1992 (7) TMI 74 - HC - Customs

Valuation (Customs) - Transaction value when acceptable - Adjudication - Import policy - Interpretation - Evidence - Affidavit

Issues Involved:
1. Delay in assessing the Bill of Entry.
2. Warehousing request under Section 49 of the Customs Act, 1962.
3. Allegations of under-invoicing and Import Trade Control violation.
4. Valuation of imported goods.
5. Confiscation and penalty under Sections 111(d) and 111(m) of the Customs Act, 1962.
6. Reliance on prior intelligence and evidence for valuation.
7. Jurisdiction and authority of Deputy Chief Controller of Imports and Exports.
8. Adjudicating authority's adherence to Customs Valuation Rules.
9. Proportionality of penalties imposed.

Detailed Analysis:

1. Delay in Assessing the Bill of Entry:
The appellant's Clearing Agent filed the Bill of Entry on 18th April 1991, but the Customs authorities delayed its assessment until the last week of May 1991. Despite repeated requests, the respondents did not expedite the assessment, causing the appellant to incur demurrage charges.

2. Warehousing Request Under Section 49:
The appellant requested warehousing of goods under Section 49 of the Customs Act, 1962, without payment of duty due to the delay in assessment. However, the Customs authorities did not take any steps to warehouse the goods, further exacerbating the appellant's financial burden.

3. Allegations of Under-Invoicing and Import Trade Control Violation:
The Customs authorities received intelligence from the Directorate of Revenue Intelligence indicating under-invoicing of motor vehicle parts, particularly filters. The appellant's declared price of lb0.23 per piece was significantly lower than the Directorate's indicated price of lb3.73. Consequently, the Bill of Entry was referred to the Special Investigation Branch for thorough investigation.

4. Valuation of Imported Goods:
The Customs authorities alleged that the valuation of the goods was higher than the declared price. The adjudicating authority determined the value based on the transaction value of identical goods, but the appellant argued that the valuation was not in accordance with Rule 4 of the Customs Valuation Rules, 1988. The appellant contended that the transaction value should be accepted unless proven otherwise.

5. Confiscation and Penalty Under Sections 111(d) and 111(m) of the Customs Act, 1962:
The Collector of Customs (Judicial) confiscated the goods under Sections 111(d) and 111(m) for improper importation and mis-declaration of value. The appellant was given the option to clear the goods upon payment of Rs. 11,50,000/- and a penalty of Rs. 16,00,000/- was imposed under Section 112(a).

6. Reliance on Prior Intelligence and Evidence for Valuation:
The Customs authorities relied on intelligence and evidence, including a letter from the High Commission in London and an alert notice, to justify the departure from the declared value. However, the learned Judge noted that while these documents could not be discarded, they were not conclusive evidence of under-invoicing.

7. Jurisdiction and Authority of Deputy Chief Controller of Imports and Exports:
The Deputy Chief Controller of Imports and Exports issued a clarification letter, but the Court held that only the Chief Controller of Imports and Exports, New Delhi, had the authority to issue such clarifications. The purported clarification by the Deputy Chief Controller was deemed without authority and not binding.

8. Adjudicating Authority's Adherence to Customs Valuation Rules:
The adjudicating authority did not adhere fully to Rule 5 of the Customs Valuation Rules, 1988, which requires the use of the lowest transaction value of identical goods. The authority also ignored relevant evidence and relied on irrelevant material, leading to a perverse conclusion.

9. Proportionality of Penalties Imposed:
The penalty imposed was disproportionately high compared to the fine, indicating arbitrariness. The Court held that the adjudicating authority acted unreasonably and without proper consideration of relevant facts and evidence.

Conclusion:
The Court set aside the order of the adjudicating authority and the judgment under appeal, quashing the confiscation and penalties imposed. The fixed deposit receipts were ordered to be returned to the appellant. The Court emphasized the need for fair and reasonable action by the authorities, adherence to legal principles, and reliance on cogent evidence in determining under-invoicing and valuation.

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