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2024 (7) TMI 121 - AT - CustomsUnder-valuation of import of perfumes and deodorants - cosmetics - evasion of duty - mis-declaration of Maximum Retail Price (MRP)/ Retail Sale Price (RSP) - rejection of declared value - value declared in the B/Es, to be considered as transaction value, or not. It is contended that the value declared in the B/Es, which are based on the invoices issued by the overseas supplier, should be considered as the transaction value in terms of Section 14 ibid for payment of the Customs duty, which had been properly discharged by the appellants and also accepted by the proper officer at the time of assessment of the B/Es. HELD THAT - Since, the transaction value is determinable on the basis of the documents exchanged between the parties i.e., the appellants and the overseas supplier, the value of the imported goods, for which the payments were made through the approved banking channel, should be considered as the transaction value in accordance with sub-rule (1) of Rule 3 ibid. There is no scope or occasion for the department to reject the declared value for the purpose of consideration of some other transaction value inasmuch as the transaction value has already been determined and on the basis of such determination, the remaining 45 nos. of disputed B/Es were already assessed under sub-section (1) of Section 17 ibid, which had not been objected to by the department by taking recourse to sub-section (4) of Section 17 ibid, ordering for re-assessment of the same. The learned adjudicating authority has not analyzed the provisions contained in Section 14 ibid read with Rule 3(1) ibid in their proper prospective with regard to determination of the transaction value on the goods imported by the appellants into the territorial waters of India. There cannot be any reason to doubt the declared value in the B/Es as the transaction value, for the purpose of duty assessment. Rule 4 ibid deals with the situation of consideration of transaction value of identical goods. It has been provided that in applying the said rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity should be used. On perusal of the above table, it transpires that the volume of imports made on behalf of M/s Rasasi Perfumers Pvt. Ltd. was only 0.57%, as compared to the imports made by the appellants for their wholesale business during the disputed period. Further, the facts are not under dispute that the appellants had imported the goods for their wholesale business in India; where as, the overseas supplier had supplied the goods for exclusive sale in retail through its outlet(s) located in India, that too, in a minuscule quantity. The dealings of a wholesaler vis- -vis a retailer cannot be considered at the same commercial level. Thus, determination of value under Rule 4 ibid cannot be resorted to by the department under the above factual matrix. The learned adjudicating authority has confirmed the differential demand of Basic Customs Duty (BCD) by adopting to the deemed value based on MRP, for arriving at the transaction value. The valuation of goods for the purpose of computation of BCD amount has to be in accordance with Section 14(1) ibid and has thus, to be based on transaction value and not on the basis of MRP declared on the said goods. Therefore, no recommendation has been provided in the Customs statute for adopting the MRP as the basis for arriving at the transaction value of the imported goods. Even considering the fact that the transaction value can be arrived at on the basis of RSP, the wholesale dealers (appellants herein) are outside the scope and ambit of the Legal Metrology (Packaged Commodity)Rules, 2011. Imported cosmetics - HELD THAT - As an importer and wholesaler of perfumes, the appellants had duly complied with the provisions of Drugs and Cosmetics statute. In view of the fact that the appellants as the importer/wholesaler of perfumes and deodorants are governed under the provisions of Drugs and Cosmetics statute, they are outside the purview of the Legal Metrology Act, 2009 and the rules framed there under. It is opined that in the present set of facts, rejection of transaction value, re-determination of the same, confiscation of the impugned goods, confirmation of the differential duty demand along with interest and imposition of penalties on the appellants shall not stand the judicial scrutiny. Therefore, the impugned order dated 09.07.2020, confirming the adjudged demands on the appellants are set aside in entirety. The appeal is allowed in favour of the appellants.
Issues Involved:
1. Whether the prices declared in the 45 Bills of Entry (B/Es) should be considered as the 'transaction value' under Section 14 of the Customs Act, 1962. 2. Whether the declared value can be rejected and re-determined based on the value of identical goods as per Rule 4 of the Customs Valuation Rules, 2007. 3. Whether the appellants were required to comply with the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011 or the Drugs and Cosmetics Act, 1940. Detailed Analysis: Issue 1: Transaction Value Determination The appellants argued that the declared prices in the 45 B/Es should be considered as the 'transaction value' under Section 14 of the Customs Act, 1962. They contended that the goods were imported for wholesale purposes and the prices were based on invoices issued by the overseas supplier, with payments routed through approved banking channels. The Tribunal noted that there was no evidence of mis-declaration or additional payments beyond the invoice value. It was held that the declared value should be accepted as the transaction value as per Section 14 and Rule 3(1) of the Customs Valuation Rules, 2007. The Tribunal emphasized that the transaction value must be based on the price actually paid or payable and that the appellants had discharged their duty liability accordingly. Issue 2: Rejection and Re-determination of Declared Value The Revenue relied on two B/Es to reject the declared value in the remaining 45 B/Es, arguing that the prices in these two B/Es were higher and should be used for re-determination. The Tribunal found that the prices in the two B/Es were determined by the overseas supplier for their retail outlets and were not comparable to the wholesale imports by the appellants. The Tribunal held that the volume of imports and the commercial level of transactions were significantly different. Therefore, the declared value in the 45 B/Es could not be rejected based on the prices in the two B/Es. The Tribunal cited several Supreme Court judgments, including Eicher Tractors Ltd. v. Commissioner of Customs, to support the principle that the transaction value should be accepted unless there is evidence of mis-declaration or additional payments. Issue 3: Compliance with Legal Metrology or Drugs and Cosmetics Act The Tribunal examined whether the appellants were required to comply with the Legal Metrology (Packaged Commodities) Rules, 2011 or the Drugs and Cosmetics Act, 1940. It was found that the appellants imported goods in wholesale packages, which were sold to intermediaries and not directly to consumers. The Tribunal held that the Legal Metrology Rules applied to retail packages intended for sale to ultimate consumers, whereas wholesale packages were governed by different provisions. The Tribunal concluded that the appellants, as importers and wholesalers of perfumes and deodorants, were governed by the Drugs and Cosmetics Act, 1940, and had complied with its provisions. Therefore, they were outside the purview of the Legal Metrology Act, 2009, and the rules framed thereunder. Conclusion: The Tribunal set aside the impugned order, rejecting the re-determination of transaction value, confiscation of goods, differential duty demand, and penalties imposed on the appellants. The appeal was allowed in favor of the appellants, with consequential benefits as per law.
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