2006 (11) TMI 120 - HC - Customs

Undervaluation importer pleaded that he has submitted all relevant documents and the genuineness of the documents is also not in doubt, whatever price it has shown be accepted for the purpose of levying customs duty - we set aside the impugned order of the Commissioner of Customs (Appeals) of depositing the differential duty and direct him to dispose of the appeal on merits within three weeks petitioner will not claim for the exemption from pre-deposit on the basis of this order

Summary

Issues Involved:
Challenge to impugned order of Commissioner of Customs (Appeals) regarding deposit of differential duty amount; Discrepancy in pricing of imported goods leading to imposition of customs duty and penalty; Interpretation of Customs Valuation Rules and application of Rule 10; Compliance with sub-Rule (1) and sub-Rule (2) of Rule 4 before invoking Rule 10; Request for exemption from pre-deposit of duty; Direction for timely disposal of appeal by Commissioner of Customs (Appeals).

Analysis:
The writ petition challenges the order of the Commissioner of Customs (Appeals) directing the petitioner to deposit a differential duty of Rs.10.00 lakhs by a specified date and provide proof thereof. The petitioner imported phenol at a disclosed price but faced allegations of undervaluation compared to a similar purchase by another entity, justifying imposition of customs duty and penalty. The Revenue argued that Customs Authorities have the power, under Rule 10 of the Customs Valuation Rules, to value goods based on comparable transactions. The petitioner, citing a Supreme Court decision, contended that the Authorities must adhere to Rule 4 before resorting to Rule 10, especially when all relevant documents were submitted. The court considered these arguments and set aside the impugned order, directing the Commissioner of Customs (Appeals) to decide the appeal on merits within three weeks. If the duty liability is confirmed, the petitioner must pay, retaining the right to appeal.

This judgment addresses the issue of challenging a directive to deposit differential duty, highlighting discrepancies in pricing of imported goods and the application of Customs Valuation Rules, particularly Rule 10. The court emphasized the necessity for Authorities to follow Rule 4 procedures before invoking Rule 10, stressing the importance of document submission by the petitioner. The decision underscores the obligation to comply with procedural requirements and allows for the disposal of the appeal on its substantive merits within a specified timeframe, ensuring the petitioner's right to appeal if duty liability is upheld.

In conclusion, the court's ruling provides clarity on the procedural and substantive aspects of challenging customs duty directives, emphasizing the importance of following statutory rules and ensuring a fair opportunity for appeal. The judgment balances the interests of the petitioner and the Revenue, directing a timely resolution of the appeal while upholding the petitioner's right to contest duty liability through the appropriate legal channels.