2018 (10) TMI 769 - AT - Customs

Valuation of imported goods - telephone and other communication equipments - goods imported against various bills of entry, were allegedly found with stickers indicating a retail selling price higher than that declared at the time of import - demand of differential duty - confiscation - redemption fine - penalty - Held that - In the absence of any machinery provisions to alter the retail selling price declared by the importer, and the lack of provision for recovery in the event of any subsequent alteration of retail selling price, no proceedings can be initiated against the appellant in the circumstances narrated in the show cause notice as well as the orders of the lower authorities. Recovery of duties under section 28 of Customs Act, 1962 fails - Appeal allowed - decided in favor of appellant.

Issues:
1. Challenge to order-in-appeal upholding differential duty recovery, confiscation of goods, and imposition of penalties.
2. Alleged misdeclaration of 'retail selling price' of imported goods.
3. Ascertainment of duty liability under Customs Act, 1962.
4. Application of additional duties of customs under section 3 of Customs Tariff Act, 1975.
5. Valuation of goods for the purpose of Customs Act, 1962.
6. Machinery provisions for altering declared retail selling price by importer.

Analysis:

Issue 1:
The appellant contested the order-in-appeal confirming the recovery of differential duty, confiscation of goods, and penalties imposed. The Commissioner of Customs (Appeals), Mumbai upheld the lower authority's decision, which included the recovery of ?16,913/-, confiscation of goods valued at ?2,74,190/-, with an option to redeem upon payment of a fine of ?10,000/-, and a penalty of ?16,913/- under section 114A of the Customs Act, 1962, along with other penalties.

Issue 2:
The dispute arose from the alleged misdeclaration of the 'retail selling price' of various 'telephone and other communication equipments' imported by the appellant. The differential duty was demanded based on the revised 'retail selling price' found to be higher than declared at the time of import against multiple bills of entry.

Issue 3:
The ascertainment of duty liability under section 17 of the Customs Act, 1962 necessitates the application of rates as per section 12, on the value assessed in accordance with section 14. Additional duties of customs are levied under section 3 of the Customs Tariff Act, 1975, which empowers the collection of duties recoverable under the Central Excise Act, 1944 if the goods were manufactured in India.

Issue 4:
The assessment of additional duties of customs involves two streams: default levy of duty on the assessed value for basic customs duty determination, and an alternative method for specified goods based on the 'retail selling price' after abatement. The valuation of goods under the Customs Act, 1962 must comply with section 14 and relevant rules, with specific provisions for goods covered by section 4A of the Central Excise Act, 1944.

Issue 5:
For goods covered by section 4A of the Central Excise Act, 1944, the general valuation provisions of the Customs Act, 1962 do not apply, and there is no scope for enhancing the assessable value through these provisions. The determination of 'value' for additional duty follows the specific rules applicable to such goods.

Issue 6:
The absence of machinery provisions to alter the declared retail selling price by the importer, coupled with the lack of provision for recovery in case of subsequent alterations, precludes the initiation of proceedings against the appellant as per the show cause notice and lower authorities' orders.

In conclusion, the recovery of duties under section 28 of the Customs Act, 1962 failed due to the absence of provisions for altering the retail selling price declared by the importer. Consequently, the impugned order was set aside, and the appeal was allowed.

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