2019 (11) TMI 905 - AT - Customs

Principles of Natural Justice - denial of cross-examination - right to cross-examine a deponent though the statement has been used to their detriment - whether the appellants had been placed on notice of proposal, along with reasons thereon, to reclassify the imported goods? - Valuation - rejection of transaction value. HELD THAT - The proposal in the notice for rejection of declared value, which is empowered under the prescribed Rules, indicates an intent to redetermine the value on an accepted classification. The impugned order has not taken this proposal to its logical conclusion but resorted to section 14(2) of Customs Act, 1962 which is nothing but an alternative proposed in the notice. This alternative proposal should have been preceded by a proposal to reclassify the imported goods and such a proposal is markedly absent. The conclusions derived from the test reports are not unambiguous. While the testing authority did opine that the samples were other than copper residue , we find no elaboration commencing therefrom which could lead to the conclusion that the goods are brass . Mere conclusion of non-conformity to declared declaration does not sanction the adoption of an alternative classification which has not even been proposed. Such non-conformity, even if acceptable, does not empower the invoking of tariff value without undergoing the test of conformity with the description to which such tariff value should be applied. The lack of proposal to subject the goods to an alternative classification and the leap, so to speak, over the unabridged chasm of applicability of the notification for assessment on tariff value renders the impugned order to be unsustainable. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
Challenging findings of the adjudicating authority on grounds of compromising natural justice, reclassification of imported goods based on tariff value, breach of Customs Act provisions, and reliance on Supreme Court decision.

Analysis:

Issue 1: Denial of Right to Cross-Examine and Reliance on Retracted Statement
The appeals challenge the adjudicating authority's findings, alleging a compromise with natural justice by denying the right to cross-examine a deponent. The reliance on a retracted statement is also contested. The Hon'ble Tribunal refrained from delving into the merits or alleged breach of natural justice due to a fundamental issue raised by the Learned Counsel.

Issue 2: Reclassification of Imported Goods
The primary issue revolves around the reclassification of imported goods based on the tariff value. The notice proposed the rejection of the declared value for reassessment under section 14(2) of the Customs Act. However, the appellants argued that the notice did not propose reclassification, leading to a flaw in the process. The Tribunal noted the statutory determination of tariff value for brass scrap and the discrepancy in classification declared in the bills of entry.

Issue 3: Compliance with Customs Act Provisions
The judgment emphasized the importance of complying with the Customs Act provisions regarding the determination of tariff value and reclassification of goods. It highlighted the distinction between the general law applicable to ad valorem duties and the special law of tariff value determination under section 14 of the Customs Act.

Issue 4: Reliance on Supreme Court Decision
The Tribunal analyzed the applicability of a Supreme Court decision cited by the Authorized Representative. The decision in question dealt with the determination of duty rate based on the nature of goods used in manufacturing. The Tribunal differentiated the facts of the present case from the Supreme Court decision, emphasizing the challenge to the presumption of imported goods being brass scrap.

Conclusion
The Tribunal set aside the impugned order, citing the absence of a proposal for reclassification and the flawed reliance on tariff value without proper classification. The judgment underscores the necessity of adhering to procedural requirements and statutory provisions in customs assessments.