2022 (3) TMI 1227 - AT - Customs

Valuation of imported goods - LED panel - rejection of declared value - enhancement of assessable value - restriction on importation conflate - Confiscation of goods - breach of specification of standards or not - HELD THAT - It would appear that the present proceedings must determine breach, if any, of certification standards which, admittedly, had ceased to be of import by the time of issue of show cause notice, the appropriate approach to the dispute over valuation of goods imported against 16 bills of entry and the correctness in inclusion of the value of the invoice for services in the assessable value of the goods. On the valuation of goods imported against 16 bills of entry, the show cause notice had proposed that the stream of fixed returns incorporated in the Collaborative Framework Agreement (CFA) be adopted as the assessable value. Even if the submission on behalf of the appellant that the said agreement had been voided by inability of the overseas entity to supply the goods specified therein were to be ignored, the scheme of valuation under section 14 of Customs Act,1962 cannot be for it is the transaction value, and the transaction value alone, as declared in the bill of entry that is assured of acceptance for assessment except for varying from the qualifying circumstances therein as well as in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. There is no finding, either of additional payments having been made as consideration or of the value not being in conformity with the parameters therein, for rejection of rule 12 of the Rules to warrant resort to the sequential application of the several methods in the Rules. The impugned order has relied upon a pro forma invoice as rationale for the enhancement. That may have sufficed for re-determination of transaction value after rejecting declared value. However, the provisions for inclusion of cost of services are a special law within the Rules which require ascertainment per the circumstances in rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. There is no such determination in the impugned order and the enhancement of assessable value is, thereby, tainted. The impugned goods are not in breach of certification standards and the onus for disturbing the transaction value in 16 bills of entry as well as the value of goods in the other consignment has not been duly discharged. The confiscation is set aside along with confirmation of demand of differential duty - Appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Compliance with Bureau of Indian Standards (BIS) certification.
3. Inclusion of 'cost of service' in the assessable value.
4. Confiscation of goods and imposition of penalties.

Detailed Analysis:

Valuation of Imported Goods:
The primary issue revolves around the valuation of LED panels imported by the appellant. The original value declared was ?21,54,25,872/- for 500 mm x 500 mm panels, which was substituted with a 'best judgment' value of ?27,06,46,820/- by the Commissioner of Customs. The show cause notice proposed adopting the fixed revenue payment stream in the 'Collaborative Framework Agreement (CFA)' as the assessable value. However, the Tribunal found that the scheme of valuation under section 14 of the Customs Act, 1962, mandates the acceptance of the transaction value declared in the bill of entry unless specific conditions for rejection are met. The Tribunal emphasized that the 'Collaborative Framework Agreement (CFA)' intended a temporary transfer of possession akin to a 'lease' rather than a 'sale', making it non-conforming to rule 3 of the Customs Valuation Rules, 2007. Consequently, the re-determination of duty based on an earlier import of different specifications was deemed inappropriate.

Compliance with BIS Certification:
The second issue concerns the compliance with BIS certification. The imported LED panels were initially presented without BIS certification, which was later obtained while the goods were under seizure. The Tribunal noted that each piece in the imported consignments was below the threshold size for mandatory BIS certification and could function independently. The customs authorities had granted 'out of charge' under section 47 of the Customs Act, 1962, based on the non-requirement of certification for the unassembled pieces. The Tribunal concluded that the confiscation under section 111(d) of the Customs Act, 1962, was not sustainable as the certification was obtained subsequently, ensuring substantive compliance.

Inclusion of 'Cost of Service' in Assessable Value:
The third issue pertains to the inclusion of 'cost of service' in the assessable value of a consignment imported against bill of entry no. 579691/28.06.2018. The show cause notice proposed enhancing the declared value by including the cost of services invoiced separately. The Tribunal highlighted that the Customs Valuation Rules, 2007, allow for the inclusion of service costs only if they are a condition of purchase. The impugned order failed to establish that the billed services were related to the imported goods and not post-import installation services. Consequently, the enhancement of assessable value was deemed unjustified.

Confiscation of Goods and Imposition of Penalties:
The final issue involves the confiscation of goods under section 111 of the Customs Act, 1962, and the imposition of penalties under sections 114A and 114AA. The Tribunal found that the goods were not in breach of certification standards and that the transaction value declared in the 16 bills of entry was not duly contested. Therefore, the confiscation and penalties were set aside. The appeal of the Revenue was dismissed, and the appeals of the appellant-importer and the individuals were allowed.

Conclusion:
The Tribunal concluded that the impugned goods were not in breach of certification standards, and the onus for disturbing the transaction value was not duly discharged. The confiscation and penalties were set aside, and the appeal of the Revenue was dismissed, while the appeals of the appellant-importer and the individuals were allowed.