2014 (5) TMI 975 - AT - Customs

Valuation - Mis-declaration of value of goods Sustainability of duty demand on the basis of upward revision of assessable value Whether the prices of the raw materials mentioned are the price in India or the prices in China and if so, what is the source for this information and also what is the cost of manufacture of these items in China - Held that - Goods on examination were found to be as per declaration - The main basis for not accepting the declared value is that the per kg. price of the goods is less than the average price of the raw materials - plastic, glass, steel, etc. - For making the allegation of under-valuation and rejecting the declared transaction value, the department cannot adopt the price of raw materials of the goods in India and allege that the declared price of the goods is less than the average price of the raw materials - The price of the raw materials and manufacturing cost for this purpose has to be of the country in which the goods had been manufactured - Therefore, the very basis for rejecting the declared transaction value is not sustainable. This Court do not find any iota of evidence in support of the department s allegation of mis-declaration of value and absolutely no evidence of contemporaneous import of identical or similar goods in comparable quantity at higher price had been produced - Just because the partner of the importer firm agrees for determination of the value under Rule 7 of the Valuation Rules, the department cannot allege that the value has been mis-declared - Moreover, the determination of value under Rule 7 has also been done in a very strange manner, as the department has not mentioned as to which the importer of identical or similar goods had been selling the goods in India at the wholesale price which had been adopted in this case for determination of assessable value under Rule 7 Therefore, there is absolutely no basis for rejecting the declared transaction value and making the allegation of under-valuation against assesse Thus, neither the duty demand on the basis of upward revision of assessable value nor the confiscation of the goods u/s 111(m) for alleged mis-declaration of value of the goods is sustainable. Liability of Confiscation of goods u/s 111(m) - Non affixing of MRP - Section 111(d) r/w Note 5(e) of the General Note of Foreign Trade Policy Whether the goods imported were in bulk package or were in pre-packed form for sale to ultimate consumers - Held that - According to the Note all pre-packaged commodity imported into India shall in particular carry maximum retail sale price at which the commodity in packaged form may be sold to the ultimate consumers - Unless the goods imported were in pre-packaged form meant to sale to the ultimate consumers, the provisions of Note 5(e) r/w Section 11(1) of Foreign Trade Development and Regulation Act, would not be applicable - However, there is no finding of the Commissioner (A) for deciding the question of liability of the imported goods for confiscation u/s 111(d) - The matter is remanded back for de novo adjudication Decided in favour of assesse.

Summary

Issues:
1. Mis-declaration of value in import goods.
2. Confiscation of goods under Section 111(m) of Customs Act, 1962.
3. Confiscation of goods under Section 111(d) of Customs Act, 1962.
4. Imposition of penalty on the importer firm and its partners.

Mis-declaration of Value in Import Goods:
The appellant firm imported goods declared as lighting fixtures from Hongkong. The department alleged mis-declaration of value as the declared price was lower than the raw material prices. The Joint Commissioner rejected the declared value and raised it to Rs.9,03,537 under Customs Valuation Rules, 1988. The Commissioner (Appeals) upheld this decision. The appellant contested, stating no mis-declaration occurred, and the declared value was justified. The Tribunal found no evidence supporting mis-declaration, questioning the basis of rejecting the declared value. It highlighted the lack of clarity on raw material prices and manufacturing costs in the country of origin. The Tribunal concluded that the rejection of declared value was unjustified.

Confiscation of Goods under Section 111(m) of Customs Act, 1962:
The department confiscated the goods under Section 111(m) due to alleged mis-declaration of value. The Tribunal, finding no mis-declaration, held the confiscation under this section unsustainable. It emphasized the absence of evidence for contemporaneous imports at higher prices. The Tribunal ruled against the duty demand based on the revised value and the confiscation under Section 111(m).

Confiscation of Goods under Section 111(d) of Customs Act, 1962:
The goods were also confiscated under Section 111(d) for not affixing maximum retail sale price (MRP). The Tribunal noted the lack of clarity on whether the goods were in pre-packaged form for sale to consumers, a prerequisite for MRP affixing. As the impugned order lacked findings on this aspect, the Tribunal remanded the matter for further adjudication to determine the liability for confiscation under Section 111(d).

Imposition of Penalty on the Importer Firm and Its Partners:
Penalties were imposed on the importer firm and its partners under Section 112 of the Customs Act, 1962. The appellant challenged these penalties. The Tribunal, ruling in favor of the appellant on mis-declaration issues, found no justification for the penalties based on the rejected grounds. It held the penalties unsustainable in light of the rejection of mis-declaration allegations.

In conclusion, the Tribunal set aside the impugned order and remanded the matter for a fresh decision solely on the question of determining the liability for confiscation under Section 111(d) concerning the MRP issue.