2018 (12) TMI 448 - AT - Customs

Valuation of imported goods - undervaluation - misdeclaration - case of the department is that the price indicated in the BOE is the FOB price and not CIF price - It was also alleged that goods were declared as non-woven fabric (stock lot) whereas the description in the Bill of Lading set to have been recovered from the container, the description was woven fabric (stock lot) - scope of SCN. Held that - The Department has charged the respondent- importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. The transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reach the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. In the absence of any special circumstances indicated in Section 14(1) of the Customs Act, 1962, the price paid or payable should be taken as transactional value. The charges under invoices have to be supported by evidences of prices of contemporaneous of imports like goods. Invoice price, though, not sacrosanct, the Department has to give cogent reasons before rejecting the invoice price. The Department has to find out whether there are any imports of identical goods or similar goods at a higher price around of same time unless the evidence is gathered in that regard. The question of rejecting the value does not arise. The invoice price has to be accepted in such circumstances if the charge under valuation cannot be supporter either by evidence or information about comparable imports, the benefit of doubt must go to the importer. In the instant case, the Commissioner on the one hand held that there is no mis-declaration of description on the part of the appellants. He has not adduced any evidence of payment by the appellants over and above the invoice price. No proof of payment either to the foreign suppliers or to the steamer agents for transportation. Differential duty payable has been arrived only on the basis of certain data called for from the steamer agent. The learned Commissioner has not only traversed beyond the SCN but also has not given due consideration to the contemporaneous imports, if any, of identical or similar goods. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Allegation of Mis-declaration
2. Allegation of Under-valuation
3. Rejection of Transaction Value
4. Determination of Assessable Value
5. Confiscation and Penalty

Summary of Judgment:

Allegation of Mis-declaration:
The Commissioner concluded that there was no mis-declaration of goods by the appellants. The examination reports of the Bills of Entry did not support the allegation of mis-declaration, and the Bills of Lading recovered during the investigation were not directly relevant to the issue at hand.

Allegation of Under-valuation:
The Commissioner found that there was under-valuation by the appellants. This conclusion was based on an invoice dated 10.03.2003 from M/s. PGI Non-woven to M/s. ASC International and a Master Packing List with Bill of Lading No. 4050229-239224. The Commissioner noted that the value in the invoice was USD 0.22/KG, whereas the value declared by the appellants was only USD 0.1/KG. However, the Commissioner acknowledged that this invoice was raised in the course of domestic trade and was indicative of the FOB value.

Rejection of Transaction Value:
The Commissioner rejected the declared value of USD 0.18/KG CIF, Cochin, on the grounds that it did not reflect the transaction value. The Commissioner relied on freight charges obtained from various steamer lines to determine the assessable value, which was not proposed in the Show Cause Notice (SCN). The Commissioner did not provide a clear reason for rejecting the declared value, and there was no evidence of payment of extra freight by the appellants.

Determination of Assessable Value:
The Commissioner failed to follow the procedure laid down in Rules 4 to 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The appellants argued that even if the price indicated was the FOB value, the cost of transport could only be 20% of the FOB value, making the total assessable value USD 0.216 per KG. The Commissioner did not consider contemporaneous imports or provide evidence to substantiate the revised assessable value.

Confiscation and Penalty:
The Commissioner confiscated 58 Bills of Entry under Section 111(m) of the Customs Act and assessed differential duty of ?24,62,021/- with an equal amount as penalty under Section 114A of the Customs Act. The Commissioner also imposed a fine of ?4,25,000/- and a penalty of ?1,70,000/- under Section 112 for six provisionally assessed Bills of Entry. The appellants argued that the order was not maintainable as the goods were released provisionally under Section 18 of the Customs Act.

Tribunal's Findings:
The Tribunal found that the Commissioner had not provided a reasoned finding for rejecting the declared value and had relied on data from steamer agents without evidence of actual payment of freight by the appellants. The Tribunal emphasized that the burden of proving under-valuation lies with the Revenue, and no evidence of contemporaneous imports at higher prices was provided. The Tribunal cited several Supreme Court cases, including Commissioner of Customs, Calcutta Vs South India Television (P) Ltd, Mirah Exports Pvt Ltd Vs Collector of Customs, and Commissioner of Customs, Vishakhapatnam Vs Aggarwal Industries Ltd, to support its findings.

Conclusion:
The Tribunal allowed the appeal, stating that the Commissioner had not discharged the onus of proving under-valuation and had not given due consideration to contemporaneous imports. The impugned order was found to be unsubstantiated and unreasonable, and the Tribunal set it aside.

(Order was pronounced and dictated in Open Court on 07/12/2018)

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