2020 (2) TMI 566 - AT - Customs

Valuation of imported goods - PVC Laminated sheets (PVC floor covering) - rejection of declared value - value re-fixed under Rule 5 of Customs Valuation (Determination of Value of Imported Goods) Rules 2007 - penalty on Customs Broker u/s 117 of CA - HELD THAT - In the show-cause notice the Revenue has alleged that the supplier of the goods M/s. K.H.I. Vanich Group Co. Bangkok appears to be a trader and not the manufacturer. For this allegation in the show-cause notice Revenue has no basis because the appellant has given the invoices issued by the said supplier and has submitted in the reply to the show-cause notice that the said supplier is the biggest manufacture of the impugned goods in the world. Further we find that the goods have been imported by the appellant under ASEAN Agreement between two Sovereign States and if the Department has any cogent evidence to come to the conclusion that no such manufacturer exist then they should have made proper enquiry to blacklist such a supplier but the same has not been done at all. Commissioner on its own has come to the conclusion that the raw material for the impugned goods is LDPE and LLDPE and the value of raw material ranges from UDS 1180 to USD 1270 per metric tonne without any basis. He has observed in the impugned order that it is available in the Public Domain that LDPE and LLDPE are the raw material for the impugned goods. Further even in the test report obtained by the Revenue from CIPET Cochin it is not mentioned that LDPE and LLDPE is the raw material for impugned goods. The information relied upon by the Commissioner available in the Public Domain is not admissible as evidence in law when there is a specific test report available of authorized agency. Further the certificate issued by the manufacturer which is also on record shows that LDPE and LLDPE is not the raw material for the impugned goods but the same has not been considered by the Commissioner. In the present case the appellant has imported the material from Thailand whereas the Commissioner has relied upon the contemporaneous imports from China which cannot be considered as contemporaneous import at all. Further the appellant himself earlier imported the same product and declared its value which was accepted and the goods were cleared from the same port. Instead of considering the same as contemporaneous import the Commissioner has relied upon imports from China. The impugned orders re-fixing the price than the price declared by the importer is not sustainable in law - Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Rejection of declared value by importer and re-fixing under Customs Valuation Rules
- Imposition of penalty on Customs Broker
- Allegations of undervaluation and mis-declaration
- Compliance with Customs Valuation Rules and procedures
- Reliance on contemporaneous import value and test reports
- Legal principles governing valuation of imported goods

Analysis:
1. Rejection of Declared Value and Penalty: The judgment involves two appeals against the Commissioner of Customs' order rejecting the value declared by the importer and re-fixing it under Rule 5 of Customs Valuation Rules. Additionally, a penalty of ?50,000 each was imposed on the Customs Broker under Section 117 of the Customs Act. The Tribunal consolidated both appeals due to identical issues and being sister concerns.

2. Facts of the Case: The case of M/s. Karachira Coir Manufacturers involved the import of PVC Laminated sheets from Thailand. The Customs Broker failed to declare complete details, leading to suspicion of undervaluation. The Commissioner issued a show-cause notice alleging undervaluation and mis-declaration, eventually rejecting the declared value and re-fixing it at ?78 per kg.

3. Legal Arguments: The appellant's counsel argued that the impugned order lacked legal basis and failed to conform to Customs Valuation Rules. They challenged the reasoning behind rejecting the declared value, emphasizing the supplier's authenticity and the absence of concrete evidence supporting the rejection. The counsel also highlighted discrepancies in the Commissioner's observations regarding raw materials and contemporaneous imports.

4. Revenue's Defense: The Revenue defended the impugned order, supporting the rejection of declared value and re-fixing under Rule 5. However, the Tribunal found discrepancies in the Revenue's allegations and the evidence presented, especially concerning the supplier's status and raw material details.

5. Judgment: After considering submissions and evidence, the Tribunal found the impugned orders unsustainable in law. It ruled in favor of the appellants, setting aside the Commissioner's order and providing consequential relief. The judgment emphasized the necessity of proper evidence and adherence to legal procedures in cases of undervaluation and mis-declaration.

6. Legal Precedents: The judgment referenced legal precedents like Sounds N Images vs. Collector of Customs, Damehra Steels and Forgoing (P) Ltd. vs. CC, Calcutta, and Collector of Customs, Bombay vs. Nippon Bearings (P) Ltd. to underscore the importance of establishing undervaluation charges through proper investigation and evidence of contemporaneous imports.

In conclusion, the Tribunal's detailed analysis highlighted the lack of legal basis in the Commissioner's order, leading to the reversal of the decision and a ruling in favor of the appellants. The judgment underscored the significance of adhering to Customs Valuation Rules and legal principles in cases involving the valuation of imported goods.