2018 (6) TMI 16 - AT - Customs

Failure to obtain import-export code - Validity of import for not being in possession of import export code - Valuation of imported goods - ceramic tiles and sanitary ware - enhancement of value based on contemporaneous imports - Levy of additional duty - Rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Differential duty demand - Held that - The appellant had procured the goods for personal use and for transacting in personal goods, the Foreign Trade Policy permits a generic code to be employed. Accordingly, there being no bar on imports of personal effects against bill of entry and without separate code, there is no flaw in the procedure for import. Determination of value for the purpose of additional duty - enhancement of value - Rule 6 of Central Excise (Determination of Retail Sale Price of Excisable Goods) Rules, 2008 - Held that - It is surprising that rules pertaining to section 4A of Central Excise Act, 1944, which deals with goods manufactured in the country have been invoked in relation to imports without such rules being acknowledged either in the Customs Act, 1962 or the Customs Tariff Act, 1975. Additional duty of customs is a specific levy authorised by section 3 of the Customs Tariff Act, 1975. The taxing provision is self contained and makes reference, for determination of value, to section 14 of Customs Act, 1962. There is, therefore, no scope for insinuation of any rules that does not claim parentage from either of these two statutes or, at least, by adoption in either of these - the determination of value for the purpose of additional duty is without basis in law and is not tenable - the enhancement of value for ascertainment of customs duty both basic and additional, fails to meet the test of legality. For want of information of contemporaneous imports, rule 9 of the rules has been resorted to enhance the value of sanitary ware , in proportion to that adopted for tiles . This is neither justifiable nor logical; the procedure in law does not permit application of an enhancement in one set of articles to be adopted for another. No attempt appears to have been made to follow the letter and spirit of rule 9 of the said rules. The enhancement of value in the imports effected in the impugned order is without sanction of law - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Dispute over the import of ceramic tiles and sanitary ware from Kuwait.
2. Failure to obtain import-export code.
3. Valuation of goods for demanding additional duty.
4. Application of rule 9 of Customs Valuation Rules for enhancing the value of sanitary ware.

Analysis:
1. The dispute in this appeal revolves around the import of ceramic tiles and sanitary ware of Italian/Spanish origin from Kuwait. The appellant initially sought clearance of these goods as unaccompanied baggage but later filed a bill of entry on insistence of the jurisdictional authority. The appellant was penalized for not having an import-export code, and the value of the goods was enhanced significantly, leading to a demand for differential duty.

2. The issue of failure to obtain an import-export code was examined. It was established that the appellant had procured the goods for personal use, which is permitted under the Foreign Trade Policy without the need for a separate code for personal goods. Therefore, the procedure for import without a separate code was deemed appropriate and in compliance with the relevant regulations.

3. The valuation of the goods for demanding additional duty was scrutinized. The tribunal found that the valuation was based on rules that were not applicable to imports, as they pertained to goods manufactured in the country. The tribunal emphasized that the determination of value for additional duty must align with the provisions of the Customs Tariff Act and the Customs Act. The tribunal concluded that the enhancement of value for customs duty lacked a legal basis and was not sustainable.

4. Rule 9 of the Customs Valuation Rules was invoked to enhance the value of sanitary ware based on the value adopted for tiles. However, the tribunal deemed this approach unjustifiable and illogical as the law does not permit the application of an enhancement for one set of articles to another without proper justification. The tribunal highlighted the lack of adherence to the letter and spirit of rule 9 in this case.

5. In light of the above analysis, the tribunal ruled that the enhancement of value in the imports, as per the impugned order, was not supported by law. Consequently, the tribunal set aside the order and allowed the appeal in favor of the appellant. The judgment was pronounced in court on 08/05/2018.