2020 (8) TMI 552 - AT - Customs

Valuation of imported goods - Misdeclaration of imported goods - mis-declaration of percentage of Nickel content in the imported goods - rejection of declared transaction value - request for retest of the remnant sample - denial of retest - principles of natural justice - HELD THAT - The transaction value has been arbitrarily rejected in violation of the provisions of Section 14 of the Customs Act, 1962 read with the Valuation Rules. Further, the adjudication order is vitiated for not permitting the retesting, inspite of the prayer of the importer assessee - further, as per the report of CRCL the variation in the declared percentage of nickel is hardly 1% which is a matter of normal variation not calling for any adverse inference. There are no merits in the appeal - appeal dismissed - decided against Revenue.

Summary

Issues: Mis-declaration of Nickel content in imported goods, rejection of transaction value, retesting of samples, legality of penalty

Mis-declaration of Nickel content in imported goods:
The case involved M/s Jindal Stainless Limited, a registered manufacturer of stainless steel coils, importing Ferro Nickel with declared Nickel content of 18.89% to 21.08%. The Central Revenue Control Laboratory (CRCL) test report revealed a Nickel content of 22.4%, indicating a variance. The supplier determined the valuation based on Nickel content. The Adjudicating Authority rejected the declared assessable value and re-determined it based on the correct Nickel content, leading to a differential duty and penalty.

Rejection of transaction value and retesting of samples:
The Commissioner of Customs (Appeals) set aside the order-in-original, restoring the declared transaction value. He noted that the value enhancement solely based on the CRCL test report lacked evidence of mis-declaration. The request for retesting was denied, with the Commissioner observing that the small sample size was not representative. The Revenue contended that the retesting request lacked logic, as samples were drawn correctly, and relied on Board Circulars for support.

Legality of penalty:
The Commissioner found the Department's action to enhance the transaction value based on Nickel content as improper, as it was theoretical. He also deemed the penalty unjustified, citing no mis-declaration warranting confiscation. The Revenue appealed, arguing that the transaction value rejection was valid, given the higher Nickel content in the test report. They sought a remand for retesting and a new adjudication order.

Judgment and Dismissal of Appeals:
The Tribunal dismissed the Revenue's appeals, finding the rejection of transaction value arbitrary and violating Customs Act provisions. They criticized the failure to permit retesting and noted the minimal variation in Nickel content as normal. Citing Supreme Court precedents, the Tribunal upheld the restoration of the declared value and rejected the penalty imposition. The respondent was entitled to consequential benefits, and the stay applications were disposed of accordingly.