2013 (9) TMI 704 - AT - Customs

Demand - Valuation of goods - rejection of value - Held that - declared transaction value can be rejected only if the conditions for accepting the declared transaction value as mentioned under sub-rule (2) of Rule 4 of the Valuation rules are not satisfied or in terms of the provisions of the Rule 12 of the Valuation Rules, the proper officer has reasons to believe that the declared transaction value is not acceptable and in this regard, an order has been passed by following the prescribed procedure. In this case, the impugned order does not discuss as to why the declared transaction value is not acceptable in view of the provisions of sub-rule (2) of Rule 4 of the Valuation Rules and whether there are doubting any valid goods for doubting the declared value. The basis for rejecting the value in the impugned order that the declared value is less than the average price of the raw materials - plastic, glass, metals, etc, is totally incorrect, as the prices of these raw materials in India had been adopted, while the goods have been imported from China. In any case, even if the declared transaction value is rejected, the same has to be determined by sequentially applying under Rule 5 to 8 of the Valuation Rules and the assessing officer cannot jump directly to Rule 7. Even in respect of the Rule 7 also, which provides for valuation of the goods based on the wholesale price of the similar goods or like goods in India imported by other importers, the impugned order does not discuss as to who that importer is. There is no mention in the impugned order as to whether the contemporaneous import of like goods or similar goods in comparable quantity at the prices proposed in the show cause notice has been noticed. In view of this, we hold that the impugned order upholding the rejection of the transaction value and raising the same to Rs.7,18,890/- is not sustainable. For the same reason, the confiscation of the goods under Section 111(m) and imposition of penalty under Section 112 on this count is not sustainable - Decided in favour of assessee. Regarding confiscation - Held that - the question of confiscation of FSL bulbs and Halogen bulbs under Section 111(d) has to be decided only after giving a clear finding as to whether these goods were imported in pre-packaged form so as to attract the provisions of Note 5 (e) of the General Note of Foreign Trade Policy - matter remanded back on the issue of confiscation.

Summary

Issues: Valuation of imported goods, rejection of declared transaction value, confiscation of goods under Section 111(d) and 111(m), penalty imposition, appeal against penalty.

Valuation of Imported Goods:
The appellant imported a consignment declared as "lighting fixtures complete fitting" but faced issues during examination regarding the affixing of retail sale prices on certain items and the correctness of declared value. The appellant's proprietor initially agreed to determine the value under Rule 7 of the Customs Valuation Rules based on the wholesale market price in India. The Joint Commissioner enhanced the assessable value to Rs.7,18,890/- and confirmed the demand for differential duty. The Commissioner (Appeals) dismissed the appeal but set aside the penalty on the proprietor. The appellant challenged this decision.

Rejection of Declared Transaction Value:
The appellant argued that the rejection of the declared transaction value was incorrect as the basis for rejection was flawed. The assessing officer had directly applied Rule 7 without sequentially applying Rule 5 to 8. The impugned order did not discuss why the declared value was unacceptable as per the Valuation Rules. The Tribunal held that the rejection of the transaction value and the subsequent valuation were not sustainable due to procedural errors and lack of proper assessment.

Confiscation of Goods under Section 111(d) and 111(m):
The impugned order had directed confiscation of goods under Section 111(d) and 111(m) based on mis-declaration of value and failure to affix maximum retail sale prices. However, the Tribunal found discrepancies in the application of the law regarding confiscation. The issue of confiscation under Section 111(d) for FSL bulbs and Halogen bulbs was remanded for further adjudication as the nature of the imported goods was not clearly established.

Penalty Imposition and Appeal:
The penalty imposed on the appellant and its proprietor was a subject of contention. The Tribunal ruled that there was no justification for rejecting the declared transaction value and thus no penalty was imposable on the appellant. The matter was remanded for de novo adjudication regarding the confiscation of FSL bulbs and Halogen bulbs under Section 111(d) to determine if the goods were in pre-packaged form as required by the law.

This judgment highlights the importance of proper valuation procedures, adherence to the Customs Valuation Rules, and the need for clear findings before imposing penalties or confiscating goods under relevant sections of the Customs Act.