2018 (11) TMI 500 - AT - Customs

Valuation of imported goods - hydraulic pump - rejection of declared value - enhancement in value based on contemporaneous import - propriety of exercise of jurisdiction to reject the declared value of the goods imported by the appellant - Held that - The declared value appears to be unduly low in comparison with other imports and the price at which the manufacturer sold hydraulic pumps ; it is also not less significant that the appellant failed to produce an invoice from the manufacturer. Considering all these aspects, the rejection of declared value stands upheld. The responsibility of the assessing officer does not cease with rejection of declared value and, in accordance with the sequential hierarchy of valuation prescribed for resort to Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, revised assessable value was to be arrived at. Failure to do so would render rejection under rule 10 A to be an exercise in futility - Rule 5 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 does accord flexibility to vary the declared price of contemporaneous imports to adjust for slight variations. It appears that the adjudicating authority has, accordingly, adopted value which coincides with the price declared in the imports effected by the group concern subsequent to the import of the impugned goods - there are no reasons to discard the enhanced value adopted by the adjudicating authority. Redemption fine - impugned goods not available - Held that - It is clear from the decision of the Hon ble High Court of Bombay in re Finesse Creation Inc 2009 (8) TMI 115 - BOMBAY HIGH COURT that redemption fine cannot be imposed on goods that are not available for taking possession of upon confiscation under section 111 of Customs Act, 1962 - There is no dispute that the impugned goods are not available, redemption fine cannot be imposed. There are two discrete processes leading to recovery of differential duty. Recourse to enhancement of value does not, ipso facto, arise from mis-declaration of the value in the bill of entry but from the particular scheme of assessment. Accordingly, invoking of section 111 of Customs Act, 1962 must rest upon evidences other than the mere fact of enhancement of assessable value - Evidence of mis-declaration should be made available to the noticee before doing so. Accordingly, in the present circumstances the confiscation under section 111 of Customs Act, 1962 lacks sanction of law. With the setting aside of liability to confiscation, the invoking of section 112 of Customs Act, 1962 also fails. The recovery of duty under section 28 of Customs Act, 1962 on the impugned goods upheld - the redemption fine and penalties are set aside - appeal allowed in part.

Summary

Issues:
1. Rejection of declared value of imported goods.
2. Determination of enhanced assessable value.
3. Imposition of redemption fine and penalties.

Issue 1: Rejection of declared value of imported goods:
The appeal challenged the rejection of declared value for imported hydraulic pumps by the adjudicating authority. The appellant contended that the declared value represented the transaction value and should not have been discarded without proper justification. The appellant cited various legal precedents to support their argument. The Tribunal analyzed the application of rule 10A of the Customs Valuation Rules, noting that the assessing authority has the discretion to reject declared value if there are reasonable doubts about its accuracy. The Tribunal upheld the rejection of declared value based on the circumstances surrounding the imports and the failure to produce an invoice from the manufacturer.

Issue 2: Determination of enhanced assessable value:
After rejecting the declared value, the adjudicating authority was required to determine the revised assessable value. The appellant objected to the authority's reliance on imports by a group concern for determining the value of the goods. The Tribunal acknowledged the flexibility provided by rule 5 of the Customs Valuation Rules to adjust for variations in contemporaneous imports. The Tribunal found the enhanced value adopted by the authority to be justified based on the information provided by the manufacturer regarding the price range of the goods.

Issue 3: Imposition of redemption fine and penalties:
The appellant challenged the imposition of redemption fine and penalties, arguing that they were inappropriate given the valuation dispute. The Tribunal referred to legal judgments regarding the imposition of fines and penalties in such cases. It noted that redemption fine cannot be imposed on goods that are not available for confiscation. The Tribunal found that the redemption fine and penalties imposed were not justified in the absence of evidence of underhand dealings, leading to the setting aside of these sanctions.

In conclusion, the Tribunal upheld the recovery of duty on the imported goods under section 28 of the Customs Act, 1962 but set aside the redemption fine and penalties. The judgment provided a detailed analysis of the issues related to the rejection of declared value, determination of assessable value, and imposition of fines and penalties, citing relevant legal provisions and precedents to support its findings.