2020 (2) TMI 640 - AT - Customs

Valuation of imported goods - Brass Valve Zinc Valves - rejection of declared value - redetermination of the value - period 2007-08 - invocation of Extended period under proviso to Section 28(1) (b) of the Customs Act, 1962 - demand of differential duty alongwith interest and penalty. HELD THAT - The issue is squarely covered by the decision of tribunal in case of S.K. DHAWAN AND RAJEEV SETH, ESSFO IMPEX PVT. LTD. AND ESS DEE TRADING CO. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI 2016 (3) TMI 888 - CESTAT MUMBAI where it was held that In the absence of any evidence it is not possible to accept the statement that the transaction value and the declared value were not actual transaction value. The distinction sought to be made by the learned Authorized Representative, do not address the crux of issue of rejection of transaction value. Without rejecting the transaction value, the application of any other rule, for re-determination of the value for the purpose of levy of Custom Duty is neither permissible nor admissible position in law as per the decision referred to by counsel for law. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Rejection of Declared Assessable Value.
2. Liability to Confiscation.
3. Demand of Customs Duty.
4. Demand of Interest.
5. Imposition of Personal Penalty.
6. Imposition of Additional Penalty.
7. Appropriation of Provisional Payment.

Issue-wise Detailed Analysis:

1. Rejection of Declared Assessable Value:
The Commissioner rejected the declared assessable value of US$ 1,61,380.00 for the imported goods under Rule 12(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The value was re-determined at US$ 6,26,771.80 in terms of Rule 3 and 8 read with Section 14 of the Customs Act, 1962. The basis for this re-determination was the intelligence that the declared value was less than the cost of raw materials, and the appellant accepted the re-determined value based on the cost of raw material plus 30% manufacturing cost.

2. Liability to Confiscation:
The imported goods, collectively valued at US$ 6,26,771.80 (re-determined assessable value), were held liable to confiscation under Section 111(m) of the Customs Act, 1962.

3. Demand of Customs Duty:
A demand for customs duty amounting to ?59,72,165 was confirmed from the appellant under the proviso to Section 28(1) of the Customs Act, 1962, and its recovery was ordered forthwith.

4. Demand of Interest:
Interest at appropriate rates on the customs duty amounting to ?59,72,165 was confirmed under Section 28AB of the Customs Act, 1962, due to delayed payment of differential duty, and its recovery was ordered forthwith.

5. Imposition of Personal Penalty:
A personal penalty equal to the aggregate amount of the duty and interest was imposed on the appellant under Section 114A of the Customs Act, 1962.

6. Imposition of Additional Penalty:
An additional penalty of ?5,00,000 was imposed on the appellant under Section 114AA of the Customs Act, 1962. However, no penalty under Section 112 was imposed as Section 114A precluded the imposition of penalties under both Sections 112 and 114A.

7. Appropriation of Provisional Payment:
The provisional payment of ?20,30,972 made by the appellant was ordered to be appropriated against the differential duty, interest, and/or penalty.

Tribunal's Analysis and Decision:

Arguments by Appellant:
The appellant argued that the issue was no longer res-integra, citing previous tribunal decisions (S K Dhawan and Raghav Overseas) which had set aside similar demands based on undervaluation. They contended that judicial propriety demanded following these precedents.

Arguments by Revenue:
The revenue distinguished the case from S K Dhawan, stating the department relied on the importers' declarations, not their statements. They argued that the re-determined value based on prevailing raw material prices and LME Bulletin conformed to Rule 8 of the Valuation Rules. They also cited Supreme Court judgments supporting the rejection of transaction values that are unrealistically low.

Tribunal's Findings:
The tribunal agreed with the appellant, noting that the issue was covered by previous decisions. They found that without rejecting the transaction value, applying any other rule for re-determination was impermissible. They cited the S K Dhawan case, which highlighted flaws in the adjudicating authority's methodology, lack of contemporaneous import evidence, and the necessity of proving additional remittance for undervaluation claims.

Conclusion:
The tribunal set aside the impugned orders and allowed the appeal with consequential relief, emphasizing the need for proper evidence and adherence to legal standards in valuation disputes. The order was pronounced in the open court.

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