2013 (8) TMI 796 - AT - Customs

Provisional assessment Demand of differential duty Interest u/s 111(m) Confiscation of goods Penalty u/s 114A - Assesse had satisfied all the guidelines prescribed Held that - The question of re-determination of value under Rules 5 to 8 of the Customs Valuation Rules did not arise at all relying upon - Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai 2000 (11) TMI 139 - SUPREME COURT OF INDIA - Order for re-determining the value of the machinery under importation was not sustainable in law -the confiscation of the goods and imposition of fine and penalty were also not sustainable in law - Only in special circumstances particularized in Rule 4(2) of the Customs Valuation Rules, 1988, valuation needs to be done under the Customs Valuation Rules. If these special circumstances are absent, it is mandatory for the Customs to accept the price actually paid or payable for the goods in the particular transaction; conversely, if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules Decided in favor of assesse.

Issues Involved:
1. Valuation of imported goods
2. Rejection of transaction value
3. Basis for re-determination of value
4. Confiscation of goods
5. Imposition of fine and penalty
6. Applicability of Section 28 of the Customs Act
7. Role of expert reports and certificates

Detailed Analysis:

1. Valuation of Imported Goods:
The appellant imported a second-hand Nylon/Polyester Filament Yarn Plant and declared the value as Rs. 9,14,05,204/-. The goods were examined and found to consist of 18 lines of machinery, with plate markings indicating the year of manufacture as 1994. The initial valuation by the customs expert group suggested a value of Rs. 18 Crore, based on similar imports by M/s. Hindustan Pipe Udyog in 1991. However, the Special Intelligence and Investigation Wing later sought values from M/s. Saurer India Pvt. Ltd., which suggested a higher valuation after depreciation.

2. Rejection of Transaction Value:
The appellant argued that the transaction value declared was based on genuine documents, including a pre-shipment inspection certificate by M/s. Alex Stewart (Assayers) Inc., which certified the purchase price as fair and reasonable. The department rejected this transaction value, relying instead on historical data from 1991 and indicative prices from M/s. Saurer India Pvt. Ltd.

3. Basis for Re-determination of Value:
The re-determination of value was based on imports by M/s. Hindustan Pipe Udyog in 1991, which the appellant argued were not contemporaneous and lacked details such as the make, model, and condition of the machinery. The adjudicating authority used Rule 8 of the Customs Valuation Rules, citing the inapplicability of Rules 5 to 7. However, the tribunal found this approach inconsistent, as the comparison was not contemporaneous and lacked necessary adjustments.

4. Confiscation of Goods:
The show-cause notice proposed confiscation of the goods under Section 111(m) of the Customs Act, alleging mis-declaration of value. The tribunal found no evidence of mis-declaration or under-valuation by the appellant, as the transaction value was supported by genuine documents and a Chartered Engineer's certificate.

5. Imposition of Fine and Penalty:
A fine of Rs. 2 Crore and a penalty equal to the duty (Rs. 5,46,71,434/-) were imposed under Section 114A of the Customs Act. The tribunal held that since the re-determination of value was not sustainable, the confiscation and penalties were also not justified.

6. Applicability of Section 28 of the Customs Act:
The appellant argued that the demand under Section 28 was not sustainable as the goods were provisionally assessed and not finally assessed. The tribunal agreed, citing the Supreme Court's judgment in Commissioner of Central Excise & Customs v. ITC, which held that proceedings under Section 11A (analogous to Section 28) cannot be initiated without completing the assessment proceedings.

7. Role of Expert Reports and Certificates:
The tribunal noted that the department's reliance on an in-house expert panel, without independent experts, was insufficient. The appellant's Chartered Engineer's certificate, which complied with the guidelines issued by the C.B.E. & C., should have been given due consideration. The tribunal emphasized that the department failed to provide cogent reasons for rejecting the transaction value and did not gather evidence of contemporaneous imports at higher prices.

Conclusion:
The tribunal set aside the impugned order, holding that the re-determination of value, confiscation of goods, and imposition of fine and penalty were not sustainable in law. The appeal was allowed with consequential relief.

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