2024 (4) TMI 1198 - AT - Customs

Rejection of declared value of the goods imported and re-determining the same - requiring the appellant to pay the differential duty with penalty - Additional Commissioner also ordered for confiscation of the goods with option to the appellant to redeem on payment of redemption fine - appellants filed Bills of Entry for import and cleared the goods mentioned as Bucket Tooth (parts of Earth Moving Machine) at a declared value of Rs. 48.65 per kg - appellants agreed in writing to pay the differential duty on the proposed enhanced value of Rs. 75 per kg and also agreed to pay fine and penalty that may be imposed. The appellants also stated that they did not require issuance of show cause notices or personal hearing nor they desired a speaking order to be passed on re-assessment of the Bills of Entry. HELD THAT - The proper officer doubted the truth or accuracy of the value declared by the importers for the reason that contemporaneous data had a significantly higher value. It was open to the importers to require the proper officer to intimate the grounds in writing for doubting the truth or accuracy of the value declared by them and seek a reasonable opportunity of being heard but they did not do so. On the other hand the importers submitted in writing that though they had declared the value of the imported goods at Rs. 48.65 per kg. but on being shown contemporaneous data they agreed that the value of the goods should be enhanced to Rs. 75/- per kg. The importers also specifically stated that they did not want to avail of the right conferred on them under section 124 of the Customs Act and therefore they did not want any show cause notice to be issued to them or personal hearing to be provided to them. The importers also specifically stated that they did not want a speaking order to be passed on the Bills of Entry. It needs to be noted that section 124 of the Customs Act provides for issuance of a show cause notice and personal hearing and section 17(5) of the Customs Act requires a speaking order to be passed on the Bills of Entry except in a case where the importer/exporter confirms the acceptance in writing. It is no doubt true that the value of the imported goods shall be the transaction value of such goods when the buyer and the seller of goods are not related and the price is the sole consideration but this is subject to such conditions as may be specified in the rules to be made in this behalf. The Valuation Rules have been framed. A perusal of rule 12(1) indicates that when the proper officer has reason to doubt the truth or accuracy of the value of the imported goods he may ask the importer to furnish further information. Rule 12(2) stipulates that it is only if an importer makes a request that the proper officer shall before taking a final decision intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared and provide a reasonable opportunity of being heard. To remove all doubts Explanation 1(iii)(a) provides that the proper officer can have doubts regarding the truth or accuracy of the declared value if the goods of a comparable nature were assessed at a significantly higher value at about the same time. Decision of the Tribunal in Hanuman Prasad 2020 (12) TMI 1092 - CESTAT NEW DELHI holds that when the importer agree to the enhancement of the declared value it implies that the importer has not accepted the value declared by the importer in the Bills of Entry and therefore the value declared in the Bills of Entry automatically stands rejected. In such circumstances it is not necessary for the assessing authority to undertake the exercise of determining the value of the declared goods under the provisions of rule 4 to 9 of the 2007 Valuation Rules. Much emphasis has been placed by appellant that the assessing authority could not have referred to the provisions of rule 9 of the 2007 Valuation Rules. A perusal of the order passed by the Commissioner (Appeals) shows that no reference has been made to rule 9 of the 2007 Valuation Rules. The submissions advanced by the learned representative for the appellant is therefore mis-conceived. Thus it is not possible to accept the contention of appellant that the department should have adduced evidence to substantiate its claim regarding the enhancement of the value of the goods imported and should have passed a speaking order. Appellant is however justified in contending that the Additional Commissioner could not have confiscated the goods or imposed redemption fine and penalty also. Thus the confirmation of this finding by the Commissioner (Appeals) is not justified. Thus the order passed by the Commissioner (Appeals) confirming the rejection of the declared value and requiring the appellant to pay the differential duty is upheld. However that part of the order confirming confiscation of the imported goods with option to redeem on payment of redemption fine and imposition of penalty of Rs. 90, 000/- is set aside. The appeal is accordingly allowed partly.

Summary

Issues Involved:

1. Rejection of declared value and re-determination of the same.
2. Confiscation of goods and imposition of redemption fine and penalty.
3. Applicability of Section 14 of the Customs Act and the Customs Valuation Rules, 2007.
4. Requirement of evidence and speaking order in the context of voluntary acceptance of enhanced value.

Issue-wise Detailed Analysis:

1. Rejection of Declared Value and Re-determination:

The appeals were filed against the order rejecting the declared value of goods imported by the appellants and re-determining it based on contemporaneous data showing higher values for identical goods. The appellants had initially declared the value of the imported goods as Rs. 48.65 per kg. However, upon being shown contemporaneous data, they agreed in writing to an enhanced value of Rs. 75 per kg. The Tribunal noted that the appellants voluntarily relinquished their rights to a show cause notice and personal hearing, as provided under Section 124 of the Customs Act, 1962. The Commissioner (Appeals) upheld the re-determination of value, emphasizing that the appellants had admitted to the enhanced value and voluntarily relinquished their procedural rights, making the challenge to the enhanced value unsustainable.

2. Confiscation of Goods and Imposition of Redemption Fine and Penalty:

The Additional Commissioner had ordered the confiscation of goods under Section 111(m) of the Customs Act, with an option to redeem them on payment of a redemption fine, alongside a penalty. The Commissioner (Appeals) found the amount of redemption fine and penalty to be commensurate with the facts of the case. However, the Tribunal concluded that the confiscation of goods and imposition of redemption fine and penalty were not justified, setting aside this aspect of the order.

3. Applicability of Section 14 of the Customs Act and the Customs Valuation Rules, 2007:

Section 14 of the Customs Act was discussed in terms of determining the transaction value of goods, which should be the price actually paid or payable when the buyer and seller are not related, and the price is the sole consideration. The Tribunal emphasized that the Customs Valuation Rules, 2007, particularly Rule 12, allow the proper officer to doubt the declared value based on contemporaneous data showing higher values. The Tribunal noted that the appellants had agreed to the enhanced value, thereby negating the need for further valuation under Rules 4 to 9 of the Valuation Rules.

4. Requirement of Evidence and Speaking Order:

The appellants argued that the department failed to provide evidence to substantiate the rejection of the declared value and that a speaking order was necessary. The Tribunal, referencing the Hanuman Prasad case, held that once the appellants accepted the enhanced value, the declared value was automatically rejected, and there was no necessity for the assessing authority to undertake further valuation exercises. The Tribunal further noted that a speaking order under Section 17(5) of the Customs Act is not required if the importer confirms acceptance of the re-assessment in writing.

Conclusion:

The Tribunal upheld the order of the Commissioner (Appeals) regarding the rejection of the declared value and the requirement for payment of differential duty. However, it set aside the part of the order concerning the confiscation of goods and the imposition of redemption fine and penalty, allowing the appeal to that extent.