2014 (1) TMI 791 - AT - Customs

Valuation of goods - Misdeclaration of goods - Confiscation of goods - Held that - declared description of the goods was ceiling light complete with tubes, gate lights, coconut trees etc. and the goods on examination were found to be as per declaration. As regards the allegation of misdeclaration of value, we find that the main basis for not accepting the declared value is that the per kg. price of the goods is less than the average price of the raw materials - plastic, glass, steel, etc. However, the department has neither in a show cause notice nor in order-in-original nor the impugned order-in-appeal has clarified as to whether the prices of the raw materials mentioned are the price in India or the prices in China and if so, what is the source for this information and also what is the cost of manufacture of these items in China, as these goods are of Chinese Origin. For making the allegation of under-valuation and rejecting the declared transaction value, the department cannot adopt the price of raw materials of the goods in India and allege that the declared price of the goods is less than the average price of the raw materials. No iota of evidence in support of the department s allegation of misdeclaration of value and absolutely no evidence of contemporaneous import of identical or similar goods in comparable quantity at higher price had been produced. Just because the partner of the importer firm agrees for determination of the value under Rule 7 of the Valuation Rules, the department cannot allege that the value has been mis-declared. Moreover, the determination of value under Rule 7 has also been done in a very strange manner, as the department has not mentioned as to which the importer of identical or similar goods had been selling the goods in India at the wholesale price which had been adopted in this case for determination of assessable value under Rule 7. In view of these circumstances, we hold that there is absolutely no basis for rejecting the declared transaction value and making the allegation of under-valuation against the appellant - Therefore, neither the duty demand on the basis of upward revision of assessable value nor the confiscation of the goods under Section 111(m) for alleged misdeclaration of value of the goods is sustainable - Decided in favour of assessee.

Summary

Issues:
1. Alleged misdeclaration of value of imported goods
2. Confiscation of goods under Sections 111(m) and 111(d) of the Customs Act, 1962
3. Imposition of penalty on the importer firm and its partners

Analysis:

Alleged Misdeclaration of Value:
The appellant firm imported goods declared as lighting fixtures from Hongkong. The department alleged misdeclaration of value based on the per kg. price being lower than the average price of raw materials. However, the tribunal found the department's basis for rejecting the declared value unsustainable. The department failed to clarify whether the raw material prices considered were from India or China, the source of this information, or the manufacturing cost in China, where the goods originated. Without evidence of contemporaneous imports at higher prices or proper application of valuation rules, the rejection of declared value lacked justification. The tribunal held that the allegation of under-valuation was unfounded, leading to the rejection of duty demand based on revised value.

Confiscation of Goods:
Regarding confiscation under Section 111(m) for alleged misdeclaration of value, the tribunal ruled in favor of the appellant, stating that the duty demand and confiscation were not sustainable due to the lack of evidence supporting the misdeclaration claim. The tribunal emphasized the importance of proper valuation rules application and evidence of higher-priced contemporaneous imports before alleging misdeclaration.

Confiscation under Section 111(d) and Penalty Imposition:
The tribunal addressed the confiscation of goods under Section 111(d) for not affixing the Maximum Retail Price (MRP). It highlighted the requirement for pre-packaged goods to carry an MRP for sale to consumers. However, as the impugned order lacked findings on whether the goods were pre-packaged for consumer sale, the matter was remanded for further adjudication. The tribunal set aside the penalty imposed on the appellant firm and its partners due to the lack of misdeclaration and upheld the decision on the confiscation issue pending clarification on the packaging status of the imported goods.

In conclusion, the tribunal found no misdeclaration of value, rejected the duty demand and confiscation under Section 111(m), and remanded the decision on confiscation under Section 111(d) for further assessment. The penalty on the appellant firm and its partners was set aside pending clarification on the packaging status of the goods.