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1995 (5) TMI 25 - SC - CustomsWhether if the transaction value was available i.e. the price actually paid or payable was available then the assessable value had to be determined by accepting the price actually paid or payable unless it was found to be not genuine? Held that - Unable to uphold the reasoning of the Tribunal that since there is no finding by the Collector of Customs that the Zip Rolls purchased from South Korea Japan or Taiwan are identical in all respects with what has been falsely declared to be Zip Rolls of North Korean origin Rules 3 and 4 must be applied. In our view the Tribunal has overlooked not only Rule 8 but also Section 14 of the Act which provides that the value of the imported goods shall be deemed to be the price at which such or like goods are ordinarily sold .... in the course of international trade..... The order passed by CEGAT was clearly erroneous. It took note of the fact that the certificates of origin produced by the importer were not genuine and could not be relied upon and yet came to the conclusion that the price of the goods must be of the same place of origin as was claimed by the importer. Appeal allowed.
Issues Involved:
1. Misdeclaration of country of origin. 2. Under-invoicing of the value of goods. 3. Validity of the certificates of origin. 4. Proper valuation of imported goods for customs duty. 5. Application of the Customs Valuation Rules. 6. Determination of the assessable value of the imported goods. 7. Imposition of duty and penalties. Issue-Wise Detailed Analysis: 1. Misdeclaration of Country of Origin: The Directorate of Revenue Intelligence (DRI) detained the goods based on information that the importer misdeclared the country of origin as DPR Korea. The Assistant Collector concluded that the importer produced invalid and forged certificates of origin, indicating the goods were not of North Korean origin. 2. Under-Invoicing of the Value of Goods: The show cause notice alleged that the importer declared a very low value of the goods to evade duty. The Assistant Collector noted that if the goods were proven to be of North Korean origin, the low price might be acceptable. However, since the origin was found to be falsely declared, the declared price was deemed incorrect and significantly low. 3. Validity of the Certificates of Origin: The Assistant Collector, supported by a letter from the North Korean Embassy, determined that the certificates of origin were incorrect or forged. The importer failed to produce the original certificates, providing only photocopies and claiming the originals were sent back to the suppliers in Singapore without a satisfactory explanation. 4. Proper Valuation of Imported Goods for Customs Duty: The Collector of Customs assessed the value of the goods by comparing prices of similar goods from Japan, Taiwan, and South Korea. Since the origin of the goods was not clear, the lowest price from South Korean exporters was adopted. 5. Application of the Customs Valuation Rules: The Tribunal (CEGAT) initially applied Rules 3 and 4 of the Customs Valuation Rules, which rely on the transaction value. However, the Supreme Court noted that these rules assume the price declared is genuine, which was not the case here due to the forged certificates of origin. 6. Determination of the Assessable Value of the Imported Goods: The Supreme Court emphasized that Section 14 of the Customs Act requires the value to be the price at which such or like goods are ordinarily sold in international trade. Given the false declaration of origin, the Collector correctly used prices from Japan, Taiwan, and South Korea, selecting the lowest (South Korean) price for valuation. 7. Imposition of Duty and Penalties: The Tribunal's order, which accepted the declared price despite acknowledging the forged certificates, was found erroneous. The Supreme Court upheld the Collector's approach to determine the value based on similar goods from other countries, as per Rule 8 of the Customs Valuation Rules and Section 14 of the Customs Act. Conclusion: The Supreme Court allowed the appeal, setting aside the CEGAT's order and confirming the Collector's valuation method. The decision emphasized the importance of genuine documentation for determining customs duty and the correct application of the Customs Valuation Rules in cases of misdeclaration and forged certificates.
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