2012 (12) TMI 49 - AT - Customs

Whether customs officers have powers to determine RSP for the purpose of levy of additional duty of customs (CVD), when the same is not declared by the importer Held that - CVD is leviable on the imported goods on the basis of RSP. Merely because the RSP has not been declared, it does not mean that CVD is not leviable. The assessing officer can adopt any reasonable means to determine the RSP so long as the provisions of the tax liability are in force. - Assessing officer has adopted RSP of comparable goods as the basis for determination and computation of duty liability. Such a procedure adopted for operationalising the levy cannot be considered to be unreasonable - customs officer is empowered to determine RSP if the same is not declared by the importer at the time of importation by adopting reasonable means - method adopted by the customs officer for determination of RSP and consequential addl. duty of customs is reasonable - appellants directed to make pre-deposit

Issues Involved:
1. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue notice.
2. Misdeclaration and undervaluation of imported goods.
3. Determination of additional customs duty (CVD) based on Retail Sale Price (RSP).
4. Retrospective amendment to Section 28 of the Customs Act, 1962.
5. Validity of customs officers determining RSP when not declared by the importer.

Detailed Analysis:

1. Jurisdiction of the Directorate of Revenue Intelligence (DRI) to issue notice:
The appellants raised a miscellaneous application questioning the jurisdiction of the DRI to issue the notice. The Tribunal allowed this application, noting that jurisdictional issues can be raised at any stage of the appeal. However, the Tribunal concluded that it cannot entertain the challenge to the vires of the retrospective amendment to Section 28 of the Customs Act, 1962, as it is a creature of the Customs Act. This issue should be pursued before the High Court or Supreme Court.

2. Misdeclaration and undervaluation of imported goods:
The investigation by the DRI revealed that M/s. Parth Marketing and M/s. Chinmay Corporation, controlled by Shri Sushil Agarwal, were involved in misdeclaration and gross undervaluation of imported electronic goods to evade customs duty. The goods were imported in split conditions to avoid higher duties, and the brand names were removed to make them appear unbranded. The Tribunal found that the evidence on record, including email correspondence and statements from the proprietors, supported the charge of misdeclaration and undervaluation.

3. Determination of additional customs duty (CVD) based on Retail Sale Price (RSP):
The appellants contended that the determination of CVD based on RSP of similar goods was not sustainable, as there was no provision in the Customs Tariff Act for such determination. They relied on the Tribunal's decision in ABB Ltd. However, the Tribunal noted that the decision in ABB Ltd. was in jeopardy as the Revenue had filed an appeal before the Supreme Court. The Tribunal held that customs officers could determine the RSP by adopting reasonable means when it is not declared by the importer, to ensure the levy of CVD is operational.

4. Retrospective amendment to Section 28 of the Customs Act, 1962:
The Tribunal discussed the retrospective amendment to Section 28, which was enacted to validate actions taken by customs officers, including those from DRI, for issuing notices for short levy or non-levy of duties. The Tribunal stated that the amendment aimed to overcome the Supreme Court's decision in Commissioner of Customs v. Syed Ali, which had limited the powers of certain customs officers. The Tribunal emphasized that it could not question the retrospective amendment's validity, as it is beyond its jurisdiction.

5. Validity of customs officers determining RSP when not declared by the importer:
The Tribunal addressed the issue of whether customs officers have the power to determine the RSP for CVD purposes when it is not declared by the importer. It concluded that under Section 3 of the Customs Tariff Act, 1975, read with subsection (8), customs officers could adopt reasonable means to determine the RSP. This ensures that the law is operational and the levy of CVD is effective, aligning with the principle that tax statutes should be construed to make the machinery workable.

Conclusion:
The Tribunal directed the appellants to make a pre-deposit of Rs. One crore, in addition to amounts already paid, within eight weeks. Upon compliance, the pre-deposit of the remaining dues would be waived, and recovery stayed during the appeal's pendency. The Tribunal's decision was pronounced in court on 2-5-2012.

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