2023 (7) TMI 269 - AT - Customs

Valuation of imported goods - safranal - redetermination/rejection of value - for subsequent imports of safranal the same was misdeclared as Aroma Chemical K -100 by way of affixing / getting affixed secondary sticker showing description of goods safranal - reduction of value in very short time - penalty - HELD THAT - The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (hereinafter called as Valuation Rules) were framed as per the second proviso to sub-section 1 of section 14. It has 13 Rules in all of which Rules 1 and 2 are Preliminary Rules. Rule 3 states that subject to Rule 12, the value shall be the transaction value adjusted according to Rule 10. Rule 10 provides for certain costs to be included in the transaction value. Rule 12 provides for the proper officer to reject the transaction value if he has reason to doubt its truth and accuracy. Thus, unless the proper officer rejects the transaction value under Rule 12, the valuation has to be based on transaction value as per Rule 3 with some additions, if necessary, as per Rule 10 - In case the valuation cannot be done under Rule 3 /Rule 10. It must be done sequentially under rules 4 -9 sequentially. It is observed from the extract of Emails placed on record that after receiving the first consignment in February, 2016 there is a common order confirmation for purchase of 5000 Kg. safranal . However, prior to the said order was completely dispatched there have been exchange of emails for modifying the agreed price at the rate of 428 USD per Kg. to 408 USD per Kg. and based on said communication that the order confirmation got modified with respect to undispatched quantity of safranal . These observations, are sufficient to hold that though the time period has been short but there is a reasonable genesis for reduction in price while importing Aroma chemical as safranal . It is also observed that a certificate being issued by M/s.Givaudan, the importer, acknowledging the quantity imported by the appellant and the prices for the same. The said certification is in complete conformity of the description and the price in the impugned bill of entries. These observations are also sufficient to hold that the findings of adjudicating authority below in para 38.2 of the order that there was no written proof regarding the offer of discount and even the declaration of overseas supplier i.e. M/s. Givaudan is silent about the price are wrong being contrary to the documents on record - the value of Aroma Chemical while being imported as Safranol though was at reduced price for subsequent transaction but the same cannot be rejected for it being the transaction value. The transactions are held to be the ordinary sales. Penalty - HELD THAT - The entire case made out against the appellant is therefore, held to be an act of misunderstanding and the findings are nothing but the result of presumptions and assumptions. Once there was no intent to evade the customs duty and the required duty has already been paid by the appellant. Once, there is no evidence of alleged misdeclaration and undervaluation for the reasons as discussed above, there arises no question of imposition of penalty either on the importing firm or on its director. Hence, the orders under challenge cannot be sustained. The order under challenge is hereby set aside - Appeal allowed.

Summary

Issues Involved:
1. Allegation of undervaluation of imported chemical.
2. Allegation of misdeclaration of imported chemical.

Summary:

1. Allegation of Undervaluation of Imported Chemical:
The impugned demand was raised and confirmed by rejecting the transaction value of the import on two counts: (1) Reduction in the value of "Safranal" within a very short time alleging it as an act of under-valuation, and (2) Subsequent import of the same chemical as "Aroma Chemical K-100" at still lower prices, alleging misdeclaration as a cause for under-valuation. The Adjudicating Authority rejected the transaction value, reassessed it, and confirmed the differential amount to be recovered from the appellants, along with the confiscation of the recovered Aroma Chemical and imposition of penalties on both appellants.

The Tribunal observed that the valuation has to be done on the basis of the transaction value subject to certain conditions as per Section 14 of the Customs Tariff Act, 1975. The Tribunal noted that the transaction value should be accepted unless there are reasons to doubt its truth and accuracy. The Tribunal found that the appellants had provided sufficient documentation, including purchase orders, invoices, and certification from the importer, to support the transaction value. The Tribunal held that the reduction in price was due to commercial negotiations and not an act of undervaluation. Therefore, the transaction value could not be rejected, and the reassessment by the Adjudicating Authority was not sustainable.

2. Allegation of Misdeclaration of Imported Chemical:
The Tribunal took judicial notice of the fact that "Safranal" and "Aroma Chemical K-100" are the same chemical compound with the same chemical composition and IUPAC name. The Tribunal observed that the HSN Code and the rate of customs duty for both "Safranal" and "Aroma Chemical K-100" are the same. Therefore, even if the imported chemical was named "Aroma Chemical K-100" instead of "Safranal," no benefit accrued to the appellant, and there was no intent to evade customs duty. The Tribunal also noted that the reduction in value was reasonable and based on commercial negotiations, and there was no evidence to prove that "Safranal" and "Aroma Chemical K-100" are different compounds.

The Tribunal concluded that the change of name from "Safranal" to "Aroma Chemical K-100" did not amount to misdeclaration, and there was no evidence of evasion of customs duty. The entire case against the appellant was based on misunderstandings and presumptions. Consequently, the Tribunal set aside the order under challenge and allowed both appeals.

Conclusion:
The Tribunal set aside the order under challenge, allowing both appeals, and held that there was no undervaluation or misdeclaration of the imported chemical. The reassessment by the Adjudicating Authority was not sustainable, and no penalties were imposable on the appellants.