2015 (12) TMI 646 - AT - Customs

Confiscation of goods - Enhancement of value - Held that - Appellant have taken a categorical stand that the goods were purchased on stock lot basis and at the transaction value reflected in the invoice. This fact is clear from the fact that the different cosmetic goods like Air freshners, lipsticks, perfumes, eye liner, mascara, etc. were of various brand names like Yodernia, Revelon, Dove, Lamani, Loreal, etc. Further, we also find that the Revenue has not adopted the Customs Valuation Rules for enhancing the value and instead have gone to do the market survey in India. Such market inquiries reflected the sale value of the products in India and as per the settled law cannot be adopted as the basis for enhancing the value or the imported goods. We also note that the cosmetics carry an expiry date and it is a matter of common knowledge that the same are disposed of by the sellers at a very low cost if the expiry is about to be reached. In any case, we find that the Revenue having not adopted the Valuation Rules sequential-wise and having not produced any evidence of contemporaneous nature to reflect upon the lower value of the imported goods, the adoption of market price cannot be held to be a method in accordance with law. As such, we find no justification in the impugned orders passed by the lower authorities. Accordingly, both the impugned orders are set aside. - Decided in favour of assessee.

Summary

Issues: Valuation of imported cosmetics, application of Customs Valuation Rules, market survey impact on value determination, confiscation of goods, imposition of penalties

In this case, the appellant imported cosmetics from China and declared the transaction value as the assessable value in the bill of entry. The assessing officers loaded the value by 50%, which was accepted by the importer for duty payment. Subsequently, a 100% examination revealed branded goods of various brand names, leading to initiation of proceedings. The value was enhanced from Rs. 27.68 lakhs to Rs. 44.29 lakhs, with goods confiscated, redemption fine imposed, duty confirmed, and penalties levied on the appellant and the Director.

The appellant contended that the goods were purchased on a stock lot basis at the invoice value, comprising various branded cosmetic items. The Revenue did not follow Customs Valuation Rules but relied on market surveys in India to determine the value. However, market inquiries cannot be the basis for enhancing imported goods' value, especially when the goods have expiry dates and are typically sold at low costs nearing expiration. The Revenue's failure to follow Valuation Rules sequentially and lack of contemporaneous evidence to support the lower value of imported goods rendered the market price adoption legally unjustified. Consequently, the impugned orders were set aside, and the appeals allowed with relief to the appellant.