2017 (1) TMI 1305 - AT - Customs

Valuation - Levy of CVD on MRP based value - import of induction cookers in SKD - goods are subject to quality testing - Whether the enhancement of value of goods imported under the three bills of entry was in accordance with Customs Valuation (Determination of Price of Imported Goods) Rules, 2007? - Held that - reliance placed in the case of EICHER TRACTORS LTD. Versus COMMISSIONER OF CUSTOMS, MUMBAI 2000 (11) TMI 139 - SUPREME COURT OF INDIA , where it was held that if the transaction value cannot be determined u/r 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. Whether the imported goods are induction cookers and, if they are, whether the provisions of section 4A of Central Excise Act, 1944 will be applicable as to render the assessment of additional duty of customs to be levied on the maximum retail price ? - Held that - the induction cookers are imported as parts and, being electrical consumer goods, are required to be subject to testing before they can be marketed. Hence, the goods are, as yet, not subject to the provisions of Legal Metrology Act, 2009 in its imported form - When the imported products are not permitted for sale to the consumer as such without mandatory testing, the classification under Customs Tariff Act, 1975 cannot provide the escapement from Legal Metrology Act, 2009. Goods that are not subject to the prescription of declaring the maximum retail price under Legal Metrology Act, 2009 do not come within the ambit of section 4A of Central Excise Act, 1944. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Undervaluation and differential duty on import of 'induction cookers'
2. Misdeclaration of imports as 'spare of induction cookers' to evade duty
3. Confiscation of goods and penalty imposition under Customs Act, 1962
4. Determination of enhanced value of imported goods under Customs Valuation Rules
5. Applicability of Central Excise Act, 1944 on 'induction cookers'

Issue 1: Undervaluation and differential duty on import of 'induction cookers'
The appellant challenged the order-in-appeal related to the undervaluation of 'induction cookers' imports, leading to a confirmed differential duty. The goods were found to be undervalued and subjected to confiscation and penalties under the Customs Act, 1962. The first appellate authority upheld the order, leading to the appeals by the appellant and another individual.

Issue 2: Misdeclaration of imports to evade duty
The appellant was alleged to have misdeclared imports as 'spare of induction cookers' to evade duty assessment based on 'maximum retail price' and undervalued the imports. The examination of one consignment revealed discrepancies in the declared quantity, leading to the seizure and inclusion of other consignments in the show cause notice.

Issue 3: Confiscation and penalties under Customs Act, 1962
The confiscation of goods and imposition of penalties under sections 111(m), 112(a), and 114A of the Customs Act, 1962 were challenged in the appeals. The appellant contested the penalties imposed on them and another individual, which were confirmed by the first appellate authority.

Issue 4: Determination of enhanced value under Customs Valuation Rules
The determination of enhanced value of imported goods under the Customs Valuation Rules was a key issue. The authorities rejected the declared value, resorting to Rule 12 of the Customs Valuation Rules, 2007. However, the process lacked the sequential application of valuation rules, as mandated by law, leading to the set aside of the enhancement of assessable value.

Issue 5: Applicability of Central Excise Act, 1944 on 'induction cookers'
The classification of the imported goods as 'induction cookers' under the Central Excise Act, 1944 was disputed. The authorities found the goods to be 'induction cookers' subject to additional duty under section 4A of the Act. However, the Tribunal highlighted the limitations of the classification rules and the specific objective of determining duty rates under the Customs Tariff Act, 1975.

In conclusion, the Tribunal held that the levy of differential duty, confiscation, and penalties were without legal authority and set them aside. The appeals were allowed, emphasizing the need for adherence to legal procedures and rules in customs valuation and classification of goods.