2006 (7) TMI 232 - HC - Customs

Summary

Issues Involved:
1. Refusal to accept declared value of goods.
2. Issuance of a show cause notice on the same grounds as an earlier notice.
3. Legality of the show cause notice in light of previous appellate decisions.
4. Jurisdiction of the authority to issue the show cause notice.
5. Compliance with Customs Valuation (Determination of Price of Imported Goods) Rules, 1988.

Detailed Analysis:

1. Refusal to Accept Declared Value of Goods:
The petitioner, a major importer of raw silk, had a formal contract dated 17-2-2005 for the supply of 2,22,000 Kgs of Mulberry raw silk at USD 13.50/Kg-CIF. The petitioner had already cleared 163734.76 Kgs at an enhanced value of USD 13.94/Kg-CIF due to urgency. The third respondent issued a show cause notice to enhance the value to USD 22.36/Kg-CIF based on contemporaneous prices. This was adjudicated, and the declared value was rejected. However, the Commissioner of Customs (Appeals) set aside this order, holding that the goods should be assessed at USD 13.94/Kg-CIF. The CESTAT upheld this decision, and the Supreme Court dismissed the civil appeal at the admission stage.

2. Issuance of Show Cause Notice on the Same Grounds as an Earlier Notice:
Despite the appellate decisions, the third respondent issued a new show cause notice on 7-7-2006, citing the same grounds as the earlier notice. The petitioner argued that this notice was without jurisdiction since the same issue had been previously adjudicated and resolved in favor of the petitioner. The petitioner contended that the department's refusal to release the goods based on the earlier appellate decisions was unjustified.

3. Legality of the Show Cause Notice in Light of Previous Appellate Decisions:
The court noted that the contents of the show cause notices dated 29-11-2005 and 7-7-2006 were almost identical. The appellate authority had previously found no reason to reject the transaction value and had allowed the appeal, stating that the contract price should hold good for the entire contracted quantity unless omissions or commissions having a bearing on the value were shown. The CESTAT also upheld this view, emphasizing that the transaction value should not be rejected without valid reasons as set out in Rule 4(2) of the Customs Valuation Rules.

4. Jurisdiction of the Authority to Issue the Show Cause Notice:
The court held that the show cause notice dated 7-7-2006 was without jurisdiction, as it was issued on the same grounds that had already been adjudicated and resolved. The court emphasized that the department's repeated issuance of show cause notices on the same grounds was an act of defiance against the appellate decisions and was not supported by law.

5. Compliance with Customs Valuation (Determination of Price of Imported Goods) Rules, 1988:
The court referred to the Customs Valuation Rules, 1988, particularly Rules 3, 4, and 8, which outline the methods for determining the value of imported goods. The court noted that the transaction value should be accepted unless specific conditions under Rule 4(2) were met. The appellate authority and CESTAT had found that these conditions were not met in the petitioner's case, and therefore, the declared transaction value should be accepted. The court also referenced the Supreme Court's decision in Eicher Tractors Ltd. v. Commr. of Customs, which supported the acceptance of the transaction value unless valid reasons for rejection were present.

Conclusion:
The court quashed the show cause notice dated 7-7-2006, holding it to be without jurisdiction. The court directed the department to release the goods as expeditiously as possible, based on the value fixed by the CESTAT for earlier imports under the same contract dated 17-2-2005. The writ petition was allowed, and no costs were imposed.