2024 (9) TMI 1327 - AT - Customs

Requirement to issue fresh SCN - Misdeclaration of value of imported goods - mis- classification of goods - rejection of declared value - right to cross-examination - Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007) read with Section 14 of the Customs Act, 1962 - Requiremnet of fresh SCN - assessment by itself being appealable even by the department whether the facts justified a fresh show cause notice? - HELD THAT - The valuation has to be determined even if be on contemporaneous price by sequentially following Customs Valuation Rules by rejecting all those which are not legally accepted. Also the statement of the Director (Finance of M/s. Glanbia Performance Nutrition India Pvt. Ltd) which has been relied upon to indicate mis-description and valuation is required to be tested on cross-examination and all documents of contemporaneous price to be adopted by the department are required to be supplied to the appellants. The statement of Director (Finance) of another rival Company even if is to be relied upon same has to be backed with import data. It is found that no such exercise has been carried out by the department in instant matter and in the absence of same, appellants cannot offer effective reply. Further, some of the products that do contain proteins do not prima facie merit consideration under T.H 21069099. Same needs detailed Consideration. The matter deserves to be re-considered by the adjudicating authority by offering a proper opportunity, as well as relevant import data/ documents as may be relied upon by the department and required in defence by the party - Appeal is allowed by way of remand.

Issues Involved: Mis-declaration of value, undervaluation, mis-classification, rejection of transaction value, non-compliance with Customs Valuation Rules, right to cross-examination, re-opening of assessment, and appropriate classification of imported goods.

Issue-wise Detailed Analysis:

1. Mis-declaration of Value and Undervaluation:
The Directorate of Revenue Intelligence (DRI) gathered intelligence indicating that the appellant was involved in the mis-declaration of value to evade customs duty on 'Nutritional Supplements' imported through Kandla SEZ. The investigation revealed that the appellant had resorted to undervaluation in respect of the imported goods from Muscle Fusion FZE, UAE, with the country of origin being the USA. The appellant admitted to undervaluation and voluntarily paid part of the differential duty amounting to Rs. 12,25,602/-. The department found that the declared values were manipulated and false, as the imports were done in connivance with the suppliers who received the differential value in cash.

2. Mis-classification of Goods:
The investigation also found that the appellant misclassified the imported 'Nutritional Supplements.' The appellant classified the goods under Customs Tariff Item (CTI) 21061000, which was challenged by the department, asserting that the correct classification should be under CTI 21069099. The appellant admitted that some products contained protein concentrates and textured protein substances and agreed to the department's classification for these products.

3. Rejection of Transaction Value:
The declared value was found liable for rejection under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CVR, 2007) read with Section 14 of the Customs Act, 1962. The department determined the correct valuation under Rules 4 to 9 of the CVR, 2007, comparing the values with contemporaneous imports of identical products. The appellant's declared values were significantly lower than the contemporaneous values, leading to the rejection of the transaction value.

4. Non-compliance with Customs Valuation Rules:
The appellant argued that the department failed to follow the Customs Valuation Rules sequentially, as required. The rejection of the transaction value and the re-opening of the assessment were deemed improper by the appellant. The department's reliance on the statement of the Director (Finance) of M/s. Glanbia Performance Nutrition India Pvt. Ltd. was also challenged, as the appellant was not offered cross-examination of the witness.

5. Right to Cross-examination:
The appellant contended that they were not offered the opportunity to cross-examine the witnesses whose testimonies were relied upon during the adjudicating proceedings. The tribunal found that the statement of the Director (Finance) of M/s. Glanbia Performance Nutrition India Pvt. Ltd., which indicated mis-description and undervaluation, required cross-examination and proper verification with import data.

6. Re-opening of Assessment:
The tribunal noted that the order did not address the issue of whether the assessment could be re-opened only through review by the department. The assessment by itself being appealable, the tribunal questioned if the facts justified issuing a fresh show cause notice.

7. Appropriate Classification of Imported Goods:
The tribunal found that some products containing proteins did not prima facie merit consideration under CTI 21069099. The classification of these products required detailed consideration, and the department needed to provide relevant import data and documents to the appellant for an effective defense.

Conclusion:
The tribunal concluded that the matter deserved re-consideration by the adjudicating authority. The department was directed to offer the appellant a proper opportunity, provide relevant import data/documents, and allow cross-examination of witnesses. The appeal was allowed by way of remand for a detailed examination of the issues raised.

(Pronounced in the open court on 23.09.2024)

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