2023 (5) TMI 671 - AT - Customs

Valuation of imported goods - PVC sheeting - rejection of declared value - enhancement of value - rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Confiscation - redemption fine - penalty - HELD THAT - The lower authorities proceeded on the assumption that the impugned goods are of prime quality but, nonetheless, relied upon alternatives in valuation that are not consistent with the finding for it is inconceivable that similar goods, of prime quality, were not being imported and the sweeping declaration of non-availability is not borne by any record of search for such. It would not be out of place to suggest that the lower authorities appear unsure of the their own conclusions inasmuch as determination, and approval thereof, in accordance with the residual rule 9 was not allowed to stand on its own but placed alongside rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - As rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 is to be invoked only upon inability of ascertained under any of the preceding rules, the concatenation of the two itself is not permissible in law. It is clear from the manner in which the re-determined value has been computed, and from specific assertion of the market survey being confined to imported goods, that it is based on prices obtaining for domestically produced articles. The valuation under rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 fails on this ground. Likewise, rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires adoption of the value of identical or similar imported goods sold in India as the base for computation of unit price. There is nothing on record to evidence that the market survey was confined, unarguably, to imported goods without which the re-determination thereof fails the test of law. Appeal allowed.

Summary

Issues involved:
The legality and propriety of the manner in which assessable value has been enhanced.

Detailed Judgment:

Issue 1: Rejection of declared value and enhancement of assessable value
The appeals challenged the rejection of the declared value in 21 bills of entry for 'PVC sheeting' and the subsequent enhancement to US $ 1010 per metric ton. The appellants argued that the declared value was based on the price contracted with suppliers in China, but was rejected and re-determined despite physical inspection of only one lot. They contended that market survey results and test reports were not appropriately considered by the adjudicating authority. The appellants also questioned the reliance on the statements of individual appellants without compliance with the Customs Act.

Issue 2: Application of Customs Valuation Rules
The appellants argued that the adjudicating authority incorrectly applied rule 9, along with rule 7, of the Customs Valuation Rules without sufficient evidence. They cited legal precedents to support their contention that re-determination of value should comply with statutory requirements. They criticized the market survey conducted by customs officers, claiming it lacked evidence of actual sales at the ascertained prices.

Issue 3: Quality of the imported goods
The Authorized Representative contended that the value declared in the bills of entry was unacceptable based on the examined packages. He justified the rejection of declared value by pointing to the admission of the goods being of 'prime' quality by the individuals involved in the import.

Issue 4: Market survey and computation of assessable value
The re-determined value was based on a market survey that involved traders examining representative samples of the goods. The assessable value was calculated after abating the retail price by 56%. The adjudicating authority found the process fair, citing the voluntary agreement to pay duty at the higher assessable value as confirmation of the correctness of the computation.

Issue 5: Compliance with procedural requirements
The rejection of declared value by the original authority was challenged due to procedural breaches, including reliance on statements of co-noticees without proper evaluation under the Customs Act. The failure to communicate test results to the appellants and the absence of tests from eminent institutions were highlighted as shortcomings in the decision-making process.

Conclusion:
The Tribunal set aside the impugned order and allowed the appeals, citing inconsistencies in the application of Customs Valuation Rules, lack of evidence supporting the market survey, and procedural irregularities in determining the assessable value. The judgment was pronounced on 11/05/2023.