2023 (10) TMI 75 - AT - Customs

Detention of imported goods - illegal import - mis-declaration of value and description of goods - rejection of declared value - valuation of the goods - HELD THAT - On perusal of the impugned order as submitted by Learned AR the goods were detained on reasonable believe that they are illegally imported by mis-declaring the value and description of the goods. Preliminarily when details were sought manufacturer of the goods informed that the value of the imported goods are lower than the market value of the goods. Based on the above email and data from Internet further investigation was carried out. However on inspection of the goods by Advocate Commissioner appointed by the Hon ble High Court of Kerala it was found that there is no such mis-declaration regarding quantity as alleged. There is no such finding in impugned order as well. Valuation of imported goods - HELD THAT - During investigation matter was taken up with the Authorized importer of Corelle brand items to disclose the import price of the said goods when imported by them and they have furnished the same. However without considering this value respondent took assistance from Chartered Engineer. Regarding the report submitted by the Chartered Engineer the Chartered Engineer relied on the market value of similar indigenous items in India to ascertain the assessable value. In view of above facts the method adopted by respondent to reject the transaction value based on such report of Chartered Engineer seems to be without any legal basis. As per the law laid down by the Apex Court in the matter of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS MUMBAI 2000 (11) TMI 139 - SUPREME COURT and also in the case of COMMISSIONER OF CUSTOMS CALCUTTA VERSUS SOUTH INDIA TELEVISION (P) LTD. 2007 (7) TMI 9 - SUPREME COURT what should be accepted as transaction value for the purpose of assessment under Customs act is the price actually paid by the importer for the particular transaction unless it is unacceptable for the reasons set out in Rule 4 thus the Hon ble Supreme Court directs the customs authority to decide the validity of the particular value instead of rejecting transaction value. In the impugned order there is no reference to transaction value and the value paid by the importer for procurement of the goods. This kind of valuation of the imported goods is incorrect and an improper appreciation of the Customs Valuation Rules 2007 - Appeal allowed.

Summary

Issues Involved:
1. Allegation of undervaluation of imported goods.
2. Rejection of transaction value based on Chartered Engineer's report.
3. Non-compliance with Customs Valuation Rules and precedent judgments.

Summary:

1. Allegation of Undervaluation:
The appeal concerns the valuation of imported goods, including Plates, Dinner Set, Bowls, Kitchen Ware, Glassware, and Home Appliances, under Bill of Entry No. 226908 dated 07.07.2008. The respondent alleged undervaluation, initiating an investigation which revealed that some items were "Corelle and Corningware" products. The official importer confirmed the authenticity and offered to provide import cost details, but these were not considered in the impugned order.

2. Rejection of Transaction Value Based on Chartered Engineer's Report:
The appellant contested that the adjudication authority relied on a Chartered Engineer's valuation, which was based on local market prices, arguing this method is unsustainable. The appellant maintained that the goods were purchased as a stock lot in a clearance sale, thus the transaction value should reflect the depreciated value rather than the price of brand-new items. The appellant cited the Supreme Court's judgment in Commissioner of Customs, Calcutta Versus South India Television (P) Ltd., emphasizing that invoice price forms the basis of transaction value unless cogent reasons justify its rejection.

3. Non-compliance with Customs Valuation Rules and Precedent Judgments:
The Tribunal noted that the adjudication authority did not consider the import price furnished by the authorized dealer or data from the Department's databank. The Chartered Engineer's report, based on local market prices, lacked legal basis. The Tribunal referenced Supreme Court judgments, stating that the transaction value should be the price actually paid unless invalidated under Rule 4. The Department must follow a sequential process under Rules 5, 6, and 7 before invoking Rule 8, which was not adhered to in this case.

Conclusion:
The Tribunal concluded that the valuation method adopted was legally unsustainable and an improper application of the Customs Valuation Rules, 2007. The appeal was allowed with consequential relief.

(Order pronounced in the Open Court on 26.07.2023)