2023 (7) TMI 1069 - AT - Customs

Valuation of import goods - H.R. steel plates - allegation that physical weight is in excess to the weight mentioned in their import documents such as import invoices, Bill of lading etc. - enhancement of value to the extent of excess undeclared weight - HELD THAT - There is no dispute that the weight of the HR steel plates is calculated on theoretical basis taking thickness, length and width of the HR steel plates and the supplier also issue invoices. Accordingly, there is no extra consideration if on this basis there is any increase in physical weight therefore, irrespective of minor difference in weight the value of the goods remain same. Therefore, in our opinion no value can be enhanced on the basis of the weight variation in the facts of the present case .This is an international practice for calculating the weight of similar goods like HR steel plates in the present case. It is obvious that when a theoretical weight is taken by adopting a formula the same will never be matching exactly with the physical weight of the goods. Therefore, due to this minor increase or decrease in the weight valuation cannot be varied. This issue is no longer res-Integra in the appellant s own case this Tribunal has decided the matter in their favour which is reported at M/S. WELSPUN CORP. LIMITED VERSUS COMMISSIONER OF CUSTOMS, MUNDRA 2018 (12) TMI 173 - CESTAT AHMEDABAD . where it was held that the manner of computing the physical weight was not the most scientific one inasmuch as the physical weight was arrived at by first arriving at the tare weight of the truck trailer and thereafter arriving at the weight of the truck trailer with the steel plates loaded on it. The demand in the present case is not sustainable. Hence, the impugned order is set aside appeal is allowed.

Summary

Issues Involved:
1. Differential Customs Duty Demand
2. Confiscation and Penalties for Alleged Undeclared Excess Quantity

Summary:

Differential Customs Duty Demand:
The case revolves around the discrepancy between the theoretical and physical weight of imported HR steel plates. The department argued that the valuation of goods should be enhanced due to the excess weight found during physical verification, resulting in a demand of Rs. 4,37,481/-. The appellant contended that the theoretical weight, calculated based on thickness, length, and width, is a universal practice and minor differences in physical weight should not affect the value. The Tribunal noted that the transaction value, as defined under Section 14 of the Customs Act, should be the basis for duty assessment unless exceptions in Rule 3(2) of the Customs Valuation Rules, 2007 apply. The Tribunal found no evidence of extra consideration paid over the declared value and ruled that minor weight variations do not justify value enhancement. Citing the case of Eicher Tractors Ltd. v. Commissioner of Customs, the Tribunal emphasized that transaction value should be accepted unless specific exceptions apply.

Confiscation and Penalties for Alleged Undeclared Excess Quantity:
The Tribunal examined whether the alleged undeclared excess quantity of HR plates was liable to confiscation under various sections of the Customs Act. The adjudicating authority's method of enhancing the assessable value was deemed arbitrary and without legal basis. The Tribunal referred to Public Notices and Indian Standard specifications, which allow for a weight variation tolerance of +5%/-2.5% for HR steel plates. The Tribunal found that the actual weight variation of 3.57% was within permissible limits. The Tribunal also criticized the method used for physical weighment and noted that the appellant had clearly declared the theoretical weight in import documents, negating any allegations of suppression. Consequently, the Tribunal set aside the impugned order, ruling that the demand for differential duty and the imposition of fine and penalties were unsustainable.

The appeal was allowed with consequential reliefs, and the impugned order was set aside.