2014 (1) TMI 478 - AT - Customs

Valuation of goods - Mis declaration of goods - whether the declared transaction value of the goods imported from M/s. Neworb Corporation Limited, Hong Kong, is acceptable or not - Held that - The only reason for rejecting the declared value, as mentioned in show cause notice, is that the declared value is less than the price of raw-material - stainless steel, glass, plastic, etc. In our view this ground mentioned in the show cause notice is absurd, as it is not even mentioned as to whether the price of raw-material mentioned is the price in the country of manufacture or the price in India. No contemporaneous imports of identical or similar goods in comparable quantity at higher price have been cited. Just because in respect of two imports of like goods made by the appellant at JNPT, Nava Sheva, the customs authorities there increased the declared value without passing any reasoned and detailed order, the value of the goods in respect of these consignments can not be rejected. Even the basis of determining the value of the goods under Rule 7 of the Valuation Rules, is incorrect, as the wholesale prices of the goods quoted by M/s. Orma Lights are sought to be adopted for determining the assessable value in this case, but as observed by the Commissioner in the finding portion of the impugned order, Sh. Manoj Gupta, Proprietor of M/s. Orma Lights has disowned his signature on the quotation and on verification by forensic expert, Lucknow, the signatures of Sh. Manoj Gupta on the quotations were not found to be his genuine signatures. There is absolutely no justification for rejecting the declared transaction value and as such neither there is any misdeclaration of value nor there is any justification of confiscation of the goods on this account and the duty demand on this basis, confiscation of the goods and imposition of penalty on this basis, is liable to be set aside. As regards the allegation of misdeclaration of description, when except for some un-declared items, other goods are broadly as per declared description, this allegation does not sustain. However, only the items which were not declared at all in the bill of entry, would be liable to confiscation under Section 111(l) - Decided in favour of assessee.

Summary

Issues involved:
1. Determination of the value of imported goods.
2. Allegations of misdeclaration of value and description.
3. Confiscation of goods under Customs Act, 1962.
4. Imposition of penalties under Section 112 of Customs Act, 1962.
5. Application of Foreign Trade Policy regarding MRP declaration for CFLs.

Issue 1: Determination of the value of imported goods:
The main issue in this case revolved around the acceptance of the declared transaction value of goods imported by the appellant firm. The Customs Valuation Rules, 1988 were applied to determine the value of the imported goods. The appellant argued that the declared value was based on correct transaction value reflected in the invoices and satisfied the conditions for acceptance under Rule 4(2) of the Valuation Rules. The Department sought to reject the declared value based on the price of raw materials, which was deemed as an inadequate reason. The Tribunal found that there was no justification for rejecting the declared transaction value and held that the value determination based on wholesale prices quoted by a certain entity was incorrect due to forged quotations. Consequently, the duty demand, confiscation of goods, and penalties based on the rejection of declared value were set aside.

Issue 2: Allegations of misdeclaration of value and description:
The investigating officers alleged that the value of the imported goods was under-declared and misdescribed, leading to short payment of duty. However, the Tribunal found that there was no evidence of misdeclaration of value or description warranting confiscation of the goods. It was noted that apart from some undeclared items, the goods broadly matched the declared description. The Tribunal upheld that only the items not declared at all in the bill of entry would be liable for confiscation under Section 111(l).

Issue 3: Confiscation of goods under Customs Act, 1962:
The show cause notice issued to the appellants included provisions for confiscation of imported goods under Section 111(d) & (m) of the Customs Act, 1962. The Commissioner's Order-in-Original confirmed the duty demand, ordered confiscation of goods, and imposed penalties under Section 112. However, the Tribunal set aside the duty demand, confiscation, and penalties on the basis of alleged misdeclaration of description and value, except for the confiscation of undeclared goods under Section 111(l).

Issue 4: Imposition of penalties under Section 112 of Customs Act, 1962:
Penalties were imposed on the importer firm and its partners under Section 112 of the Customs Act, 1962. The Tribunal found that as there was no misdeclaration of value and description of the goods, the imposition of penalties on this account was not sustainable. Penalties were upheld only for the confiscation of undeclared goods under Section 111(l).

Issue 5: Application of Foreign Trade Policy regarding MRP declaration for CFLs:
The matter of confiscation of CFLs for not declaring the Maximum Retail Price (MRP) was raised under Section 111(d) of the Customs Act. The Tribunal noted that there was no finding in the impugned order regarding whether the CFLs were imported in a pre-packaged form meant for sale to ultimate consumers. As per the Foreign Trade Policy, MRP declaration requirements apply only to pre-packaged commodities for sale to ultimate consumers. The Tribunal remanded the matter to the Original Adjudicating Authority for a fresh decision on this specific point.

In conclusion, the Tribunal set aside the duty demand, confiscation, and penalties related to misdeclaration of value and description, except for confiscation of undeclared goods. The matter of confiscation of CFLs for not declaring MRP was remanded for further consideration. The appeals were disposed of accordingly.