2019 (2) TMI 1119 - AT - Customs

Valuation of imported goods - rejection of declared value - contemporaneous imports - the compared imports are two months old - case of appellant is that the declared CIF value was much above the floor price prescribed by the DGFT - N/N. 36/2009-2014 dated 31.03.2010 - Held that - It is settled law that the value for determination of Custom Duty in terms of Section 14 of The Customs Act, 1962 is based on the transaction value between the buyer and seller in course of international trade. It only when the transaction value is rejected or cannot be determined that value has to be determined by application of Rule 4 to 9 of Customs Valuation (determination of Value of Imported Goods) Rules, 2007. In terms of the rule 5 the value can be based on the value of contemporaneous imports. Contemporaneous imports for the purpose of Rule 5 can be those imports which are made on or about the same time. In the present case adoption of value in reference to imports made nearly two months back cannot be correct reflection of value of contemporaneous imports. When the compared imports are nearly two months old, and also no similarity has been established vis a vis the country/ place from where imported and quality and quantity the same cannot be said to be contemporaneous imports. The rejection of the transaction value in this case and enhancing the value of the imported goods on the basis of so called contemporaneous imports cannot be justified in this case. Licensing of import of Marble Blocks - N/N. 36/2009-2014 dated 31.03.2010 - Held that - From the reading of notification it is quite evident, that it provides for entire scheme of licensing of import of Marble Blocks. It not only provides for the scheme of licensing but allows the license to be issued subject to actual user condition. It also provides for a mechanism of application for grant of license and also for monitoring of the imports made in terms of the license. By undertaking the imports of Rough marble Blocks, without proper import license appellants have contravened the provisions of Foreign Trade Policy read with Foreign Trade Regulation Act, 1993 and thus have rendered the goods liable for confiscation under Section 111(d) of the Customs Act, 1962. Appeal allowed in part.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Confiscation and redemption fine.
3. Imposition of penalty.

Issue-wise Detailed Analysis:

1. Valuation of Imported Goods:
The Commissioner rejected the declared transaction value of ?83,72,355 under Rule 12 of CVR, 2007 and re-determined the value at ?91,94,288 under Rule 5 of CVR, 2007, based on contemporaneous imports. The appellants challenged this valuation by citing previous Tribunal decisions which held that the declared CIF value above the floor price prescribed by DGFT should be accepted. The Tribunal noted that the Commissioner did not provide special or extraordinary reasons for rejecting the transaction value, as required by settled law. The Tribunal found that the contemporaneous imports used for comparison were nearly two months old and lacked similarity in terms of country of origin, quality, and quantity. Therefore, the rejection of the transaction value and enhancement based on these imports was deemed unjustified.

2. Confiscation and Redemption Fine:
The Commissioner confiscated the imported goods under Section 111(d) and 111(m) of the Customs Act, 1962, but allowed redemption on payment of a fine of ?32,00,000. The appellants argued that the Commissioner did not cite specific provisions of the Foreign Trade Policy to justify the confiscation and claimed the redemption fine was excessive. The Tribunal upheld the confiscation, referencing DGFT Notification No. 36/2009-2014, which mandates import licensing for rough marble blocks. The Tribunal found that the appellants imported the goods without the required license, violating the Foreign Trade Policy and rendering the goods liable for confiscation. The redemption fine was not considered excessive and was upheld.

3. Imposition of Penalty:
A penalty of ?10,00,000 was imposed under Section 112(a) of the Customs Act, 1962. The appellants contended that since the issue involved interpretation, the penalty should not have been imposed, citing various judicial decisions. The Tribunal observed that the appellants were aware of the licensing requirements and deliberately violated them by continuing imports without a license. The Tribunal rejected the argument of acting under a bona fide belief and upheld the penalty, noting that deliberate violation of policy warrants penalties.

Conclusion:
The Tribunal modified the Commissioner's order by setting aside the re-determined value of the imported goods, but upheld the confiscation, redemption fine, and penalty. The appeal was thus partly allowed, maintaining the penalty and redemption fine while rejecting the enhanced valuation.