2022 (6) TMI 435 - AT - Customs

Valuation of imported goods - DCBS N or N Dicyclohexyl-2 Benzothiazole Sulfenamide - enhancement of assessable value - rejection of declared value - failure to issue notice of intent - non-speaking order - violation of principles of natural justice - HELD THAT - Doubtlessly, rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 empowers rejection of declared upon evidence to the contrary and, by default too, upon non-satisfaction of queries sought by the assessing officer. Two aspects are critical to such rejection requiring such evidence to be furnished by importer as is necessary for acceptance of declared value as transaction value and, should the declared value be discarded, adoption of such value as is validated by the sequential alternatives in the Rules. There is nothing on record to demonstrate that the necessary pre-requisite in rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been set in motion; indeed, the entire process, commencing with failure to issue notice of intent and culminating in refusal to issue speaking order, appears to be devoid of any cognition of the principles of natural justice. Even though the principles of natural justice stand breached by both the lower authorities, that need not concern the disposal of this dispute which, by the absence of evidence to displace the declared value, calls for the impugned order be set aside on merit. Appeal allowed.

Summary

Issues:
Enhancement of assessable value on import without proper notice or justification; Reliance on single bill of entry for re-valuation; Compliance with Customs Act, 1962; Application of Customs Valuation Rules, 2007; Principles of natural justice breach.

Analysis:

1. Enhancement of assessable value without proper notice or justification:
The appeal arose from the enhancement of the assessable value on the import of a rubber accelerator. The appellant contested the increase from US$ 2.95 per kg to US$ 3.95 per kg, arguing that the assessment was done without a show cause notice or proper justification. The appellant's counsel highlighted the failure of the "proper officer" under the Customs Act, 1962, to issue a speaking order justifying the re-valuation, which raised concerns about procedural compliance.

2. Reliance on single bill of entry for re-valuation:
The appellant challenged the reliance on a single bill of entry for re-valuing the goods, emphasizing that a stray invoice was insufficient basis for revising the assessable value. The appellant cited legal precedents to support the argument that a single bill of entry could not serve as the sole justification for enhancing the assessable value. The Tribunal agreed that the single bill of entry was inadequate evidence for re-valuation.

3. Compliance with Customs Act, 1962:
The appellant contended that the first appellate authority's decision was flawed as it relied on a value from a bill of entry not contemporaneously imported or validated. The appellant argued that the authority did not consider the Customs Valuation Rules, 2007, which had elevated the importance of declared value. The Tribunal noted that the transformation in valuation standards required a more rigorous approach to assessing the acceptability of declared values.

4. Application of Customs Valuation Rules, 2007:
The Tribunal examined the application of Rule 12 of the Customs Valuation Rules, 2007, which empowers the assessing officer to reject declared prices based on evidence to the contrary. The Tribunal emphasized the importance of furnishing necessary evidence for accepting declared values as transaction values. It found that the rejection of declared value in this case lacked the required evidentiary support and failed to follow the principles of natural justice.

5. Principles of natural justice breach:
The Tribunal observed breaches of natural justice by both lower authorities but ultimately focused on the lack of evidence to displace the declared value. Despite procedural shortcomings, the Tribunal set aside the impugned order on its merits and allowed the appeal.

In conclusion, the judgment addressed issues related to procedural compliance, evidentiary requirements for valuation, and the application of Customs Valuation Rules, 2007, while emphasizing the importance of natural justice in customs valuation disputes.