2017 (9) TMI 204 - AT - Customs

Valuation of imported goods - magnets of various grades and sizes - It appeared to the department that the declared value was low and hence the declared value was enhanced on the basis of contemporaneous import of magnets (N35 and similar goods) as unit price INR 1300 and ferrite magnets as INR 300 per kg - case of appellant is that the department has however bunched all the magnets together for adhoc uniform enhancement price - Held that - It is noted that the commercial invoice accompanying the imported goods indicate the price therein as USD per piece. From the details of the contemporaneous imports submitted by the appellant during hearing, it appears that the pricing therein is also per piece If this be the case, it is not understood how and why the department has chosen to adopt per kg method of assessment if that is not the internationally accepted practice by foreign sellers and by the importers in India. Release of goods - Held that - almost nine months the goods have been lying in the custody, presumably in the Docks at least for nine months. The appellant has a point in his contention that the magnetic properties of the imported goods would deteriorate over long periods of storage - the prayer for interim relief should be considered sympathetically and at the same time protecting the interest of Revenue to the extent possible and the resolution of this dispute will require denovo consideration of the matter by the adjudicating authority. Provisional release of the impugned goods will be allowed to the appellant on payment of deposit - For the purpose of assessment, the original authority will immediately take up denovo adjudication in the matter for arriving at the assessable value in respect of imported goods for the purpose of levy of customs duty by way of duties of customs - appeal allowed in part and part matter on remand.

Summary

Issues Involved:
1. Correctness of the method and manner of valuation of imported goods.
2. Rejection of declared value based on contemporaneous imports.
3. Basis of valuation (per piece vs. per kg).
4. Interim relief and provisional release of goods.

Issue-wise Detailed Analysis:

1. Correctness of the method and manner of valuation of imported goods:
The core issue in this appeal concerns the correctness or otherwise of the method and manner of valuation of imported goods followed by the department. The appellant contended that the magnets imported are of various types, grades, sizes, and quantities, each depending upon the composition and having different magnetic properties and strengths. The department, however, bunched all the magnets together for an ad hoc uniform enhancement in price, which the appellant argued was incorrect.

2. Rejection of declared value based on contemporaneous imports:
The declared value of magnets by the appellant was rejected by the department based on contemporaneous imports and determined under Rule 5 of the Customs Valuation Rules, 2007, by adopting the value of similar goods. The appellant argued that the contemporaneous data adopted by the department was generic and did not relate to the particular category, quality, and quantity of the appellant's imports. The department enhanced the value to INR 1300/kg for N35 and similar grade magnets and INR 300/kg for Ferrite Magnets, which the appellant claimed was erroneous.

3. Basis of valuation (per piece vs. per kg):
The appellant declared the value of magnets on a 'per piece' basis, as indicated in the commercial invoice from the foreign supplier. However, the department insisted on converting the number of pieces into kilograms and adopting the assessable value thereafter. The appellant argued that this method was not justified as the internationally accepted practice for selling and buying magnets is on a 'per piece' basis. The department's insistence on 'per kg' valuation resulted in untenable assessments and ad hoc enhancements of assessable values without proper justification.

4. Interim relief and provisional release of goods:
The Hon'ble High Court of Madras granted the appellant the opportunity to file an appropriate application seeking interim relief. The appellant's goods had been lying in the custody of the department for almost nine months, potentially deteriorating their magnetic properties. The Tribunal considered the prayer for interim relief sympathetically, while also protecting the interests of Revenue. The Tribunal ordered the provisional release of the goods on payment of a deposit of INR 5,00,000 and furnishing a bond of INR 12 lakhs. The original authority was directed to take up denovo adjudication of the matter, giving the appellant an opportunity to present their case and submit additional evidence. The denovo proceedings were to be completed within two months from the date of receipt of the order.

Conclusion:
The Tribunal's order addressed the appellant's concerns regarding the valuation method, the basis of valuation, and the need for interim relief. The Tribunal emphasized the need for a denovo adjudication to resolve the dispute, considering the various contentions and arguments from both sides. The provisional release of goods was ordered to mitigate the prolonged custody and potential deterioration of the imported magnets, balancing the interests of both the appellant and the Revenue.