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2025 (3) TMI 791 - AT - CustomsUndervaluation of imported goods - Oath Token - enhancement of value - rejection of value under Rule 12 of the Customs Valuation Rules 2007 (CVR) - redetrmination of value by proceeding sequentially through Rule 4 to 9 of CVR 2007 - It is submitted that the enhancement of value in the present case cannot be sustained based on the earlier enhancement by the Revenue - HELD THAT - It is a fact that the appellant had filed Bills of Entry 4200544 and 2454990 had imported 4000 oath tokens and declared the value as 50 USD in the Bills of Entry and cleared the same on payment of duty. The present consignment of identical goods quantity varying from 800 to 1600 have been declared at 6.5 USD inspite of the fact that the earlier consignment value was accepted as 50USD. Hence the revenue enhanced the value to USD 50 which is objected to by the appellant only on the ground that earlier also they had declared 6.5 USD which was enhanced to USD 50 accepted by the appellant. Having accepted the value the appellant cannot now claim that the enhanced value cannot be the basis for redetermination of the value. The Supreme Court of India in the case of Century Metal Recycling Pvt. Ltd. vs. UOI 2019 (5) TMI 1152 - SUPREME COURT observed that Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc. to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identical or similar and certain reasons exists and justifies detailed investigation. These reasons are to be recorded and if requested disclosed/communicated to the importer. Valuation alerts could be relied upon for default valuation computation under the Rules. Since the appellant had cleared identical products earlier on payment of USD 50 the Commissioner s order to redetermine the value based on the earlier acceptance of the value at USD 50 cannot be found fault with. In fact the appellant in the present 5 Bills of Entry vide his letter dated 29.09.2011 has clearly admitted that the differential duty and interest has been voluntarily paid and had requested to drop all proceedings. It is also a fact that the appellant had admitted that the goods were received free of charge under no charge invoice as submitted by them in their letter dated 15.11.2011. However the claim of the appellant that the assessments were provisional has to be accepted as we notice that the present bills of entry the word provisional is mentioned in all these bills of entry. Hence since the assessments are provisional the question of investigation and imposition of penalty without finalizing the assessments does not arise. Conclusion - i) Having accepted the value the appellant cannot now claim that the enhanced value cannot be the basis for redetermination of the value. ii) Since the assessments are provisional the question of investigation and imposition of penalty without finalizing the assessments does not arise. Appeal is allowed by way of remand.
1. ISSUES PRESENTED and CONSIDERED
The core legal questions considered in this judgment include:
2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Justification of Value Enhancement The relevant legal framework includes Rule 12 of the Customs Valuation Rules, 2007, which allows for the rejection of declared value if there is reasonable doubt about its truth or accuracy. The Court referenced the Supreme Court's interpretation in the case of Century Metal Recycling Pvt. Ltd. v. UOI, which outlines the procedural steps and conditions under which declared values can be questioned and reassessed. The Court found that the appellant had previously accepted the enhanced value of USD 50 for identical goods, which provided a reasonable basis for the authorities to suspect undervaluation in the current instance. The appellant's acceptance of the higher value in previous transactions undermined their argument against the current enhancement. The Court applied the law to the facts by affirming that the authorities were justified in enhancing the value based on the appellant's prior acceptance of the higher value, which indicated a precedent for the valuation of the goods in question. Issue 2: Impact of Provisional Assessments The appellant argued that the assessments were provisional and thus could not form the basis for enhancement or penalties. The Court agreed with this argument, noting that the bills of entry were marked as provisional, indicating that final assessments had not been completed. The Court concluded that since the assessments were provisional, the imposition of penalties and interest was premature. The procedural requirements for finalizing assessments had not been fulfilled, rendering the penalties unjustified. Issue 3: Imposition of Interest and Penalties The appellant contested the imposition of interest and penalties under Section 114A, arguing that there was no willful suppression of facts. The Court found merit in this argument, particularly in light of the provisional status of the assessments. The Court emphasized that penalties should not be imposed without finalized assessments and clear evidence of willful suppression. The Court set aside the imposition of penalties and interest, remanding the case for finalization of assessments before any further action could be taken. Issue 4: Procedural Compliance with Rule 12 The Court examined whether the authorities complied with the procedural requirements under Rule 12 of the Customs Valuation Rules, 2007. This rule mandates that the proper officer must have reasonable doubt about the declared value and must provide the importer with an opportunity to justify the declared value. The Court noted that the authorities had a basis for doubting the declared value due to the appellant's previous acceptance of a higher value for identical goods. However, the Court emphasized the need for the authorities to follow the procedural steps outlined in Rule 12, including providing written reasons for doubting the declared value and allowing the appellant an opportunity to respond. 3. SIGNIFICANT HOLDINGS The Court held that the enhancement of the value to USD 50 was justified based on the appellant's prior acceptance of this value for identical goods. However, the imposition of penalties and interest was set aside due to the provisional nature of the assessments. The Court remanded the case for finalization of the assessments, emphasizing the need for compliance with procedural requirements under Rule 12 of the Customs Valuation Rules, 2007. Significant Quotes: "The proper officer must record 'certain reasons' specified in (a) to (f) or similar grounds in writing at the second stage before he proceeds to discard the declared value and decides to determine the same by proceeding sequentially in accordance with Rules 4 to 9 of the 2007 Rules." "Since the assessments are provisional, the question of investigation and imposition of penalty without finalizing the assessments does not arise." The Court established the principle that provisional assessments must be finalized before penalties and interest can be imposed, ensuring that procedural fairness is maintained.
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