2017 (10) TMI 468 - AT - Customs

Valuation of imported goods - Mix Stock Lot of Alcoholic Beverages - rejection of declared value - The declared values for various types of alcoholic beverages are admittedly lower than the prices noticed by the customs in the case of other imports. Through the impugned order, the assessable value of various items have been enhanced on the basis of various bills of entry indicated in the SCN - Held that - As per the scheme of valuation under the Customs Act 1962, as per Section 14, the transaction value is required to be accepted for assessment purposes except in circumstances, outlined in Rule 3 (earlier Rule 4) of the Custom Valuation Rules. Unless the price actually paid for the transaction falls within the exceptions, customs authorities are bound to assess the duty on the transactional value. The adjudicating authority has not recorded any specific reason for disregarding the transaction value, other than the suspicion that values are mis declared as seen by comparison with various other bills of entry, as is cited in the show cause notice - rejection of the transaction value was not strictly in terms of the provisions of Customs Act read with the Customs Valuation Rules. The rejection of transaction values by the adjudicating authority on the basis of bills of entry of prime goods cannot be approved. Allegations of mis-declaration of value on the above basis also cannot be sustained. However, the enhancement in value ordered by the customs appraiser on the basis of data of stock lot goods which stand admitted by the importer at the time of assessment is upheld. Appeal allowed in part.

Summary

Issues: Differential duty demand, confiscation of goods, imposition of penalties on importer and others, validity of transaction value rejection, comparison of imported goods, assessment by Customs Appraiser, penalty on Appraiser.

Analysis:
1. The appellants imported a "Mix Stock Lot of Alcoholic Beverages" from Dubai, which were alleged to be undervalued, leading to detention and later seizure by the Department. Statements of company MD and Customs Appraiser were recorded during investigations. Goods were provisionally released, but differential duty was demanded based on the value discrepancy.

2. The Principal Commissioner confirmed the duty demand, confiscation of goods, and imposed penalties on the company MD, importer, and Customs Appraiser. The appeals challenged these orders, questioning the basis of value enhancement and penalties imposed.

3. The appellants argued that the show cause notice did not provide all relevant bills of entry for comparison, leading to an inability to defend properly. They contended that the rejection of declared value lacked valid reasons and the imported goods were not comparable to prime goods due to being old stock sold at discounted prices.

4. The Customs Appraiser defended his assessment process, stating compliance with customs practices. The appellants argued that no discrepancies were found during examination, questioning the penalty imposed on the Appraiser for not verifying goods' description before assessment.

5. The Tribunal observed that the rejection of transaction value lacked specific reasons other than suspicion, not meeting the Customs Act and Valuation Rules requirements. It noted the heterogeneous nature of the imported goods, different from prime consignments, and set aside the value enhancement and confiscation based on misdeclaration charges.

6. The Tribunal upheld the Appraiser's value enhancement based on stock lot data admitted by the importer during assessment. It concluded that the rejection of transaction values based on prime goods' bills of entry was not justified, setting aside the demand for differential duty and penalties on the importer and MD, while upholding the Appraiser's value loading.

7. Ultimately, the impugned order was set aside concerning the demand and penalties on the importer and MD, while the Appraiser's penalty was revoked. The judgment highlighted the importance of adhering to valuation rules and ensuring proper comparison of goods for accurate assessment.