2013 (4) TMI 626 - HC - Customs

Provisional assessment of duty U/s 18 - Valuation of goods U/s 14 - Provisional release of goods, documents and things seized pending adjudication U/s 110A - Clearance of goods for exportation U/s 51 of the Customs Act - Held that - As the case is at the stage of adjudication. The petitioner is now adjudicating the matter by giving necessary documents and the reply to the show cause notice and the only question, which the respondent resisted is the non-production of BRC, which according to the petitioner has already been produced. If such is the case, the below cardinal principle as envisaged by the provisions of the Act would apply to the case then the adjudicating authority would decide finally what would be the outcome of the decision. On such a decision, the petitioner is entitled for the release of the goods and then only, it can be released. Therefore, the claim has to be considered in the light of the following provisions. U/s 14 of the Act would make it clear that the value of the imported goods and export goods shall be the transaction value of such goods the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for the delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the Rules. The ordained principle as envisaged by the Act for the provisional release of goods contemplates that any goods, documents or things seized under Section 110 may pending the order of the adjudicating officer to release to the owner on taking a bond from him in the proper form with such security and conditions as the Commissioner of Customs may require. Accordingly, the mandamus sought for by the petitioner, to direct the respondent to grant provisional release of goods on adjudication of the matter, is ordered and the respondent is directed to pass appropriate orders in accordance with law and on merits, on the basis of personal hearing, dated 01.12.2011 and the production of BRC, dated 05.12.2011, which was endorsed, and thereafter release the goods - Miscellaneous petition is closed.

Issues Involved:
1. Provisional release of goods under Section 18 read with Section 110A of the Customs Act.
2. Alleged overvaluation of export goods to avail higher DEPB incentives.
3. Determination of the true transaction value of the export goods.
4. Compliance with procedural requirements and production of necessary documents.

Detailed Analysis:

1. Provisional Release of Goods:
The petitioner, a partnership firm engaged in exporting polyester fabric, sought a mandamus directing the respondent to grant provisional release of goods under Section 18 read with Section 110A of the Customs Act and in accordance with the Customs (Provisional Duty Assessment) Regulations, 1963. The petitioner argued that despite the proper verification and assessment by customs authorities, the goods were recalled and stopped by the Department of Revenue Investigation (DRI) on allegations of overvaluation intended to avail higher DEPB incentives. The petitioner requested provisional release multiple times through letters dated 03.03.2011, 04.03.2011, 23.02.2011, and 21.03.2011, but received no response. The petitioner contended that the goods were freely exportable, not subject to duty, and there was no justification for not allowing provisional release, especially since they undertook not to avail any incentives pending adjudication.

2. Alleged Overvaluation of Export Goods:
The DRI alleged that the petitioner overvalued the goods to avail higher DEPB incentives, claiming the goods were of inferior quality. The declared value of Rs.134.10 and Rs.135.15 per yard was reduced to Rs.20 per yard by the respondent, significantly decreasing the claimed DEPB amounts. The petitioner argued that the valuation was based on the buyer's agreed price in international trade, where the buyer and seller were not related, and no tangible evidence was provided by the respondent to substantiate the claim of overvaluation. The petitioner maintained that the declared value was correct and supported by proof of advance payment received from the buyer.

3. Determination of True Transaction Value:
The respondent determined the value of the goods as Rs.45,60,000 and Rs.45,75,000 based on local market inquiries with merchants, significantly lower than the petitioner's declared value. The petitioner argued that the valuation should be based on the transaction value as per Section 14 of the Customs Act, which considers the price actually paid or payable for export goods where the buyer and seller are not related, and price is the sole consideration. The petitioner claimed that the respondent's valuation lacked proper market inquiry and was based on conjectures and surmises.

4. Compliance with Procedural Requirements:
The respondent argued that the petitioner failed to provide purchase invoices or bills evidencing the purchase of fabrics to support the declared FOB value. The petitioner countered that they had provided all necessary documents, including the BRC (Bank Realization Certificate), as required during the personal hearing on 01.12.2011. The petitioner provided proof of submission of the BRC in their communication dated 05.12.2011. The court noted that the adjudicating authority should consider the BRC and other documents provided by the petitioner to conclude the adjudication process and decide on the provisional release of goods.

Conclusion:
The court directed the respondent to pass appropriate orders in accordance with law and on merits, based on the personal hearing and the production of the BRC. The court emphasized the need for the adjudicating authority to consider all documents and evidence provided by the petitioner to make a final decision on the provisional release of goods. The mandamus sought by the petitioner was ordered, and the respondent was instructed to proceed with the adjudication and release the goods accordingly. No costs were awarded, and the miscellaneous petition was closed.

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