1991 (12) TMI 185 - AT - Customs

Summary

Issues Involved:
1. Determination of the assessable value of imported goods.
2. Alleged misdeclaration of the quality of the imported goods.
3. Compliance with principles of natural justice.
4. Application of Customs Valuation Rules, 1988.

Detailed Analysis:

1. Determination of the Assessable Value of Imported Goods:
The appellants declared the goods as 132 Metric Tonnes of Methyl Ketone (Inferior quality) with a declared value of US $ 510 per MT. The Department, however, argued that the assessable value should be US $ 1275 per MT, based on prevailing market prices and quotations from the manufacturer's agents. The Collector of Customs determined the value of the imported goods as US $ 1275 per MT C.I.F. under Rule 8 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, read with Section 14(1) of the Customs Act, 1962.

2. Alleged Misdeclaration of the Quality of the Imported Goods:
The Customs House Laboratory confirmed that the imported goods were Methyl Ethyl Ketone and noted that the analytical constants matched those for technical grade Methyl Ethyl Ketone. The Collector rejected the claim that the goods were of inferior quality based on the chemical test and the markings on the drums. Consequently, the goods were confiscated under Sections 111(m) and (d) of the Customs Act, 1962, and a penalty of Rs. 20,000/- was imposed under Section 112 of the Customs Act, 1962.

3. Compliance with Principles of Natural Justice:
The appellants contended that the chemical test report was not furnished to them despite repeated requests, which amounted to a denial of justice. The Tribunal agreed with this contention, citing the Calcutta High Court's decision in Bata Shoe Company Pvt. Ltd v. Union of India and Others, which held that relying on a Chemical Examiner's report without providing a copy to the concerned party amounts to a denial of justice.

4. Application of Customs Valuation Rules, 1988:
The Tribunal noted that the adjudicating authority had straightaway resorted to Rule 8 for determining the value without sequentially considering Rules 4 to 7 as mandated. According to Section 14(1-A) read with Rule 3 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, the value of imported goods should be the transaction value under Rule 4, and if not determinable under Rule 4, it should proceed sequentially through Rules 5 to 8. The Tribunal found that the adjudicating authority failed to provide reasons for not considering the transaction value under Rule 4 and other rules before resorting to Rule 8, thereby rendering the order non-compliant with the requirement of being a 'Speaking order'.

Conclusion:
The Tribunal set aside the impugned order and remanded the case to the Collector for de novo adjudication in accordance with the law and the observations made in the judgment. The Tribunal emphasized the need for the adjudicating authority to follow the principles of natural justice and to provide a reasoned order sequentially considering the applicable rules. The Tribunal also urged for the case to be adjudicated within one month due to the detention of the goods. The appeal was disposed of in these terms.