2015 (9) TMI 1258 - AT - Customs

Determination of market value of the seized goods - applicability of Section 123 - determination of redemption fine - Held that - There is no direction by the Hon ble High Court on the issue of applicability of Section 123 of the Customs Act, 1962 and on the aspect that if the documents furnished by the appellant are in order then the goods should be released. It has been observed by Hon ble High Court that market value of the seized goods has been arbitrarily arrived at by CESTAT. Regarding determination of redemption fine, the same is required to be based on the basis of prevailing market value of the goods. Secondly, redemption fine imposable also has a bearing on the margin of profit (MOP) of the seized goods. Value of seized goods indicated in annexure A dated 17/09/2003 are also basis on the market value prevailing at the time of seizure. However, appellant has furnished certain invoices before the adjudicating authority which also represent the market value of the seized goods. Even if, the documents furnished by the appellant were not considered proper documents to cover the seized goods but the same will also represent the prevailing market price of comparable goods. - Matter remanded back - Decided in favour of assessee.

Summary

Issues:
1. Market value determination of seized goods by CESTAT.
2. Applicability of Section 123 of the Customs Act, 1962.
3. Redemption fine imposition based on prevailing market value.
4. Verification of seized goods' market value by the adjudicating authority.

Analysis:
1. The Hon'ble High Court remanded the case to CESTAT due to the arbitrary determination of market value of seized goods at Rs. 5.00 Lacs, leading to a reduction in the redemption fine. The appellant argued that the goods seized were for repair and purchase from Indian traders, with no indication of foreign origin. The onus was on the appellant to establish non-smuggling, supported by documents provided to the Department. The High Court emphasized examining the case based on the submissions made before the adjudicating authority.

2. The Revenue contended that the issue of confiscation was not decided by the High Court, focusing on the redemption fine's improper imposition by CESTAT. The High Court's observation highlighted discrepancies in the explanation provided by the appellant regarding the seized goods' market value.

3. Upon hearing both sides and reviewing the case records, it was noted that the High Court remanded the case solely on the incorrect market value determination by CESTAT. The determination of the redemption fine should align with the prevailing market value of the goods and consider the margin of profit. The appellant's furnished documents, though not deemed sufficient, represented the market price of comparable goods.

4. The appellant failed to provide a comparable price for the seized goods, necessitating the adjudicating authority to verify and determine the market value at the time of seizure. The case was remanded for the appropriate market value determination, imposition of a reasonable redemption fine, and penalty after granting a personal hearing to the appellant. As a result, the appeal was allowed for remand to the adjudicating authority for further proceedings.