the submissions made by the AR observed -

"7. When appellant failed to challenge the valuation made by the Expert Trade Panel, there remained no scope to order for revaluation pleaded by appellant. Action of appellant established mis-declaration of import rendering the goods liable to confiscation under Section 111 of the Customs Act, 1962. Therefore, in absence of any basis to disturb adjudication findings, order for confiscation and levy of penalties by the learned adjudicating authority does not call for interference."

However, the Bench was surprised to note the order of the adjudicating authority imposing a token redemption fine of Rs.5 lakhs and remarked that the same was 'under a misplaced sympathy and is liable to criticism'.

The CESTAT further observed -

"…Learned Commissioner should have appreciated that overvaluation is not expected to be rewarded by ordering a negligible redemption fine to unduly benefit the importer when section 111 of Customs Act 1962 made the goods liable to confiscation. So also when there was huge difference in the value declared and determined establishing deliberate mis-declaration, levy of penalty of Rs.5 lakhs also appears to be too low and is an incentive to wrongdoing. It is also surprising why Revenue has not come in appeal against the misplaced sympathy of learned adjudicating authority. It is shocking to read para 40 of the impugned order reproduced below demonstrating misplaced sympathy of the adjudicating authority against breach of law:-

"40. With regard to the aspects of quantum of fine and penalty, I find that the goods are freely importable and attract Nil rate of duty. The case, therefore, deserves a lenient view."

All the appeals were dismissed.

The Registry was directed to send a copy of the order to the CBEC Chairman for issuance of proper guidelines to the field to protect interest of the economy.

(See 2018-TIOL-285-CESTAT-MUM)