2016 (3) TMI 888 - AT - Customs

Demand of differential duty - Under-valuation and mis-declaration of goods - Transaction value rejected of imported ball valves and check valves - Held that - the methodology adopted by the adjudicating authority for redetermination of the value of the imported consignments is totally on presumption and surmises. The adjudicating authority has come to a conclusion that imported ball valves contained brass content of 76% and iron content of 24%, zinc content in zinc ball valves is of 65% and iron content is of 35%. In the entire case records nothing found anything which indicates that the content as recorded by the adjudicating authority is supported by any evidence. Therefore, this finding of the adjudicating authority is not in consonance of the law. There is nothing on record to indicate that samples were drawn from the consignment and sent for testing to Dy. Chief Chemist and Examiner of the Department to ascertain the contents of brass and zinc. It is also surprising to note that the adjudicating authority has relied upon only the statement of Shri S.K. Dhawan to hold that the valves were having brass and zinc content as mentioned. The adjudicating authority has rejected the transaction value as filed by the appellant without any reasoning or finding. The submission of appellant importer that they had submitted details of contemporaneous imports of the same goods and the value seems to be more or less is same as declared by the appellant importer is not addressed to and also the adjudicating authority has not recorded a single sentence of finding on such contemporaneous import detail given by the appellant. Also the appellant importer had submitted details of contemporaneous imports of the same goods and the value seems to be more or less is same as declared by the appellant importer is not addressed to and also the adjudicating authority has not recorded a single sentence of finding on such contemporaneous import detail given by the appellant. The adjudicating authority has come to a conclusion that there was under-valuation as the appellant importer did not produce the manufacturer s invoice nor catalogue which is totally not in consonance with the law, as these consignments were cleared by the same department when the bills of entries were filed and the documents as produced were accepted as correct at that time. If the authorities had entertained any doubt, they should have called for these documents at the time of clearance of the consignments. Also the adjudicating authority has recorded that the declared value were not actual transaction value paid or payable by the importer; are incorrect findings as they are not evidenced in any form; if the adjudicating authority has to come to such a conclusion in the impugned order there has to be a findings that the appellant importer had paid additional amount to the exporters in some way or other with proper evidence. In the absence of any evidence it is not possible to accept the statement that the transaction value and the declared value were not actual transaction value. Therefore, Demand of differential duty can not be raised and the impugned orders are set aside as unsustainable. - Decided in favour of appellant with consequential relief

Summary

Issues involved:
Valuation of imported goods, under-valuation of consignments, rejection of transaction value, reliance on LME price, mis-declaration, contemporaneous imports, manufacturer's invoices, confiscation of goods, differential duty, penalties.

Analysis:

Valuation of Imported Goods:
The case involved the valuation of ball valves and check valves imported by the appellants during a specific period. The adjudicating authority rejected the transaction value provided by the appellant importers, citing reasons such as prices being lower than LME prices of valves and scrap, and statements indicating the content of brass and zinc in the valves. The authority also mentioned the opinion of the Central Excise Divisional Deputy Commissioner regarding value addition on raw materials. However, the methodology used for redetermination of value was based on presumptions and lacked concrete evidence, especially regarding the content of the imported goods.

Under-Valuation and Mis-Declaration:
The adjudicating authority concluded that there was under-valuation due to the lack of manufacturer invoices and catalogues from the trading house. However, this decision was deemed flawed as the authorities had accepted the documents during clearance, and no evidence was presented to prove that the declared value was not the actual transaction value. Moreover, the rejection of transaction value without considering contemporaneous imports provided by the appellant importers was considered unjustified.

Confiscation of Goods and Differential Duty:
The adjudicating authority upheld the liability for confiscation of the imported goods, confirmed the demand for differential duty, and imposed penalties. The decision was based on the perceived under-valuation and mis-declaration of the goods. However, the appellate tribunal found the reasoning and findings of the authority to be flawed on multiple grounds, leading to the setting aside of the impugned orders and allowing the appeals with consequential relief.

Contemporaneous Imports and Legal Precedents:
The tribunal highlighted the importance of considering contemporaneous import details and criticized the adjudicating authority for not addressing the evidence provided by the appellant importers. Legal precedents were cited to support the argument that rejecting transaction value without proper evidence and disregarding contemporaneous imports were against the established rules and principles of valuation under the Customs Act, 1962.

Conclusion:
The appellate tribunal found the impugned orders unsustainable and set them aside, allowing the appeals with consequential relief. The decision was based on the lack of concrete evidence supporting the under-valuation claims, the flawed methodology used for redetermination of value, and the failure to consider contemporaneous import details provided by the appellants. The case highlighted the importance of following established legal principles and evidentiary requirements in matters of valuation and duty imposition related to imported goods.