2018 (12) TMI 1923 - HC - Customs

Valuation of imported goods - Star Aniseeds - undervaluation of goods - rejection of declared value based on contemporaneous value - invocation of principle of sampling - demand of differential duty alongwith interest and penalty - HELD THAT - The petitioner herein had imported vide as many as 59 bills of entry. The authority had some material to doubt the truth or accuracy of two of the transactions. The respondent chose to invoke the principle of sampling and determine all the 59 transactions on this basis. This is clearly not correct. The imported goods are agricultural commodities. It may not be anybody's case that the value of the goods prevailing in one month would be the same over a period also. Therefore, on the strength of some materials obtained in respect of a few transactions, the respondent could not have determined the value of the remaining 57 transactions also. Only in Statistics and Psephology, the sampling methods are adopted. In matters having serious civil and penal consequences, such sampling methods should not be adopted. There are no hesitation to hold that the approach adopted by the respondent does not conform to the statutory procedure laid down in the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. As already pointed out as per Rule 12, before passing an order of rejection, the authority must first ask the importer for further information. In this case, there is nothing on record to show that this Step-1 was performed. Once the declared value is rejected, the next step is to proceed sequentially in accordance with Rules 4 to 9. The respondent did not do so. As already shown, the respondent by not furnishing the authenticated copies of the documents with true translation has committed gross violation of the principles of natural justice. The matter is remitted to the file of the respondent to proceed afresh in accordance with law - petition allowed by way of remand.

Summary

Issues Involved:
1. Undervaluation of imported goods.
2. Violation of principles of natural justice.
3. Adherence to Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
4. Reliance on unauthenticated foreign documents.
5. Procedural lapses in the rejection of declared value.

Issue-wise Detailed Analysis:

1. Undervaluation of Imported Goods:
The petitioner imported "Star Aniseeds" via 59 bills of entry from April 2009 to March 2014. The valuation provided by the petitioner was accepted initially. However, the respondent received information suggesting undervaluation. A comparison revealed that the petitioner declared values between ?62.86 and ?70.88 per Kg, while another importer declared ?138 per Kg. The respondent concluded that the import price should have been above ?130.

2. Violation of Principles of Natural Justice:
The petitioner requested translated and authenticated copies of documents relied upon in the show cause notice, which were in a foreign language (Chinese). The respondent declined this request. The petitioner also sought to cross-examine officers involved in the transactions, which was also denied. The court emphasized that principles of natural justice require that the petitioner be provided with translated copies of documents and the opportunity to cross-examine relevant officers.

3. Adherence to Customs Valuation (Determination of Value of Imported Goods) Rules, 2007:
The court noted that the procedure adopted by the respondent did not align with the Customs Valuation Rules, 2007. Rule 12 outlines a specific procedure for rejecting declared value, including steps for requesting further information from the importer and providing a reasonable opportunity to be heard. The respondent failed to follow these steps sequentially and misdirected itself in law by not adhering to the prescribed rules.

4. Reliance on Unauthenticated Foreign Documents:
The court highlighted that the documents relied upon by the respondent were not authenticated as per the DIPLOMATIC AND CONSULAR OFFICERS (OATHS AND FEES) ACT, 1938. The documents were not attested by a Consular officer, making them unauthenticated. The court referenced previous Supreme Court rulings emphasizing that unauthenticated documents should not be relied upon in such proceedings.

5. Procedural Lapses in the Rejection of Declared Value:
The court detailed the procedural lapses, noting that the respondent did not request further information from the petitioner as required by Rule 12. Additionally, the respondent used a sampling method to determine the value of all 59 transactions based on two transactions, which the court found inappropriate for matters with serious civil and penal consequences.

Conclusion:
The court set aside the impugned order, emphasizing the need for adherence to statutory procedures and principles of natural justice. The matter was remitted to the respondent for fresh proceedings in accordance with the law. The writ petition was allowed, and the connected miscellaneous petitions were closed.