2006 (3) TMI 393 - AT - Customs

Summary

Issues Involved:
1. Validity of the declared value of imported goods.
2. Requirement and dispensation of Show Cause Notice.
3. Applicability of Rule 10A of the Customs Valuation Rules, 1988.
4. Mis-declaration of imported goods.
5. Compliance with CEGAT's remand order.
6. Legitimacy of the Chartered Engineer's valuation.
7. Rejection of Transaction Value under Rule 10A.

Issue-wise Detailed Analysis:

1. Validity of the Declared Value of Imported Goods:
The respondents imported 68 units of video games, and the declared value was contested by the Revenue. An independent Chartered Engineer was engaged to ascertain the value, leading to proceedings for re-determination of the value. The original authority determined the value based on the Chartered Engineer's valuation, which was deemed fair for duty calculation. The Commissioner (Appeals) set aside this order, which led to the Revenue's appeal.

2. Requirement and Dispensation of Show Cause Notice:
The Commissioner (Appeals) found that no Show Cause Notice was issued, which the Revenue contested, stating that the notice was dispensed with per the importer's request letter dated 19-10-2001. The Revenue argued that this dispensation was in line with Section 124 of the Customs Act.

3. Applicability of Rule 10A of the Customs Valuation Rules, 1988:
The Commissioner (Appeals) noted that no infringement of Rule 4(2) was alleged in the Show Cause Notice. However, the Revenue argued that after the introduction of Rule 10A, the requirement of infringement under Rule 4(2) was no longer mandatory to reject the declared value. The Revenue cited the Apex Court ruling in the Eicher Tractors Ltd. case, emphasizing that Rule 10A allows rejection of declared value based on "a reason to doubt."

4. Mis-declaration of Imported Goods:
The Revenue claimed that the importer concealed the fact that the goods were second-hand, leading to the rejection of the Transaction Value on the suspicion that the declared value might not correspond to the actual goods. This suspicion was argued to constitute a "reasonable doubt" under Rule 10A.

5. Compliance with CEGAT's Remand Order:
The CEGAT had remanded the case to the original authority to determine the price and clearly indicate the valuation method under the Customs Valuation Rules, 1988. The Additional Commissioner of Customs, in the de novo order, reiterated the same conclusions as the original order, which the Tribunal found to disregard the CEGAT's directions, making the judicial process a mockery.

6. Legitimacy of the Chartered Engineer's Valuation:
The original authority relied on the Chartered Engineer's valuation, which was based on the selling price in India. The CEGAT highlighted that Rule 8(2) prohibits valuation based on the selling price in India. The Tribunal found that the original authority failed to justify the rejection of the Transaction Value under Rule 4 and the inapplicability of Rules 5 to 7A.

7. Rejection of Transaction Value under Rule 10A:
The Tribunal agreed with the Revenue that Rule 10A allows rejection of Transaction Value even in the absence of circumstances mentioned in Rule 4(2). Rule 10A was introduced to address undervaluation issues and allows rejection of declared value based on reasonable doubt. However, the Tribunal found that the department did not seriously apply Rule 10A and relied solely on the Chartered Engineer's certificate, which was based on the selling price in India, contrary to Rule 8(2).

Conclusion:
The Tribunal upheld the Commissioner (Appeals)'s order, finding it legal and proper, and rejected the Revenue's appeal. The Tribunal emphasized the need for thorough investigation and proper application of Rule 10A before rejecting the Transaction Value. The original authority's reliance on the Chartered Engineer's valuation, based on the selling price in India, was found inappropriate, and the de novo order was criticized for not complying with the CEGAT's directions.