2009 (4) TMI 652 - AT - Customs

Valuation - Contemporaneous imports - Adjudication order - Words and Phrases - Stock lot goods - enhancement of value

Issues Involved:
1. Examination and valuation of imported goods.
2. Determination of the declared value of goods.
3. Imposition of redemption fine and penalty.
4. Adjudication process and application of Customs Valuation Rules.
5. Acceptance of transaction value and burden of proof.

Detailed Analysis:

1. Examination and Valuation of Imported Goods:
The Appellant imported goods described as "Rejected Stock Lot of Plastic film/sheeting/clear/colour printed (mixed size, width and thickness)" and filed two Bills of Entry with a declared value of Rs. 18,46,616/-. The goods were examined by Docks Appraisers and found to be of various thicknesses, lengths, widths, and colors, packed in rolls with stickers showing details of dimensions and weight. No specific country of origin details were found. The goods were considered as "stock lot" and not evidently rejected as declared. The declared value of US$ 480 per Ton was deemed very low compared to international prices of raw materials used in manufacturing such goods.

2. Determination of the Declared Value of Goods:
The Proprietor's statements indicated that the goods were purchased as "stock lot" from different warehouses in China. A show cause notice was issued to enhance the declared value to Rs. 38,87,329/- and proposed confiscation and penalty. The Appellant contested this, providing evidence of similar goods cleared at the declared value at Chennai Customs House. However, the adjudicating authority rejected the declared value under Rule 12 and determined the value at US$ 1030 F'MT under Rule 8 of the Customs Valuation Rules, 2007, read with Section 14 of the Customs Act, 1962. A redemption fine of Rupees 8 lakhs and a penalty of Rupees 2 lakhs were imposed.

3. Imposition of Redemption Fine and Penalty:
The Appellant contested the loading of the declared value and the consequent imposition of fine and penalty. The Customs authorities accepted that the goods were "stock lot" but used fluctuating international prices of Chinese origin raw material to enhance the declared value. The adjudicating authority was argued to have erred in rejecting the value under Rule 12, which does not empower rejection but only allows raising doubts and requesting details or documents.

4. Adjudication Process and Application of Customs Valuation Rules:
The adjudicating authority compared the goods with PVC granules, which was not permissible under the Rules. The Geo-Syndicate report and the Chemical Examiner's opinion did not provide definite conclusions. The reliance on PLATT prices for PVC granules was deemed incorrect as it was not comparable to the imported goods. The adjudicating authority did not consider the evidence provided by the Appellant, including the Chennai Custom House assessments. The Commissioner was found to have a casual approach to the adjudication process, ignoring the mandate of Section 125 of the Customs Act regarding redemption fine and penalty.

5. Acceptance of Transaction Value and Burden of Proof:
The Appellant argued that the goods were stock lot of unsold, rejected, and left-over material, sold at US$ 480 PMT on an "as is where is" basis. The Department accepted the goods as stock lot but did not disprove the declared value. The burden of proof to disprove the value lies with the Department. The Appellant's evidence showed that stock lot goods are sold at discounted prices, which should be accepted unless disproven by the Department. The Apex Court's decision in Eicher Tractors Ltd. emphasized that discounts for stock clearance are commercially acceptable.

Judgment:
The adjudication order enhancing the declared value and imposing redemption fine and penalty was set aside. The goods were ordered to be released forthwith, preferably within three days, after ensuring that the duty on the declared value was paid. The appeal was allowed.

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