2023 (9) TMI 533 - AT - Customs

Valuation of imported goods - goods declared as raw silk yarn in hanks - undervalued goods - enhancement of the value based on contemporaneous imports - rejection of transaction value - proper reasons for rejection not given - HELD THAT - There are no proper reasons given by the department to reject the transaction value. In para 15 of the Order in Original, the original authority has discussed the various provisions relating to transaction value without giving reasons for rejecting the transaction value. Further, it is seen that in para 21 of Order in Original that the value has been enhanced on the basis of a Bill of Entry dated 25.11.2010 which is an import directly from Uzbekistan - In the present case, the appellant has imported the goods from Dubai, UAE, though the country of origin is Uzbekistan. It is also not brought out in evidence as to the comparison of the various parameters with regard to quality, quantity of the goods imported. The appellant has furnished data with regard to various Bills of Entry for imports made from Uzbekistan for the period from 12.4.2010 to 30.11.2010. In present case, merely because the value declared for the goods in a single Bill of Entry dated 25.11.2010 is 28 USD, the department has rejected the transaction value. It is not established that the commercial parameters as to quality, quantity, manufacturer are similar. The Tribunal in the case of M/S. SREE RAJENDRA TEXTILES VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , CHENNAI AND COMMISSIONER OF CUSTOMS, CHENNAI VERSUS M/S. KAVERI SILKS JUTE PVT. LTD., M/S. SREE RAJENDRA TEXTILES 2017 (6) TMI 988 - CESTAT CHENNAI had occasion to consider a similar issue and observed that the transaction value cannot be rejected without cogent reasons. Thus, the demand of duty, confiscation, imposition of redemption fine and penalty imposed cannot sustain and requires to be set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment include undervaluation of goods, rejection of transaction value, provisional assessment, confiscation of goods, redemption fine, penalty under Customs Act, and comparison of import values.

Undervaluation of goods:
The appellant filed Bill of Entry for clearance of goods declared as raw silk yarn in hanks. Invoices were raised by a foreign supplier at a unit price of USD 15 per kilogram. The assessment group sought to enhance the unit price, leading to provisional assessment and release of goods on bank guarantee and personal bond. The department issued a Show Cause Notice alleging undervaluation, which resulted in rejection of transaction value, confirmation of differential duty, confiscation of goods, and imposition of penalties. The appellant contended that the declared value was fixed after negotiations and the department lacked legal or factual basis for rejecting it. The Tribunal found no proper reasons given to reject the transaction value and observed discrepancies in comparing import values from different countries.

Provisional assessment and confiscation:
The Bills of Entry were provisionally assessed at a value determined by the department, leading to the release of goods on a bank guarantee and personal bond. Subsequently, a Show Cause Notice was issued alleging undervaluation, resulting in the rejection of transaction value, confiscation of goods, and imposition of penalties. The appellant argued that the department failed to provide valid reasons for rejecting the declared value, and the Tribunal agreed that the transaction value cannot be rejected without cogent reasons.

Penalty under Customs Act:
The department imposed penalties under section 112(a) of the Customs Act, 1962, in addition to confiscation of goods and imposition of redemption fine. The appellant challenged these penalties, highlighting the lack of justification for rejecting the declared value. The Tribunal, after considering the facts and legal precedents, set aside the demand of duty, confiscation, redemption fine, and penalties, thereby allowing the appeals with consequential relief.