2013 (4) TMI 133 - AT - Customs

Valuation - Misdeclaration/undervaluation of goods imported - Confiscation/penalty - Assesse imported 540 bales of old and used garments through his custom house agent. - old and used goods or other than old and used goods - classifiable under Chapter 6309 of CTA, 1975 - Held that - So far as valuation is concerned reliance made on the judgement of Hon ble Supreme Court in the case of Eicher Tractors Limited, reported in 2000 (11) TMI 139 - SUPREME COURT OF INDIA , wherein it has been held that if the transaction value cannot be determined under Rule 4(1) now Rule 3(1) and does not fall under any of the exceptions in Rule 4(2) now rule 3(2) , there is no question of determining the value under the subsequent Rules. The value was sought to be enhanced by treating the impugned goods as other than old and used garments and by comparing the sale price of earlier imported old and used garments, the classification of the goods have been decided by ld. Commissioner as old and used garments classifiable under 6309 as claimed by the importer by rejecting the claim of the DRI. Once the goods are held to be old and used, their value cannot be enhanced by treating the goods as other than old and used goods. There is no findings that the invoices issued by the overseas suppliers are fake or fabricated and that the importer had paid any amount more than that mentioned in invoices either in kind or any other manner. - Decided in against the revenue.

Summary

Issues Involved:
1. Classification of imported goods.
2. Valuation of imported goods.
3. Imposition of fine and penalty.
4. Alleged mis-declaration and undervaluation.
5. Role of Customs House Agent (CHA) and other parties.
6. Proceedings against departmental officers.

Issue-wise Analysis:

1. Classification of Imported Goods:
The central issue was whether the imported goods, described as old and used garments, were correctly classified under Chapter 6309 of the Customs Tariff Act, 1975. The Commissioner found that the goods were indeed "old and used garments" classifiable under CTH 6309. This classification was not challenged by either party, thus reaching finality.

2. Valuation of Imported Goods:
The Customs authorities initially enhanced the declared value from USD 0.45 per kg to USD 0.60 per kg. The DRI sought further enhancement based on the wholesale market price of similar goods from M/s. Ma Vabatarini Enterprises. The Commissioner accepted the valuation method under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. However, the Tribunal found that the declared transaction value should be accepted unless there is evidence of mis-declaration or undervaluation. The Tribunal cited Supreme Court judgments emphasizing the necessity of cogent reasons for rejecting the transaction value.

3. Imposition of Fine and Penalty:
The Commissioner ordered confiscation of the goods with an option to redeem on payment of a fine of Rs. 4,25,000/- and imposed penalties on various parties. The Tribunal found that the penalties were based on the incorrect valuation and classification assumptions and thus set aside these penalties.

4. Alleged Mis-declaration and Undervaluation:
The DRI alleged mis-declaration and undervaluation, claiming the goods were new rather than used. The Tribunal found no evidence to support this claim, noting that the goods were correctly described as old and used garments. The Tribunal emphasized that the invoices from the foreign supplier were not proven to be fake or fabricated.

5. Role of Customs House Agent (CHA) and Other Parties:
The CHA, M/s. Gee Pee International, and its partners were penalized for alleged involvement in mis-declaration. The Tribunal found the penalties against the CHA and its partners were based on assumptions without concrete evidence. The Tribunal highlighted the lack of any legal obligation on the CHA to verify the wholesale prices of goods in the domestic market.

6. Proceedings Against Departmental Officers:
The Commissioner dropped proceedings against certain departmental officers. The Tribunal did not find any fault with this decision, noting that the officers had followed the existing practice of examination without any prior notice of revised procedures.

Conclusion:
The Tribunal set aside the Commissioner's order on valuation and penalties, allowing the appeal of the importer and other noticees. The Tribunal dismissed the Revenue's appeal, emphasizing the need for concrete evidence to reject declared transaction values and impose penalties. The Tribunal's decision underscored the importance of adhering to established legal principles and procedures in customs valuation and classification disputes.