2004 (5) TMI 141 - AT - Customs

Corrigendum to adjudication order - Hearing necessary - Natural justice - Whether valuation can be enhanced in the matter - HELD THAT - The manufacturing cost and depreciation has not been arrived at. It merely states that considering the present condition of the used Monitors and comparing to new Monitors of similar make, the value assessed as US 7,425.00 (CIF) should be reasonable, as against the invoice value US 5,400.00 (CIF) . The appellants had imported various models of colour monitors. The Chartered Engineer does not give specific value of each of the imported monitors to arrive at this value. The certificate itself states that the second hand goods being subjected to variable opinion, valuer or firm is not liable for any claims or damages. They only have assessed it at a reasonable price without any mention of market price or the price available for similar monitors in the market or in the international market. Therefore, the Certificate being vague, cannot be relied. In the present case, as noted, the new price of the various models of colour monitors has not been stated nor has shown the method of the depreciation to arrive at the value. We have not found the Chartered Engineer's Certificate to be a reliable document and as the same has been rejected, the valuation adopted also stands rejected. Thus, the impugned order is set aside and appeal allowed.

Issues Involved:

1. Validity of the corrigendum issued by the Additional Commissioner.
2. Violation of principles of natural justice.
3. Legality of the confiscation and penalty imposed.
4. Validity of the valuation enhancement based on the Chartered Engineer's Certificate.

Issue-wise Detailed Analysis:

1. Validity of the corrigendum issued by the Additional Commissioner:

The appellants challenged the procedure adopted by the Additional Commissioner in issuing a corrigendum after the appeal was heard by the Commissioner (Appeals). The corrigendum invoked Para 2.17 of the EXIM Policy 2002-2007, changing the grounds for confiscation. The Tribunal referenced Circular No. 502/68/1999-CX, dated 16-12-1999, which states that significant changes in an order post-issuance, which are not clerical or arithmetical, should be reviewed by the appropriate authority instead of issuing a corrigendum. The Tribunal found that the corrigendum issued was not in compliance with the Ministry's Circular and was beyond the scope of Section 154 of the Customs Act, 1962, thus not legally sustainable.

2. Violation of principles of natural justice:

The Tribunal held that the issuance of the corrigendum without notifying the appellants and after the appeal hearing constituted a clear violation of the principles of natural justice. The Tribunal emphasized that the procedure should be fair and just, and the corrigendum issued behind the appellants' back was not in accordance with the principles of natural justice.

3. Legality of the confiscation and penalty imposed:

The Tribunal noted that the import of used Colour Monitors was initially held to violate Para 2.33 of the EXIM Policy 2002-2007, which restricts import of second-hand capital goods more than 10 years old without a specific import license. However, the Chartered Engineer's Certificate indicated that the goods were less than 10 years old, making the import valid. The Tribunal found that the confiscation and penalty imposed were not justified as the import did not contravene the EXIM Policy. Thus, the order of confiscation and imposition of penalty was set aside.

4. Validity of the valuation enhancement based on the Chartered Engineer's Certificate:

The Tribunal scrutinized the valuation enhancement based on the Chartered Engineer's Certificate, which assessed the value of the imported goods higher than the declared value. The Tribunal found the certificate to be vague and lacking a clear method for determining the value. It did not specify the manufacturing cost, depreciation, or market price of the similar monitors. The Tribunal referenced the case of Nina Chaka Pvt. Ltd. v. CC, New Delhi, where it was held that resort to Rule 8 of the Valuation Rules cannot be taken without exhausting the provisions of Rules 5 and 6. The Tribunal also cited the Supreme Court's judgment in Tolin Rubbers Pvt. Ltd. v. CC, Cochin, emphasizing the need to follow the proper valuation procedure under Rule 4(1) and Rule 4(2). Consequently, the Tribunal rejected the Chartered Engineer's Certificate and the valuation enhancement, setting aside the impugned order.

Conclusion:

The appeal was allowed, with the Tribunal setting aside the confiscation, penalty, and valuation enhancement orders. The corrigendum issued by the Additional Commissioner was deemed invalid, and the principles of natural justice were upheld.

← Previous Next →