bills of entry can't be rejected based on proforma invoice

The Kolkata Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has quashed the penalty under Section 114AA of the Customs Act and held that declared value in bills of entry cannot be rejected based on proforma invoice.

The bench of Shriashok Jindal (Judicial Member) and K. Anpazhakan, (Technical Member) has held that the appellants have imported 129 consignments of Sewing Machinery and parts of various brands through Kolkata port and one consignment of sewing machinery at ICD Tughlakabad, between the years 2012 and 2014. All the Bills of Entry were assessed/reassessed to duty by accepting the transaction value declared by the appellant in the respective Bills of Entry. The Assessment Orders have not been challenged and hence they became final.

Background

The appellant/assessee had imported 129 consignments of Sewing Machinery and parts of various brands through Kolkata port and one consignment of sewing machinery at ICD Tughlakabad, between the years 2012 and 2014. All the Bills of Entry were assessed/ reassessed to duty finally by accepting the transaction value declared by the appellant in the respective Bills of Entry.

On 01.12.2014, the officers of Directorate of Revenue Intelligence (DRI), Bangalore, searched the business premises of the appellant at Kolkata and seized the import documents relating to the 130 consignments mentioned above.

After initial verification of the documents, DRI, Bangalore transferred the documents to DRI, Kolkata for further investigation at their end in the year 2015. After receipt of the documents from DRI, Bangalore, DRI, Kolkata started an independent investigation.

On completion of the investigation, a Show Cause Notice was issued to the appellant proposing to reject the transaction value declared by them in all the 130 Bills of Entry and demanded differential customs duty. The Notice also proposed to demand interest and impose penalty under Section112(a) and (b) and Section 114AA of the Customs Act, 1962.

The Notice was adjudicated vide the impugned order wherein the Ld. Commissioner has confirmed the demand of customs duty of Rs.2,57,27,920/- along with interest. He also ordered for confiscation of the goods imported and imposed equal amount of duty as penalty on the appellant-company. A penalty of Rs. 50,00,000/- has also been imposed on Shri Sanjay Mehta, Partner of the appellant-company, under Section 114AA of the Customs Act.

Arguments

The appellants submited that the initial investigation was conducted by DRI, Bangalore and they could not find any undervaluation; subsequently, when the case was transferred to DRI, Kolkata, they started fresh investigation; DRI Kolkata presented two documents: one was a mail allegedly found with one Mr. Mahesh Agarwal at Bangalore and another was a proforma invoice in the name of Jaiswal Trading Company.

The appellant submitted on the basis of these documents, the officers of DRI, Kolkata alleged that the appellant has undervalued the goods imported through the 130 Bills of Entry. The Department alleged that in the mail, the appellant has guided his friend company, namely, M/s. Sleek Corporation, Bangalore to disclose lower value and gave his declared value before the Customs at Kolkata. The proforma invoice of Jaiswal Trading Company shows a much higher value and accordingly, it was alleged that the appellant has undervalued the goods imported by them.

Conclusion

The tribunal held that demand cannot be raised without challenging the assessment orders. The order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable.

The tribunal held that the ingredients required for imposing penalty on him under Section 114AA of the Customs Act are not existing in the case.