2019 (5) TMI 1472 - AT - Customs

Valuation of imported goods - rejected of declared value - Mis-declaration of value of the imported goods - the item declared as Drill machine-I (600 pcs.) was actually concrete Vibrator to two different sizes i.e. 300 Pcs of 1 meter and other 300 Pcs. of 1.5 meter - seizure u/s 10 of the Customs Act, 1962 - Department has not produced any record of contemporaneous import or even the price data from the National Import Data Bank being maintained by the Customs Department. HELD THAT - The assessing authority has rejected the transaction value on the ground of mis-decloaration regarding drill machine-I. The assessing officer has also concluded that the assessable value appeared to be low and the value was enhanced item wise - the assessing officer has enhanced the declared value on the ground that those are not inconsonance with the current market price of similar goods being sold in the Indian market. However, the adjudication order does not indicate as to how and where the market survey has been conducted and also how the transaction value has been rejected without following the Valuation Rules. It is a fact that the appellant has accepted the enhanced value and paid the differential duty, but only for the reasons that the consignment was incurring a heavy demurrage and detention charge by the custodian. Therefore, the acceptance of enhancement of the price by the department is not at their own volition but under compulsion so as to avoid heavy demurrage and detention charges - If any transaction value is to be rejected by the assessing officer it has to be done under the provisions of Section 14 of the Customs Act read with Customs Valuation Rule 2007. No such exercise has been undertaken by the adjudicating authority and also by learned Commissioner (Appeals), while passing the impugned order. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Rejection of transaction value.
3. Mis-declaration of goods.
4. Application of Customs Valuation Rules, 2007.
5. Acceptance of enhanced value under duress.
6. Sequential application of Customs Valuation Rules.

Issue-Wise Detailed Analysis:

1. Valuation of Imported Goods:
The appellant, M/s Tushar Trading Company, imported a consignment with a declared assessable value of ?18,99,147/-. The consignment was put on hold based on intelligence about mis-declaration. Upon examination, discrepancies were found in the declared items, notably the drill machines, which were actually concrete vibrators. The declared value was rejected, and the value was re-determined at ?34,57,428/-, leading to confiscation and imposition of penalties.

2. Rejection of Transaction Value:
The adjudicating authority rejected the declared transaction value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and re-determined the value. The appellant argued that the transaction value was rejected without any basis, contemporaneous import price, or market enquiry, which the Commissioner (Appeals) failed to consider.

3. Mis-declaration of Goods:
The consignment was seized due to mis-declaration under Section 110 of the Customs Act, 1962. The appellant's partner admitted to the mis-declaration and paid the differential duty. The declared value of ?505588.40 was enhanced to ?921686.30 by the department. The appellant paid the differential duty and waived the Show Cause Notice and personal hearing to avoid heavy demurrage charges.

4. Application of Customs Valuation Rules, 2007:
The lower adjudicating authority failed to follow the provisions of Section 14 of the Customs Act read with the Valuation Rules. The assessing officer should have followed the Valuation Rules sequentially, which was not done. Rule 12 allows rejection of the transaction value but does not mandate acceptance of values other than those determined under Rules 4 to 9 of CVR, 2007.

5. Acceptance of Enhanced Value Under Duress:
The acceptance of the enhanced value by the appellant was under compulsion due to heavy demurrage and detention charges. The adjudicating authority did not conduct any market survey or follow the Valuation Rules before rejecting the transaction value. The appellant's acceptance of the enhanced value was not voluntary.

6. Sequential Application of Customs Valuation Rules:
The adjudicating authority did not sequentially apply the Customs Valuation Rules, 2007. The Tribunal noted that the enhancement of the assessable value lacked legal sanctity as it did not follow the required sequential application of the Valuation Rules. The Tribunal cited the Supreme Court's decision in Eicher Tractors Ltd. vs. Commissioner, emphasizing the necessity of sequential application of the rules.

Conclusion:
The Tribunal set aside the impugned order, finding that the adjudicating authority and the Commissioner (Appeals) failed to follow the Customs Valuation Rules sequentially. The Tribunal allowed the appeal with consequential benefits, emphasizing the need for proper application of valuation rules and recognizing the appellant's acceptance of enhanced value under duress.