2014 (6) TMI 411 - AT - Customs

Valuation of goods - Mis declaration of goods - Import of Retro-Reflective Sheetings - Non disclosure of assessee s relationship with exporter as sole distributor - Enhancement in value of goods - Whether the transaction value can be rejected as same has been influenced being related person or not - Held that - During the course of investigation/search one invoice showing the sale price of the impugned goods at the rate of 66000 per roll against the import value of 1427/- per roll. The investigation team relied on that sale invoice but did not take into account all the other invoices which show the sale price of the impugned goods in the range of 1800 to 2400 per roll. - the sales invoices produced by the applicant cannot be discarded but the same are reliable evidence to determine the value of imported goods. Therefore, the enhancement of transaction value on the ground of that importer is related to the supplier is not sustainable as price is not influenced being related person. Commissioner has not taken into consideration all the sale invoice during the course of adjudication and relied on 2 or 3 stray invoices where the highest sale price is shown. More than 90% of the sale were found between the range of Rs. 1800 to 2400 per roll. Therefore, on this ground, the transaction value cannot be enhanced. Enhancement of value after comparing with contemporaneous import - Held that - here is no comparison of the quantity imported by M/s. Cosmic Manufacturing and the appellant. - To invoke Rule 5 or 6 of the CVR, 1988, the goods should be substantially of the same commercial value and of the same quantity. None of these requirements were fulfilled in the present case. - the single import made by M/s. Cosmic Manufacturing cannot be the basis of enhancement of the transaction value. Related person - financial flow back - Held that - No where it is coming out that the appellant has transferred money against the imported goods by some other means over and above the transaction value - if it is presumed that the appellants are related person, the transaction value is not influenced being related person has contemporaneous imports made by M/s. Rajhans Automobiles, the supplies by S.N. Corporation, Japan through other importers in India on the same price and the import made by M/s. Cosmic Manufacturing cannot be basis as without comparison of the goods imported by M/s. Cosmic Manufacturing and the appellant - No enhancement in transactional value to be done - Decided in favour of assessee.

Summary

Issues Involved:
1. Acceptance of declared transaction value.
2. Relationship between importer and exporter.
3. Validity of documents produced by the importer.
4. Legitimacy of demand under Section 28 of the Customs Act, 1962.
5. Liability of penalties on the importation firm and its directors.
6. Confiscation of goods not available at the time of the show-cause notice.

Detailed Analysis:

1. Acceptance of Declared Transaction Value:
The Tribunal examined whether the declared price could be accepted as the transaction value. The Commissioner had rejected the declared value based on the relationship between the importer and exporter and on higher sale prices observed in certain invoices. However, the Tribunal found that the declared value should be accepted as the transaction value since the goods were sold at similar prices to other importers and the relationship did not influence the price. The Tribunal also noted that the sale invoices provided by the appellant, showing prices between Rs. 1800 to Rs. 2400 per roll, were reliable evidence.

2. Relationship Between Importer and Exporter:
The Tribunal considered whether the importer (SKIL) and the exporter (KIWA) were related persons and if this relationship influenced the price. It was concluded that even if they were related, the relationship did not influence the price because KIWA sold identical goods to other parties at similar prices. The Tribunal emphasized that the agreement between SKIL and KIWA had expired, and during its validity, KIWA had sold goods at the same price to other importers.

3. Validity of Documents Produced by the Importer:
The Tribunal assessed the relevance of documents produced by the importer, including invoices showing sales at lower prices and the lack of cross-examination of customs officers. The Tribunal found that the Commissioner did not consider all relevant invoices and failed to grant cross-examination, violating principles of natural justice. The Tribunal held that the documents provided by the importer were valid and should be considered.

4. Legitimacy of Demand Under Section 28 of the Customs Act, 1962:
The Tribunal evaluated whether the demand for customs duty under Section 28(2) was justified. It was found that the demand was not sustainable because the transaction value was incorrectly enhanced based on an alleged relationship and higher sale prices in a few invoices. The Tribunal held that the declared transaction value should be accepted, nullifying the demand.

5. Liability of Penalties on the Importation Firm and Its Directors:
The Tribunal reviewed the penalties imposed on the importer and its directors. It was determined that the penalties were not justified as the transaction value was valid and there was no evidence of mis-declaration or undervaluation. The Tribunal set aside the penalties imposed on the importer and its directors.

6. Confiscation of Goods Not Available at the Time of the Show-Cause Notice:
The Tribunal considered whether goods that were not available for confiscation could be confiscated. It was concluded that since the goods were not available, they could not be confiscated, and the basis for imposing penalties on this ground was invalid.

Conclusion:
The Tribunal set aside the impugned order, accepting the declared transaction value and nullifying the enhanced demand and penalties. The appeal was allowed, providing consequential relief to the appellants.