2023 (11) TMI 487 - AT - Customs

Confiscation of imported goods - undervaluation of goods - Radiators Cylinder Block Crankshaft and Oil Pump - no MRP/RSP was found on certain packages and the goods entering the port meant to be cleared by the Customs authorities for home consumption - non-complaince with the provisions of Notification No. 40 (RE2000) 1997-2002 dated 24.11.2000 issued by the Ministry of Commerce and Industry - HELD THAT - The impugned matter for assessment of the imported goods rightly and ordinarily fell within the adjudication competency of the Deputy/Assistant Commissioner. Though there is no prohibition in law for the Commissioner to undertake adjudication in the impugned case however as a matter of practice that is ordinarily not resorted to. We find that no reasons as required to be adduced for the rejection of the declared value in terms of sub-rule (2) of Rule 12 of the CVR- 2007 have been spelt out in the present adjudication undertaken by the Commissioner. Also none of the ingredients indicated in Explanation (1) of Rule 12 ibid are also indicated in the adjudication order - the re-enhancement of value for assessment purposes undertaken when the goods were already assessed and exercise for enhancement of declared value was already undertaken at the time of assessment is patently illegal and unjustified. Further there is an inherent contradiction in the department s proposal with reference to assessment of the goods imported thus while at para 11 B of the order it is admitted that the assessed value models of MPFI and MC appeared to be acceptable yet at the same time learned adjudicating authority has resorted to enhancement of the declared values of the said items as well. Following the law as pronounced by the Apex Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS MUMBAI 2000 (11) TMI 139 - SUPREME COURT there are no hesitation in stating that the transaction value has been rejected arbitrarily as the department was not able to adduce any sustainable evidence in the matter. The golden rule being that ordinarily the transaction value has to be accepted the rejection of transaction value has to be based only on extraordinary or special reasons and considerations. The Order in Original set aside - appeal allowed.

Summary

Issues involved:
The issues involved in the judgment include the rejection of declared unit value of imported goods, re-determination of value in accordance with Customs Valuation Rules, confiscation of goods, imposition of penalties under Customs Act, undervaluation of imported auto parts, compliance with Notification No. 40 (RE2000) 1997-2002, market enquiry for valuation, enhancement of assessable value, assessment of imported goods, adjudication competency, re-enhancement of value, Rule 5/Rule 6 of Customs Valuation Rules, contradiction in department's proposal, resort to Computed Value assessment, adoption of contemporaneous values, comparison of valuation of imported goods with Indian market value, rejection of transaction value, and acceptance of transaction value based on special reasons.

Summary of Judgment:

1. The appellant, an importer of auto parts, challenged the order of the Commissioner of Customs Port, Kolkata, regarding the rejection of declared unit value of imported goods and re-determination of value under Customs Valuation Rules, leading to confiscation and penalties under the Customs Act.

2. The department alleged undervaluation of imported goods based on lack of compliance with Notification No. 40 (RE2000) 1997-2002 and discrepancies in the valuation of certain items like Radiators, Cylinder Block, Crankshaft, and Oil Pump.

3. The department conducted a market enquiry to determine the value of imported goods as no database of contemporaneous imports was available, resulting in the enhancement of assessable value and rejection of declared value under Customs Act.

4. The appellant argued that past importations were assessed under second appraisement system, with values verified by officers, and no excess quantity observed, highlighting inconsistencies in the department's valuation methodology.

5. The Tribunal found that the Commissioner's adjudication lacked reasons for rejecting declared value, contravening Customs Valuation Rules, and noted the illegality of re-enhancing value once duty had been paid without appeal or review.

6. The Tribunal emphasized the need to consider the lowest value in a database for valuation, pointed out contradictions in the department's assessment, and highlighted the inapplicability of Computed Value assessment without evidence of related buyer-seller relationship.

7. Referring to legal precedents, the Tribunal concluded that the adoption of Indian market values for comparison was invalid, and the rejection of transaction value lacked sustainable evidence, ultimately setting aside the Order in Original and allowing the appeal.