2017 (12) TMI 107 - SC - Customs

Misdeclaraion of imported goods - According to the Revenue, the goods were to be graded only as Grade A and AA whereas the assessee had graded the goods under the grades A, B and C - Section 130E(b) of the Customs Act, 1962 - Held that - Insofar as grading is concerned, apart from the letter dated 22.12.2000 of the Board of Foreign Trade, Ministry of Economic Affairs, Taiwan confirming that grades B, C and D also exist, what was available on record is an intra-departmental communication dated 12.04.1999 - The above materials, according to the learned Tribunal, were sufficient to reverse the finding of the primary and the First Appellate Authority on the point of grading. Valuation - evidence of contemporaneous value of the imported yarns i.e. Partially Oriented Yarn of Polyester (POY), Polyster Textured Yarn (PTY) and Polyester Filament (PFY) - Held that - The finding of the learned Tribunal is that almost half of number of the said bills of entry relating to each item of Yarn i.e. POY and PFY did not pertain to the yarns imported by the assessee and, in case of the rest, there was a variance in the price mentioned in the aforesaid bills of entry and those in the standing order; yet the prices mentioned in the said standing order were adopted to determine the transaction value. Tribunal thought it proper to take the view that the claim of the Revenue on the basis of contemporaneous records is not established and what was done was a determination/assessment based on the standing order which is prohibited by Rule 8(2) (v) of the Customs Valuation Rules, 1988 - If the basis on which the learned Tribunal had arrived at its conclusion and thought it proper to reverse conclusions of the primary and First Appellate Authority is to be considered in the light what has been stated above we will have no hesitation in coming to the conclusion that in the present case the learned Tribunal has arrived at a conclusion which is possible and permissible upon due consideration of the relevant materials. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Appeal under Section 130E(b) of the Customs Act to challenge an order reversing the liability for differential duty.
2. Discrepancy in grading of imported goods leading to rejection of transaction value.
3. Evaluation of documents supporting grading and transaction value.
4. Admissibility of appeal under Section 130E(b) of the Customs Act based on specific criteria.

Detailed Analysis:
1. The appeal under Section 130E(b) of the Customs Act aimed to challenge an order by the Customs, Excise and Service Tax Appellate Tribunal that reversed the liability of the respondent for a significant amount of differential duty. The primary and First Appellate Authority had held the respondent liable due to mis-declaration regarding the grade of imported items, which led to the rejection of the transaction value based on grading discrepancies.

2. The issue of grading discrepancies was central to the case. The authorities found that the goods were inaccurately graded by the assessee, deviating from the acceptable Grade "A" and "AA" standards. The Revenue relied on a standing order specifying acceptable values for similar goods, supported by contemporaneous documents. However, the Tribunal considered various documents provided by the assessee, including contracts, invoices, and confirmations of different grades by external entities, to reverse the grading decision.

3. Regarding the transaction value, the Tribunal scrutinized 16 bills of entry provided by the Revenue as evidence of contemporaneous value for imported yarns. It was noted that discrepancies existed in the bills related to different types of yarn, and the Tribunal concluded that the reliance on standing order prices for valuation was in violation of Customs Valuation Rules, 1988. This decision was based on the lack of establishment of claims through contemporaneous records.

4. The admissibility of the appeal under Section 130E(b) of the Customs Act was evaluated based on specific criteria outlined in a previous judgment. The Court emphasized that for the appeal to be considered, the raised question must directly impact duty assessment or goods valuation, involve a substantial unresolved legal issue, and not conflict with established conclusions unless a procedural violation or injustice occurred. In this case, the Court found that the Tribunal's decision was permissible, based on a valid consideration of relevant materials, and declined to interfere with the order.

In conclusion, the Court dismissed the appeal and upheld the Tribunal's order, emphasizing the absence of substantial legal questions warranting intervention and highlighting the importance of adhering to established criteria for appeal consideration under the Customs Act.