2016 (6) TMI 397 - AT - Customs

Import of old used worn clothing - Legality of valuation of imported goods - declared value is much lower than the price fixed by the Commissionerate vide Internal instruction and Alert Circular dated 17.9.2008 issued by DRI - Held that - the method adopted by the original authority for fixing the value of imported goods is not in accordance with the provisions of Valuation Rules. There is a self-contradiction in the finding by the original authority. While he rejects the application of Rules 4 to 8 as no comparable consignment of identical or similar goods are available, he takes general value as per NIDB data without establishing whether the said data is relevant in respect of identical or similar goods. As Revenue could not produce the details of NIDB data, it is apparent from the findings of the original authority that such general application of value of other imports is not legally tenable. There is no cogent reason for rejection of transaction value for these imports. Quantum of redemption fine and penalty - Held that - in view of our finding on the valuation of the imported goods it is found that redemption fine and penalty is sustainable only with reference to violation of Foreign Trade Policy. This is not being contested by the appellant also. Considering the overall facts and circumstances we find that redemption fine imposable on these goods can be fixed at 15% of the declared value. Similarly, the penalty imposed under Section 112(a) of the Custom Act, 1962 can be reduced and fixed at 10% of the declared value. - Decided partly in favour of appellant

Summary

Issues: Valuation of imported goods and quantum of redemption fine and penalty

Valuation of Imported Goods:
The case involved the importation of "old used worn clothing" without a valid import license, leading to proceedings initiated by the Department. The Commissioner of Custom passed impugned orders based on discrepancies in valuation and violation of Foreign Trade Policy. The appellants argued that the valuation did not comply with Custom Valuation Rules, 2007, and the guidelines used lacked a legal basis. They contended that the declared value should be rejected under Rule 12 of the Valuation Rules before applying Rule 9. The Revenue opposed, stating the valuation was based on physical examination and market guidelines. The Tribunal found the Commissioner's valuation methodology flawed, as it did not follow the Valuation Rules properly. It noted a lack of justification for rejecting the declared value and inconsistency in applying Rules 4 to 8 and using general values without relevant data. Citing precedent, the Tribunal held that Rule 12 requires a sequential determination of value if the declared value is doubted. Consequently, the impugned orders were deemed unsustainable regarding valuation, leading to the setting aside of that portion of the orders.

Quantum of Redemption Fine and Penalty:
Regarding the redemption fine and penalty, the Tribunal found them sustainable only concerning the violation of the Foreign Trade Policy, which was not contested by the appellant. The redemption fine was reduced to 15% of the declared value, and the penalty under Section 112(a) of the Custom Act, 1962, was reduced to 10% of the declared value. The appeals were allowed concerning the valuation of goods and partly allowed concerning the redemption fine and penalty, with modifications as ordered.