2013 (3) TMI 368 - AT - Customs

Undervaluation - enhancement of valuation - mis-declaration - The Commissioner (Appeals) accepted the contention of the respondent. He observed that the respondent was not put to notice before enhancement and no opportunity was given to them. He also sought a report from the concerned Deputy Commissioner who agreed that Chartered Engineer s report/certificate was not given to the importer. Held that - In any case, we find that the lower authorities while enhancing the value of the machine has solely relied upon Indian Chartered Engineer s certificate. For enhancement of value, Revenue is first expected to discard the transaction value or at least reflect upon some evidence to cast doubt in respect of the same. Revenue in their memo of appeal is silent about the supplier s certificate indicating that the word C refers to third generation model of machine and not to computerised machine. In any case, the expression console stands declared by the respondent in their bill of entry. They have adopted the same declaration as is available in the invoices of the foreign supplier and the other relevant documents like bill of lading etc. As such no mis-declaration charge can be pressed against the respondent. Otherwise also we find that there is no reference to any evidence on record to create a doubt about transaction value or to believe the certificate given by the foreign supplier. In this scenario, the Commissioner (Appeals) has rightly relied upon decision of the Hon ble Supreme Court mentioned in TOLIN RUBBERS PVT. LTD. Versus COMMISSIONER OF CUSTOMS, COCHIN 2003 (11) TMI 90 - SUPREME COURT OF INDIA or of the Tribunal IQUIRA INC Versus COMMISSIONER OF CUSTOMS, CHENNAI 2004 (5) TMI 141 - CESTAT, BANGALORE . - Decided against the revenue.

Summary

Issues:
Valuation of imported second-hand printing press, misdeclaration of model, enhancement of value by assessing authority, reliance on Chartered Engineer's certificate, principles of natural justice, rejection of transaction value, application of Customs Valuation Rules.

Valuation of Imported Printing Press:
The respondent imported a second-hand printing press, declaring a value of Euro 15,000, which was enhanced to Euro 56,100 by the assessing authority based on a Chartered Engineer's certificate. The respondent contended that the model was misinterpreted as a computerized machine due to the absence of the letter "C" in the description. The Commissioner (Appeals) accepted the respondent's explanation, noting that the value enhancement lacked proper justification and the respondent was not given an opportunity to address the issue.

Misdeclaration of Model and Value Enhancement:
The respondent argued that the absence of the letter "C" in the model did not signify a computerized machine and provided evidence from the foreign supplier supporting their claim. The appellate authority upheld the respondent's position, emphasizing that no evidence was presented to question the declared value or the foreign supplier's clarification. The assessing authority's reliance on the Chartered Engineer's certificate without sufficient grounds for rejecting the transaction value was deemed unjustified.

Principles of Natural Justice and Rejection of Transaction Value:
The Revenue contended that the enhancement was done in the presence of the respondent's Customs House Agent (CHA) and that the model indicated a computer-operated console. However, the appellate tribunal found that the supplier's certificate clarifying the model's designation was unchallenged and that the respondent's declaration was consistent with the foreign supplier's documents. The rejection of the transaction value without substantial evidence and failure to consider contemporaneous imports were key factors in rejecting the Revenue's appeal.

Application of Customs Valuation Rules:
The tribunal highlighted the importance of adhering to Section 14 of the Act and Rule 3 of the Valuation Rules, emphasizing that unless exceptional circumstances exist, the transaction value should be accepted. The tribunal referenced past legal precedents to support the rejection of the transaction value based solely on a Chartered Engineer's certificate. The decision underscored the need for concrete evidence to dispute the declared value and the importance of following established valuation rules.

In conclusion, the tribunal dismissed the Revenue's appeal, affirming the Commissioner (Appeals)'s decision in favor of the respondent due to the lack of substantial evidence to justify the value enhancement and the misdeclaration allegations. The judgment emphasized the significance of adhering to procedural fairness, the principles of natural justice, and established customs valuation rules in determining the assessable value of imported goods.