2008 (4) TMI 91 - AT - Customs

Imported Patchouli Oil - On the basis of market inquiry conducted in India, the original authority enhanced the value and held that the same has been arrived under Rule 5 of the Customs Valuation Rules differential duty imposed & goods were confiscated held that Rule 5 is applicable only on basis of contemporaneous goods - invocation of Rule 5 for fixation of assessable value based on local market inquiry by the original authority, in not legal

Summary

Issues:
- Appeal against order of Commissioner (Appeals) dated 30-12-2004 regarding enhancement of value of imported Patchouli Oil
- Applicability of Rule 5 of the Customs Valuation Rules, 1988 for value enhancement
- Confiscation of goods, redemption fine, and penalty imposed by original authority
- Decision of Commissioner (Appeals) on legality of value enhancement method
- Cross Objection No.115 of 2005 connected to the appeal

Analysis:
The appeal before the Appellate Tribunal CESTAT, New Delhi involved a dispute over the enhancement of the value of imported Patchouli Oil. The Customs authorities conducted a market inquiry and increased the value from Rs. 117/- per kg to Rs. 230/- per kg, invoking Rule 5 of the Customs Valuation Rules, 1988. This led to the confirmation of a differential duty, confiscation of goods, a redemption fine of Rs. 1,00,000/-, and a penalty of Rs. 60,000/-. The Commissioner (Appeals) overturned this decision, deeming the method of value enhancement as illegal.

During the hearing, the Department's representative argued that the market inquiry was conducted in the presence of the Customs House Agent (CHA), and the value was undisputed, hence a detailed order was unnecessary. The Department contended that the appeal to the Commissioner (Appeals) was an afterthought. However, the Tribunal found the invocation of Rule 5 for value fixation based on local market inquiry to be unjustified. Rule 5 is applicable when comparing values of identical imported goods, considering factors like commercial level and import quantities. Therefore, the Tribunal upheld the Commissioner (Appeals)' decision as reasonable.

The Tribunal also noted that the cross-objection essentially supported the Commissioner (Appeals)' order. Consequently, the Department's appeal was rejected, and the cross-objection was disposed of. The judgment was delivered on 8-4-2008 by Member (T) M. Veeraiyan, in the presence of President S. N. Jha.