2023 (8) TMI 712 - AT - Customs

Valuation of imported goods - undervalued goods or not - Raw Silk Yarn in hanks - rejection of declared value - allegation based on contemporaneous import prices of similar goods of same description - re-determination of the transaction value is in accordance with the provisions of Section 14 of the Customs Act 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or not? - allegation of mis-declaration against the importer is justifiable or not - Confiscation - penalty. HELD THAT - In order to examine the issue of under-valuation of the imported goods, we find it enlightening to refer to the Hon ble Supreme Court s analysis of the statutory provisions relating to valuation under the Customs Act, 1962 in the case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS 2019 (5) TMI 1152 - SUPREME COURT where it was held that Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc., to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identical or similar and certain reasons exists and justifies detailed investigation. It is found that the original adjudicating authority has rejected the declared transaction value in terms of Rule 12 of the Customs Valuation Rules, 2007 basing on the assessable value of identical goods imported vide Bill-of-Entry No. 699388 dated 25.11.2010, which was proposed to be adopted as the transaction value under Rule 4 of the Customs Valuation Rules, 2007 - The declared value of the impugned consignment, which was said to be based on the said contract, was rejected as not representing the actual transaction value contemplated in Rule 3 of the Customs Valuation Rules, 2007 and the contract was found to be extraneous to the transaction between the importer and the supplier on account of non-fulfilment of the conditions of the said contract. The Ld. adjudicating authority has communicated the basis for enhancement of the transaction value to the importer relying on the contemporaneous import of Silk Yarn of Uzbekistan origin vide Bill-of-Entry No. 699388 dated 25.11.2010 at USD 28.5 per kg., but it has to be commented that the crucial commercial details of this consignment as to the type, quality, quantity imported, whether under any contract, whether any advance paid, etc., are not ascertainable from the records in these appeals. There was no discussion either by the original adjudicating authority or by the lower appellate authority in this regard. Thus, there is no finding as to how this consignment was considered as contemporaneous import of identical goods in terms of Rule 4 of the Customs Valuation Rules, 2007. Thus, there is no valid reason to reject the declared transaction value of the goods. The transaction value, as declared by the importer-respondent, accepted. As earlier imports of the respondent were cleared accepting the values declared and also since the value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority, the declared transaction value has to be accepted. Hence, there is no need to pass any order in respect of confiscability of the goods or on imposition of penalty. The appeals filed by the Revenue are rejected.

Summary

Issues Involved:
1. Re-determination of transaction value under Section 14 of the Customs Act 1962.
2. Allegation of mis-declaration and confiscation of imported goods under Section 111(m) of the Customs Act 1962.
3. Imposition of penalty under Section 112(a) of the Customs Act 1962.

Summary:

Re-determination of Transaction Value:
The main issue was whether the re-determination of the transaction value was in accordance with Section 14 of the Customs Act 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Revenue suspected under-valuation of imported Raw Silk Yarn by the respondent, M/s. Kaveri Silks & Jute Pvt. Ltd., based on contemporaneous import prices. The lower appellate authority allowed the importer's appeals, relying on the Supreme Court's decision in M/s. Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, which emphasized acceptance of transaction value unless there were valid reasons for rejection. The Tribunal upheld this view, noting that the declared value was based on a contract and there was no evidence of mis-declaration or extra-commercial considerations.

Mis-declaration and Confiscation:
The Revenue alleged mis-declaration, leading to the proposal of confiscation under Section 111(m) of the Customs Act, 1962. The original adjudicating authority rejected the declared value and re-determined it based on a higher contemporaneous import value. However, the Tribunal found no valid reason to reject the declared transaction value, as there were no allegations of mis-declaration or evidence that the importer paid more than the contracted price. The Tribunal emphasized that the declared value should be accepted in the absence of evidence to the contrary.

Imposition of Penalty:
The Revenue imposed penalties under Section 112(a) of the Customs Act, 1962, based on the alleged under-valuation and mis-declaration. The Tribunal, however, found that the enhancement of transaction value was not legally sustainable without establishing the prices of contemporaneous imports of identical or similar goods. The Tribunal upheld the lower appellate authority's decision to accept the declared transaction value and rejected the need for penalties, as the earlier imports were cleared at similar declared values and the contemporaneous import value was not conclusively proven.

Conclusion:
The Tribunal upheld the lower appellate authority's order, rejecting the Revenue's appeals and accepting the declared transaction value. Consequently, the confiscation of goods and imposition of penalties were deemed unnecessary. The appeals filed by the Revenue were rejected.