2000 (7) TMI 316 - AT - Customs

Summary

Issues:
1. Valuation of imported cloves based on increased prices.
2. Allegation of illegality in the impugned order.
3. Application of international prices in assessment.
4. Lack of notice to the importer in the assessment process.
5. Quasi-judicial function of determining valuation and charges.

Issue 1: Valuation of imported cloves based on increased prices
The appeal was filed against an order that increased the assessment of cloves from US $750 per metric ton (PMT) to US $1800 PMT. The appellant had imported cloves of Zanzibar origin with a declared CIF value of US $750 PMT. The impugned order cited a substantial increase in clove prices post-May 1999 and referenced bills of entries from various countries to justify the new assessment value. The appellant argued that the assessment was illegal and lacked supporting evidence for the higher value.

Issue 2: Allegation of illegality in the impugned order
The appellant contended that the impugned order was illegal due to a lack of evidence provided for the increased valuation. The appellant's counsel argued that the assessment should have been based solely on the transaction value, emphasizing the need for natural justice in the process. Additionally, the appellant challenged the authority's reliance on a Supreme Court judgment, highlighting the differences in facts between the cases and the changes in relevant customs laws over time.

Issue 3: Application of international prices in assessment
The impugned order justified the increased assessment by comparing the declared value with international prices of cloves from different origins, such as Indonesia, Sri Lanka, and Madagascar. The order emphasized the need to consider contemporary prices rather than contract values, especially when contracts were expired and not supported by a Letter of Credit. The authority relied on previous judgments to support the assessment based on prevailing international prices.

Issue 4: Lack of notice to the importer in the assessment process
The appellant raised concerns about the absence of a notice to the importer regarding the revised assessment. The appellant argued that under Section 124 of the Customs Act, a notice should have been given unless waived by the importer. The importance of providing a level playing field for comparisons, especially concerning prices from different origins, was emphasized, along with the necessity of giving a show cause notice before determining valuation and charges.

Issue 5: Quasi-judicial function of determining valuation and charges
The judgment highlighted the quasi-judicial nature of assessment proceedings, emphasizing that the authority should not delegate the determination of valuation and charges to another entity. The impugned order was set aside, and the adjudicating authority was directed to re-determine the assessment in accordance with the law, ensuring that the parties have the opportunity to present evidence and be heard in the process.

In conclusion, the judgment addressed various issues related to the valuation of imported cloves, legality of the assessment order, application of international prices, notice requirements, and the quasi-judicial functions involved in determining valuation and charges. The decision emphasized the importance of following due process and considering contemporary prices in assessments while upholding principles of natural justice and fair comparison in international trade transactions.