2020 (2) TMI 875 - AT - Customs

Undervaluation of goods - import of certain spares of automobiles - not branded goods - appellant submitted that the Revenue did not have any evidence that the appellants have made payment to the overseas exporters in addition to what was stated in the invoices and in the absence of any additional consideration flowing from the importer to the exporter overseas, under the provisions of Customs Act, 1962, transaction value has to be accepted - HELD THAT - Though the adjudicating authority has stated that the goods were found to be branded, the information as to which brand the goods were belonging to is totally missing in the adjudication order. The objection raised by the appellant in respect of documents which were load port documents is valid and Revenue could not establish that the load port documents were admissible evidence for relying for initiating any proceedings. The department could not establish as to how the information about load port document was procured by the Revenue and therefore the information stated in the Show Cause Notices obtained from exporting country is not reliable as evidence. Other than that there is no evidence relied on in the Show Cause Notice for alleging undervaluation - thus, undervaluation in the present case is not established. Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, NOIDA VERSUS M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD. 2018 (12) TMI 738 - SUPREME COURT that in the absence of any contrary evidence, the value actually paid has to be accepted as Transaction Value. The value actually paid is Invoice value. Impugned order set aside - appeal allowed with direction to Revenue to assess the Bills of Entry on the basis of value declared in the Bills of Entry and complete the assessment within a period of two weeks from the date a copy of this order is served by the appellant on Revenue.

Summary

Issues: Undervaluation of imported goods, reliance on load port documents, authenticity of documents, assessment of assessable value, application of Customs Valuation Rules, delay in issuing Show Cause Notices, financial difficulty faced by importers, exemption from rent or demurrage for detained goods.

The judgment by the Appellate Tribunal CESTAT Chennai involved two appeals concerning the alleged undervaluation of imported automobile spares. The appellants had filed a total of 13 Bills of Entry for the imported goods, which were subject to special valuation for assessable value determination. The Revenue issued Show Cause Notices after a delay of five years, alleging undervaluation due to non-disclosure of brand names and manufacturers. The adjudicating authority confirmed the undervaluation, enhanced the value, imposed differential duty demands, confiscated the goods, and levied penalties, leading to the appeals before the Tribunal.

In the first issue, the appellant challenged the reliance on load port documents by Revenue, arguing that the documents lacked authenticity and evidentiary value. The Tribunal noted that the department failed to establish the admissibility of the load port documents as evidence, as required for initiating proceedings based on them. Citing Supreme Court precedents, the Tribunal emphasized the necessity for detailed inquiries and sufficient evidence to prove undervaluation, which was lacking in this case. Consequently, the Tribunal held that undervaluation was not established, setting aside the impugned orders and directing assessment based on the value declared in the Bills of Entry.

Regarding the assessment of assessable value, the Tribunal highlighted the importance of accepting the value actually paid, as per the Transaction Value under Customs Valuation Rules. Relying on Supreme Court rulings, the Tribunal emphasized that in the absence of contrary evidence, the invoice value should be accepted as the transaction value. Therefore, the Tribunal allowed both appeals, instructing Revenue to assess the Bills of Entry based on the declared value within two weeks and granting exemption from rent or demurrage for the detained goods under the Handling of Cargo in Customs Area Regulation, 2009.

The Tribunal also addressed the issue of the delay in issuing Show Cause Notices, acknowledging the financial difficulty faced by importers due to prolonged detention of goods. The appellant's request for setting aside the impugned orders and assessing goods at the filed value was granted, emphasizing adherence to legal procedures and principles governing customs valuation and undervaluation allegations.