2014 (9) TMI 24 - SC - Customs

Valuation - enhancing value based on computer printouts - import of Cyanuric Chloride - revenue allege that cost of the unit price in each one of those imports was US 1950/- PMT(CIF) as against the value declared by the appellants of US 500/- PMT - Held that - Whether Cyanuric Chloride was imported at the relevant point of time by others in comparable transactions, i.e., is a sale at the same commercial level and in substantially the same quantity etc. is a matter to be considered on the examination of the material relied upon by the Revenue. A reasonable opportunity must be given to the appellant to demonstrate (if at all) that the transactions relied upon by the Revenue are not comparable transactions. In the absence of any material produced by the Revenue in proof of the alleged comparable imports at a higher value, the impugned order which eventually confirmed the original order of assessment by the Assistant Commissioner of Customs dated 31.3.2001 cannot be sustained for two reasons (1) the mere existence of an alleged computer printout is not proof of the existence of comparable imports; (2) assuming such a printout exists and the contents thereof are true, the question still remains whether the transaction evidenced by the said computer printout are comparable to the transaction of the appellant. The appellant will have to be given reasonable opportunity to establish (if he can) that the transactions are not comparable. - Decided in favor of assessee.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Determination of the transaction value.
3. Non-supply of crucial evidence to the appellants.
4. Compliance with principles of natural justice.
5. Legality of the assessment and demand of customs duty.

Detailed Analysis:

Issue 1: Valuation of Imported Goods
The appellants imported consignments of "2-4-6 Tricloro 1-3-5 Triazine" from China, declared at US $ 500/- PMT. The goods were provisionally assessed and cleared. A show cause notice was later issued by the Commissioner of Customs, Gujarat, proposing to finalize the Bills of Entry at a value of US $ 1860.00 PMT CIF, recover differential duty, confiscate goods under Section 111(m) of the Customs Act, 1962, impose penalties under Section 114A/112(a), and recover interest under Section 28AB.

Issue 2: Determination of the Transaction Value
Section 14 of the Customs Act mandates that the value of imported goods is the price at which such goods are ordinarily sold or offered for sale in the course of international trade. Rule 3(i) of the Customs Valuation (Determination of the Price of Imported Goods) Rules, 1988, states that the value of imported goods shall be the transaction value, i.e., the price actually paid or payable for the goods when sold for export to India, adjusted per Rule 9. If the transaction value cannot be determined, Rule 3(ii) provides for sequential determination through Rules 5 to 8.

Issue 3: Non-Supply of Crucial Evidence to the Appellants
The appellants contended that the computer printout, which formed the basis of the show cause notice, was not supplied to them, denying them the opportunity to verify the alleged comparable transactions. The court noted that the mere existence of a computer printout is not proof of comparable imports, and the appellants must be given a reasonable opportunity to dispute this evidence.

Issue 4: Compliance with Principles of Natural Justice
The court emphasized that the principles of natural justice were violated as the appellants were not provided with the crucial evidence (computer printout) relied upon by the Revenue. This denial of evidence prevented the appellants from challenging the comparability of the transactions.

Issue 5: Legality of the Assessment and Demand of Customs Duty
The court found that the assessment and demand of customs duty based on a higher valuation without supplying the necessary evidence to the appellants were legally unsustainable. The original assessment order and the subsequent orders confirming it were set aside. However, the Revenue was allowed to proceed against the appellants per the show cause notice, provided they comply with the legal requirements and principles of natural justice.

Conclusion:
The appeals were allowed, and the impugned order and the original assessment order were set aside. The Revenue was permitted to proceed against the appellants in accordance with the law, ensuring compliance with the principles of natural justice by providing the necessary evidence to the appellants.