2018 (10) TMI 274 - AT - Customs

Valuation of imported goods - valuation based on contemporary goods - various tableware and household items which includes glass ware made out of opal glass like dinner sets - it was alleged that the respondent have mis-classified and mis-declared the goods - it was argued that the value of the goods imported by respondent were not worked out on the basis of invoices found in the premises of the said importer - whether the appellant have undervalued the goods in question or otherwise? - time limitation. Held that - It is observed that in the show cause notice, the sole reason given for undervaluation was on the basis of mis-declaration of goods. The Tribunal in the earlier order, as referred above, clearly held that there is no case of mis-declaration or mis-classification. Therefore, the very basis, even for valuation of goods, gets demolished. Once the charge in the show cause notice was made on the basis of some material, the adjudication order cannot travel beyond the allegation and the material evidence adduced in the show cause notice. From the allegation in the show cause notice, it is clear that even for the charge of undervaluation, the reason stated is mis-declaration of the description of Opal ware as Glass ware and the claim of classification of goods is under CTH 7013 39 00 instead of under CTH 7013 32 00. Since, now the charge of misdeclaration of goods and classification does not exist, the case of undervaluation of the Revenue fails on this ground itself. Other evidences in support of Revenue s allegation of undervaluation - Revenue has relied on two parallel invoices found in the premises of M/s. Vishal Hira Merchant Pvt. Limited, Delhi - Held that - The enhanced price of the goods is not based on these parallel invoices, therefore, this evidence of parallel invoices is discarded and the same cannot be used against the respondent. It is also pointed out by the ld. Counsel that the said invoices are not authentic as the same does not show that it belongs to the supplier. It also does not show that the price is meant for all customers across the world or applicable to all customers in India. Therefore, the invoices of M/s. Vishal Hira Merchant cannot be used as evidence against the respondent. Email exchanged between supplier and M/s. K.P. International - Held that - It is not the conclusive evidence for the reason that it contains only offer/ counter-offer between the parties and it is exchanged with M/s. K.P. International only for enquiring about the price. There is no evidence that goods have been imported by M/s. K.P. International at the price mentioned in the emails - Therefore, whatsoever price mentioned in the email, cannot be taken as price of contemporary goods. It is was submission of the ld. Counsel that for application of Rule 6(2) read with Rule 5(3) of Customs Valuation Rules, it clearly provides that if at all the value of contemporary imports is to be applied, the lowest value of similar goods imported into India is to be adopted. However, in the present case, the department could not bring on record that there are various imports and lowest price among all the imports is adopted. Therefore, the provisions of Rule 6 has not been complied with. Valuation based on contemporary goods - Respondent have produced evidence in the form of bills of entry under which others have imported the similar goods from the same supplier at price lower than the price at which the respondent had imported the goods - Held that - Even if the value of contemporary goods has to be adopted, the value of bills of entry produced by the respondent should have been taken. It is undisputed fact that the respondent is a bulk buyer of the goods in question, the goods are specifically branded as per the requirement of the respondent. Therefore, there cannot be contemporary goods similar to the goods imported by the respondent. For this reason also, the value declared by the respondent cannot be rejected. The Revenue has no evidence that there is any extra consideration paid by the respondent to supplier of Glassware, therefore, there is no material at all to suggest that there is undervaluation of the goods imported by the respondent - the rejection of declared value is improper and illegal. Time Limitation - show cause notice dated 23.03.2007, which was issued for the period covering from May 2005 to May 2006 - Held that - The extended period was invoked mainly on the allegation that the respondent have mis-declared the description and classification of the goods. As discussed above, the Tribunal in the first round, set-aside the charge of mis- declaration of description and classification. Therefore, in this scenario, when no mis-declaration is involved, no suppression of facts exists. Hence, the extended period for demands proposed in the show cause notice also not sustainable and therefore, the demand for the extended period is set-aside also on the ground of limitation. Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Mis-declaration and Mis-classification of Imported Goods
2. Valuation of Imported Goods
3. Applicability of Rule 6 of Customs Valuation Rules
4. Limitation Period for Demand of Differential Duty

Detailed Analysis:

1. Mis-declaration and Mis-classification of Imported Goods
The Tribunal previously concluded that the respondent did not mis-declare or mis-classify the imported goods. The goods were imported as "Glassware" and assessed under heading 70.13 of the Customs Tariff. The DRI alleged mis-classification under Tariff Item 7013 32 29, which the Tribunal rejected, confirming the classification under Tariff Item 7013 39 00. The Tribunal noted that the test report did not conclusively prove the linear coefficient of expansion required for classification under 7013 32 00. Consequently, the Tribunal held that the goods were correctly classified under 7013 39 00 and there was no mis-declaration.

2. Valuation of Imported Goods
The sole reason for rejecting the transaction value was the alleged mis-declaration, which the Tribunal dismissed. The Commissioner, in de-novo adjudication, dropped the proceedings, noting that the valuation issue was based on the now-invalid charge of mis-declaration. The Tribunal emphasized that the adjudication order cannot exceed the allegations and evidence presented in the show cause notice. The Tribunal found no substantial evidence to support undervaluation, as the parallel invoices and email correspondences cited by the Revenue were not conclusive or authentic. The Tribunal upheld the declared value, noting that the respondent was a bulk buyer with a long-term arrangement, and there was no evidence of extra consideration paid to the supplier.

3. Applicability of Rule 6 of Customs Valuation Rules
The Tribunal noted that Rule 6(2) read with Rule 5(3) requires adopting the lowest value of similar goods imported into India. The department failed to provide comprehensive data on all imports of similar goods, and the respondent provided evidence of lower-priced imports from the same supplier. The Tribunal found that the department did not comply with the mandate of Rule 6 and that the value declared by the respondent should be accepted. The Tribunal referenced the Supreme Court judgment in Eicher Tractors Limited, which stipulates that transaction value can only be discarded under specific circumstances outlined in the Customs Valuation Rules, none of which were present in this case.

4. Limitation Period for Demand of Differential Duty
The Tribunal found that the extended period for demanding differential duty was invoked based on the allegation of mis-declaration, which was not sustained. Without mis-declaration or suppression of facts, the extended period for demand under Section 28 of the Customs Act was not applicable. Consequently, the demand for the extended period was set aside on the ground of limitation.

Conclusion:
The Tribunal upheld the Commissioner’s order, confirming that there was no mis-declaration, mis-classification, or undervaluation of the imported goods. The Revenue's appeal was dismissed on merits and limitation. The Tribunal also ordered the release of bank guarantees involved in the case, granting consequential relief to the respondent.