2020 (1) TMI 482 - AT - Customs

Valuation of imported goods - Ball Valves and Bibcock - allegation of undervaluation of goods - the value is sought to be enhanced on the basis of proforma invoice which is issued by the exporter to some other importer in India and not in the name of the appellant - Confiscation - redemption fine - penalty. HELD THAT - It is on record that the bills of entry were assessed by the Proper Officer and the assessable value was determined by him and it was not challenged either by the appellant or by the department. In course of enquiry, a proforma invoice was recovered showing a different price from that as shown in the invoice submitted at the time of import. However, it is observed that the proforma invoice is not issued in the name of the appellant. Otherwise also the price quoted in a proforma invoice cannot be held as the actual prices since the price of goods are settled after negotiation between the two parties. The revenue has not produced any document to prove that there was any extra payment made by the appellant towards purchase of the said goods. The confiscation of the goods and imposition of penalty are consequential to the alleged under valuation of the imported goods by the appellant - Since there are no sufficient grounds as required for enhancement of assessable value, imposition of redemption fine in lieu of confiscation under Section 125 of the Customs Act, 1962 and imposition of penalty under Section 112 of the Customs Act, 1962 on the appellant is not sustainable - appeal allowed - decided in favor of appellant.

Issues:
1. Allegation of undervaluation of imported goods.
2. Confiscation of goods and imposition of penalty.
3. Assessment of Bill of Entry and appealability.
4. Proper Officer's valuation process and rule adherence.
5. Proforma invoice validity and transaction value determination.
6. Goods cleared for home consumption and confiscation liability.

Issue 1: Allegation of undervaluation of imported goods:
The appellant imported goods under three bills of entry, which were assessed by the Customs Officer with a value addition over the declared value. Subsequently, a differential Customs Duty was demanded based on proforma invoices showing higher values than declared. The adjudicating authority confirmed the duty, imposed penalties, and proposed confiscation. The Commissioner (Appeals) upheld the decision, citing evidence of manipulation and non-cooperation. However, the Tribunal found that the proforma invoice was not in the appellant's name, and no evidence of extra payment was presented, leading to the appeal being allowed.

Issue 2: Confiscation of goods and imposition of penalty:
The confiscation and penalty were based on the alleged undervaluation of imported goods. The Tribunal determined that since there were no grounds for enhancing the assessable value, the confiscation and penalty were not sustainable. Consequently, the appeal was allowed, providing the appellant with consequential relief.

Issue 3: Assessment of Bill of Entry and appealability:
The Tribunal emphasized that the assessment of a Bill of Entry is an appealable order, and if not challenged, it becomes final. The appellant argued that since the department did not appeal against the assessment order, any demand beyond the finally assessed value was not legally sustainable. This argument was considered in the context of the case.

Issue 4: Proper Officer's valuation process and rule adherence:
The Tribunal highlighted the necessity for the Proper Officer to follow Customs Valuation Rules sequentially. It was observed that jumping to Rule 8 without following Rules 5 to 7 was not permissible. The Tribunal referred to a Supreme Court decision to support this position.

Issue 5: Proforma invoice validity and transaction value determination:
The Tribunal discussed the validity of using a proforma invoice to determine transaction value. It was noted that prices in proforma invoices are not final and are subject to negotiation between parties. Without evidence of extra payment by the appellant, the Tribunal found the reliance on proforma invoice values unjustified.

Issue 6: Goods cleared for home consumption and confiscation liability:
The Tribunal addressed the issue of goods cleared for home consumption and their liability for confiscation under Section 111(m) of the Customs Act. Relying on precedent, it was established that once goods are cleared for home consumption, they cannot be confiscated under the mentioned section. This principle was applied in the context of the case.

In conclusion, the Tribunal allowed the appeal, setting aside the confiscation and penalty imposed on the appellant due to insufficient grounds for enhancing the assessable value of the imported goods. The decision was based on the lack of evidence supporting the allegations of undervaluation and non-compliance with procedural requirements in the valuation process.

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