2024 (7) TMI 17 - AT - Customs

Valuation/undervaluation of imported goods - rejection of declared value - redetermination of value based on the Chartered Engineer examination - retraction of statements - HELD THAT - There is no dispute about the description or quantity of the items declared. The value is also declared as per the commercial invoice filed along with the Bill of Entry. On verification, the only objection seems to be that the commercial invoice filed along with the Bill of Entry was from the supplier M/s. Masaki Corporation (Hong Kong) Ltd. but was signed by M/s. REEM International (Hong Kong) Ltd; based on which investigations were conducted and statements were taken - there was nothing on record to prove that the amount paid to the buyer was more the value declared in the commercial invoice filed by the appellant along with the Bill of Entry. The statements have been retracted and the cross-examination of the Chartered Engineer has been denied, which is against the principles of natural justice. The Hon ble Supreme Court in the case of EICHER TRACTORS LTD. VERSUS COMMISSIONER OF CUSTOMS, MUMBAI 2000 (11) TMI 139 - SUPREME COURT has held ' production of the price list did not discharge the onus cast on the Customs authorities to prove that the value of the 1989 bearings in 1993 as declared by the appellant was not the ordinary sale price of the bearings imported .' Section 14 of the Customs Act, 1962 clearly stipulates that the transaction value has to be accepted unless there are compelling reasons to reject the same. Moreover, any transaction value to be rejected has to be done as per the Customs Valuation Rules. In the instant case, none of these has been followed. The goods have been examined by the Chartered Engineer and value is being redetermined without giving any reason of the methodology that was followed - the emails and the statements do not suggest that that any extra payment was made to the buyer by the appellant in excess of what has been declared in their commercial value; therefore, the question of enhancing the value based on some random emails and statements without any corroboration has no evidentiary value. There are no reason to uphold redetermination of the value - the impugned order is set aside - appeal allowed.

Summary

Issues:
Customs valuation rules application, Allegations of undervaluation, Confiscation of goods, Appeal against redetermination of value.

Analysis:
The case involved the appellant, M/s. Saash Enterprises, filing a Bill of Entry for clearance of various items, wherein the department doubted the declared value. The Chartered Engineer estimated a higher value than declared, leading to confiscation of goods and imposition of penalties. The appellant contended that the valuation was done without following Customs Valuation Rules and without substantive reasons to reject the declared value. The appellant emphasized the need for proper assessment methods as per the rules and lack of evidence supporting undervaluation allegations.

The learned counsel argued that the goods were assessed and duty paid based on the declared value, and discrepancies in invoices did not imply undervaluation. The appellant cited the Supreme Court's ruling in Eicher Tractors Ltd. case, emphasizing that transaction value cannot be rejected without substantial reasons. The appellant also highlighted the denial of cross-examination of the Chartered Engineer, questioning the fairness of the redetermination process.

On the contrary, the Revenue's representative supported the redetermination based on statements indicating undervaluation by the appellant. The department relied on statements and evidence suggesting misdeclaration of value, justifying the need for the redetermination. The Chartered Engineer's evaluation was considered crucial in determining the correct value of the imported goods.

The Tribunal analyzed the case, noting that there were no disputes regarding item descriptions or quantities. The issue primarily revolved around discrepancies in invoices and the subsequent redetermination of value. The Tribunal referenced legal precedents, including the Eicher Tractors Ltd. case and Century Metal Recycling Pvt. Ltd. case, to emphasize the importance of following Customs Valuation Rules and providing substantive reasons for rejecting transaction values.

Ultimately, the Tribunal found the redetermination of value lacking in proper methodology and evidentiary support. The arbitrary adjustment of values without a clear assessment method was deemed against the Rule of Law. The lack of concrete evidence supporting undervaluation allegations and the denial of cross-examination further weakened the case for redetermination. Citing the Supreme Court's rulings, the Tribunal set aside the impugned order, allowing the appeal with consequential relief, if any, as per the law.