2005 (10) TMI 184 - AT - Customs

Valuation of imported goods - integrated circuits - transistors - second enhancement of value based on contemporaneous imports - HELD THAT - The country of origin of the goods imported by the appellant is Singapore and Hong Kong whereas the country of origin of the goods mentioned in the show-cause notice relied upon by the Revenue is Japan. Further it is found that the first determination of the value was based on the letter issued by the Directorate of Valuation the directorate of Valuation again issued a letter dated 19-6-98 where it has been pointed out in respect of Integrated Circuit there is no uniformity in the assessment practice of this item and that different values are being accepted by different Customs Houses and it is also pointed out that where the parameters like the country of origin part number quantity commercial level timing of import etc. are identical or comparable the assessable values differ significantly. As regards Integrated Circuits (IC) the statement along with this letter shows that the ICs which are imported by the appellant are being imported into India declaring different prices if we go by the Valuation Rules than the lowest value is to be taken for the purposes for assessment. In respect of the transistor the revenue want to rely upon quotation issued by M/s. Electromark it is settled law that value of the goods cannot be enhanced on the basis of quotation. Further on query made by the appellant M/s. Electromark denied the issuance of the quotations which was relied upon by the Revenue. Another instance is relied upon by the Revenue for enhancing value of transistors is imported by N. K. Overseas vide bill of entry dated 11-9-98 - Tribunal in the case of PARAG SHETH VERSUS COMMISSIONER OF CUSTOMS AHMEDABAD 2005 (5) TMI 138 - CESTAT MUMBAI where the Revenue relied upon the same bill of Entry for enhancing the value of the goods imported by Parag Sheth set aside the order whereby the value was enhanced on the basis of import of Ms N.K. Overseas. The enhancement of the value of the imported goods second time by issuing a show cause notice is not sustainable hence set aside. Consequently penalties are also set aside and the appeal is allowed.

Summary

Issues involved:
Challenge to the adjudication order passed by the Commissioner of Customs regarding the enhancement of value of imported goods, imposition of penalties, reliance on letters from the Directorate of Valuation, discrepancy in country of origin, relevance of Bills of Entry, denial of quotations by M/s. Electromark, Bombay, and the sustainability of the second enhancement of value and penalties.

Analysis:

1. Enhancement of Value of Integrated Circuits:
The appellant imported integrated circuits, and the Revenue enhanced the declared value, leading to duty payment and clearance of goods. A show-cause notice was issued based on discrepancies in the value declared by the appellant and values from other imports. The appellant contested the second enhancement, arguing that the country of origin and relevant Bills of Entry differed, making the comparison invalid. They also cited Valuation Rules to support taking the lowest value for assessment. The Tribunal noted the lack of uniformity in assessment practices for integrated circuits and ruled in favor of the appellant, setting aside the second enhancement and penalties.

2. Enhancement of Value of Transistors:
In the case of transistors, the Revenue relied on quotations from M/s. Electromark, Bombay, which the appellant disputed. The Tribunal referenced a previous case where reliance on the same company's quotations was rejected. Additionally, the Revenue cited an import by another entity to enhance the value, but the Tribunal found this reliance unsustainable based on precedent. Consequently, the Tribunal set aside the enhancement of transistor values and penalties, ultimately allowing the appeal.

3. Sustainability of Second Enhancement and Penalties:
The Tribunal emphasized that the first enhancement of value was accepted by the appellant, and the subsequent show-cause notice was based on comparisons with other imports. However, the Tribunal found discrepancies in the comparison, particularly regarding the country of origin and the basis for value determination. As a result, the Tribunal concluded that the second enhancement of value and imposed penalties were not sustainable, leading to their dismissal and the allowance of the appeal. The cross-objections filed by the Revenue were also dismissed as they supported the adjudication order.

In conclusion, the Tribunal's detailed analysis of the issues surrounding the enhancement of value for both integrated circuits and transistors, considering discrepancies in country of origin, relevant Bills of Entry, and the reliability of quotations, led to the setting aside of the second enhancement and penalties, ultimately favoring the appellant in this legal judgment.