2015 (5) TMI 962 - AT - Customs

Confiscation of goods - Enhancement of value - Penalty u/s 112 - Held that - One of the persons whose opinion was sought gave the value which was even lower than the value declared by the appellant. The transaction value was sought to be rejected as per the Show Cause Notice essentially because the goods were alleged to be mis-declared in description thereof. Once the goods were held to have been correctly described by the appellant, the very basis of rejecting the transaction value disappeared, even more so in the wake of the Commissioner ordering mutation of the goods. In the circumstances, we do not find any basis for rejecting the transaction value and also for arriving at the revised value as per the requirement of the said Rules. Indeed in the impugned order there is not even a whisper as to how and on what basis the transaction value was rejected even after accepting the appellant s description of goods as correct. It is a settled law that resort to the said Rules for revising the value of the imported goods can be had only after the assessing officer rejects the transaction value in terms of Rule 12 of the said Rules on account of having reasonable doubt about the truth or accuracy of the declared value. The impugned order does not disclose any basis for any such reasonable doubt after having accepted the description of the goods to be correct. Thus, we do not find the upward revision of value sustainable and as a consequence there remains no ground to order confiscation of the impugned goods under Section 111(m) ibid leading to redemption fine and penalty. - Decided in favour of assessee.

Issues:
1. Valuation of imported goods
2. Confiscation of goods under Customs Act
3. Mutilation of goods
4. Rejection of transaction value
5. Application of Customs Valuation Rules

Valuation of imported goods:
The appellant imported high-speed steel scrap and declared an assessable value. The Revenue alleged undervaluation, but after verification, the Commissioner accepted the goods' description in the Bill of Entry. However, the Commissioner found the goods undervalued and issued an order for confiscation, imposing fines and penalties. The appellant argued that once the goods' description was accepted, there was no basis for rejecting the declared value. The Tribunal noted that experts provided varying values, with one even lower than the appellant's declared value. The Commissioner accepted a value based on fairness and NIDB data but failed to show if the data related to comparable goods as defined in Customs Valuation Rules. The Tribunal found no basis for rejecting the transaction value, especially after accepting the goods' correct description. The order lacked justification for revising the value as required by the Rules, leading to the appeal being allowed.

Confiscation of goods under Customs Act:
The original order directed the confiscation of goods under Section 111(m) of the Customs Act, along with fines and penalties. However, the Tribunal found that since there was no valid basis for rejecting the transaction value and revising the value upward, the confiscation of goods and associated penalties were unsustainable. The lack of reasonable doubt about the declared value after accepting the goods' description as correct rendered the confiscation and penalties unjustified.

Mutilation of goods:
The original order included a directive for mutilating 3.9 MT of goods classified under a specific Customs Tariff Heading. The Tribunal questioned the necessity of mutilation when the goods' description was accepted and found it hard to justify the mutilation, especially after accepting the appellant's description. The Tribunal noted that the appellant had agreed to mutilation previously but found no valid reason for it post-acceptance of the goods' description.

Rejection of transaction value:
The Tribunal highlighted that the rejection of the transaction value was based on the alleged mis-declaration of goods, which became invalid once the goods' description was accepted as correct. The order failed to provide a basis for rejecting the transaction value, especially after confirming the goods' description. The lack of reasonable doubt about the declared value made the rejection unwarranted, leading to the appeal being allowed.

Application of Customs Valuation Rules:
The Tribunal emphasized that the Customs Valuation Rules permit revising the value of imported goods only if the assessing officer rejects the transaction value due to reasonable doubt about its accuracy. However, in this case, the order did not demonstrate any reasonable doubt after accepting the goods' description as correct. The absence of a valid basis for doubting the declared value rendered the upward revision unsustainable, ultimately leading to the appeal being allowed.

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