2016 (11) TMI 812 - AT - Customs

Rejection of declared value - overvaluation of imported goods - beverages/carbonated soft drinks - SVB - Held that - Settled law requires acceptance of declared value as transaction value under rule 4 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and rule 3 permits, in the event of sufficient ground for rejection of declared value, adoption of revised value but in accordance with sequential application of rules 5 to 8. The nature of relationship between importer and supplier have not been adduced and, not unnaturally, the manner in which price was influenced has not been elaborated upon. There does not appear to be any basis for the fixation of enhancement by twenty per cent over the declared value. Indeed, the failure of application of mind on the part of the two lower authorities can be gauged from their inability or unwillingness to identify the goods that were being sought to be re-valued. There is an omnibus reference to rule 9 in the order of original authority which appears to have been concurred with by the first appellate authority without comprehending the oddity of an enhancement apparently under rule 8 with reference to rule 9 which, as even the most casual perusal of the Rules would demonstrate, as applicable only when the declared value is not rejected but is adjusted for the specific circumstances enumerated therein - The two proceedings leading to this appeal before us is a pathetic display of arbitrariness and ignorance. Needless to say, it fails to meet the most basic requirement of law and deserves to be set aside - appeal allowed.

Summary

Issues:
1. Loading of imports by 20% over the declared value upheld by Commissioner of Customs.
2. Appellant's claim of not receiving a show cause notice and lack of basis for the 20% enhancement.
3. Dispute regarding the relationship between importer and supplier influencing the price.
4. Failure of the lower authorities to follow Customs Valuation Rules sequentially.
5. Allegations of arbitrariness and ignorance in the proceedings.

Analysis:
1. The case involves M/s Shalin Enterprise, a partnership firm, challenging the loading of imports by 20% over the declared value, which was upheld by the Commissioner of Customs. The appellant sought to set aside the impugned order based on procedural irregularities and lack of evidence supporting the enhancement.

2. The appellant argued that they were not issued a show cause notice and were unable to respond to the requisitions made by the original authority. They contended that the 20% enhancement lacked a valid basis, emphasizing that they were not related to the supplier and the declared value reflected the actual transaction value.

3. The dispute centered around the alleged relationship between the importer and the supplier influencing the price. While the lower authorities asserted the existence of a relationship based on the bill of entry declaration, the appellate tribunal found no concrete evidence or description of the nature of the relationship. The tribunal highlighted the importer's obligation to respond to queries in related party transactions affecting the assessable value.

4. The tribunal criticized the failure of the lower authorities to follow Customs Valuation Rules sequentially. They noted that the rejection of declared value should be based on specific circumstances enumerated in the rules, with a clear identification of the goods being re-valued. The tribunal found the application of rules by the lower authorities arbitrary and inconsistent with the valuation scheme.

5. Ultimately, the tribunal concluded that the proceedings displayed arbitrariness and ignorance, failing to meet the basic requirements of the law. As a result, the appeal was allowed, and any consequential relief was granted to the appellant. The judgment highlighted the importance of adherence to procedural fairness and legal principles in customs valuation disputes.