2018 (5) TMI 1858 - AT - Customs

Valuation of imported goods - Heavy Metal Scrap (HMS) - enhancement of value - no comparable contemporaneous imports showing import of identical goods at a higher value has been provided - Held that - On the basis of these documentary evidence it is clear that the goods imported by the appellants were Heavy Melting Scrap. The revenue did not adduce any evidence to support the allegation that the goods is not Heavy Melting Scrap but an article of steel. It may be possible that the goods appear to be article of steel but if it is not usable and the same has been used as Melting Scrap by the appellant as evidenced by the end-use certificate, merely because the scrap is in the form of used article of steel it is not sufficient to deny the classification as Heavy Melting Scrap. The revenue has arbitrarily enhanced the revenue from 600 to 700 only on the ground that the goods imported is not Heavy Melting Scrap. Neither any contemporaneous import has been relied upon nor any expert opinion from any technical expert was obtained - the revenue has decided the entire matter on assumption and presumption basis which is not permitted in law - appeal allowed - decided in favor of appellant.

Summary

Issues: Classification of imported goods as Heavy Metal Scrap, valuation of the goods, confiscation under Customs Act, 1962, enhancement of value without proper evidence.

Classification of Imported Goods:
The appellant declared Heavy Metal Scrap (HMS) under CTH 7204 49 00, but upon examination, the goods were found to be other articles of iron and steel classified under CTH 7318 29 00. The appellant argued that the goods were correctly classifiable as Heavy Metal Scrap under CTH 1704 49 00, supported by documents like commercial invoice and pre-shipment inspection certificate. The Tribunal noted that all documents described the goods as Heavy Melting Scrap, and the end-use certificate confirmed the use of the imported material in the manufacture of the final product. The revenue failed to provide evidence contradicting this classification, leading the Tribunal to conclude that the goods were indeed Heavy Melting Scrap, overturning the lower authorities' decision.

Valuation of Goods and Confiscation:
The appellant valued the goods at US $600/MT, but the revenue arbitrarily enhanced the value to US $700/MT without substantial evidence, solely based on the assumption that the goods were not Heavy Melting Scrap. The Tribunal criticized this approach, highlighting the lack of contemporaneous imports or expert opinions to support the valuation increase. As a result, the Tribunal found the revenue's decision to be arbitrary and based on presumption, not permissible under the law. Consequently, the impugned order confiscating the goods under Section 111(m) of the Customs Act, 1962, with the imposition of fines and penalties, was set aside, and the appeal was allowed.

Enhancement of Value without Proper Evidence:
The Tribunal emphasized that the revenue's decision to enhance the value of the goods without concrete evidence or expert opinions was unjustified. The lack of supporting documentation or expert analysis rendered the revenue's valuation increase purely speculative and not in accordance with legal standards. By failing to provide any substantial basis for the valuation enhancement, the revenue's actions were deemed arbitrary and not permissible under the law. Consequently, the Tribunal overturned the decision based on assumption and presumption, underscoring the necessity for concrete evidence and expert opinions in valuation disputes to ensure fairness and adherence to legal principles.