2018 (12) TMI 798 - AT - Customs

Valuation of imported goods - consignment of jute backed polypropylene carpet from Indonesia - rejection of transaction value - enhancement based upon the report received after overseas enquiry report forwarded to the DRI after the detailed investigation - Held that - The Bill of Lading No. and invoice No. are same but the Customs Tariff Heading and the quantity is different. The Revenue has not taken any further clarification regarding the mismatch from the Indonesian authority, who have supplied the same and straightway applied the same with the consignment of imported goods. The adjudicating authority has not got this further clarified as to why there is a difference in classification as well as in the quantity of the consignment imported. Merely on this basis, the valuation for the imported carpet cannot be enhanced. The valuation of consignment is required to be done as per the provisions of Section 14 of the Customs Act, read with the Customs Valuation Rules. The Department should have tried to obtain the price for the contemporaneous import and admitted to enhance the value, if found correct. It is also a fact that in respect of 13 Bills of Entry which was finally assessed and the clearance was effected, the Department tried to enhance the price based on the data received from overseas sources as well as from the two Bills of Entry imported by the appellants. It is the contention of the Department that the price of the similar goods should therefore had been applicable in all the past cases as well. It is a common knowledge that the jute backing polypropylene carpet are of the different types and quality may be superior or inferior and therefore without the sample being analyzed by the competent authority, it cannot be concluded that the goods are same or similar quality for want of specific information. Having not followed the procedure under Section 14(1) and 14 (1A) read with Customs Valuation Rules by the Adjudicating Authority and rejecting the transaction value without the contemporaneous price, the demand confirmed by the adjudicating authority in the impugned order is not sustainable - appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Rejection and enhancement of transaction value of imported goods.
2. Alleged mis-declaration of goods to evade customs duty.
3. Admissibility and reliability of foreign customs documents.
4. Application of Customs Valuation Rules.
5. Timeliness and validity of the show cause notice.
6. Imposition of penalties under Sections 114A and 114AA of the Customs Act.
7. Confiscation of goods under Section 111(m) of the Customs Act.

Detailed Analysis:

1. Rejection and Enhancement of Transaction Value:
The adjudicating Commissioner rejected the transaction value of the imported jute-backed polypropylene carpet and enhanced it based on an overseas enquiry report. The appellant challenged this enhancement, arguing that the value declared to the Indonesian Customs did not match the value declared to the Indian Customs, and the goods' classification and quantity differed.

2. Alleged Mis-Declaration to Evade Customs Duty:
The appellant was accused of mis-declaring the value of the imported goods to evade customs duty. The Department's investigation revealed discrepancies between the invoice values declared before Indonesian and Indian Customs. The appellant argued that the goods' quality and nature were not identical to those previously imported, and no extra remittance was made to the supplier.

3. Admissibility and Reliability of Foreign Customs Documents:
The appellant contested the admissibility of the letter from the Indonesian Ministry of Finance under Section 139 of the Customs Act, arguing that the presumption of truthfulness could be rebutted due to mismatched information. The Tribunal noted that the Department relied solely on the foreign customs report without further clarification of discrepancies.

4. Application of Customs Valuation Rules:
The Tribunal emphasized that the valuation of imported goods should comply with Section 14 of the Customs Act and the Customs Valuation Rules. The Department failed to establish that the goods were identical or similar as defined in the Customs Valuation Rules, and no contemporaneous import prices were considered.

5. Timeliness and Validity of the Show Cause Notice:
The appellant argued that the show cause notice was issued beyond the stipulated period under Section 28 of the Customs Act, rendering the demand time-barred. The Tribunal agreed, noting that the notice was issued after more than one year from the date of the Bill of Entry.

6. Imposition of Penalties:
The appellant contested the penalties imposed under Sections 114A and 114AA of the Customs Act, arguing that there was no evidence of mis-declaration or extra payment to the supplier. The Tribunal found no basis for the penalties due to the lack of corroborative evidence.

7. Confiscation of Goods:
The Tribunal noted that the Department failed to prove any mis-declaration by the appellant, and the confiscation of goods under Section 111(m) of the Customs Act was not justified. The Tribunal referenced previous case laws emphasizing the need for concrete evidence of undervaluation and the proper procedure for valuation.

Conclusion:
The Tribunal set aside the adjudicating authority's order, concluding that the Department did not follow proper procedures under the Customs Valuation Rules and failed to provide sufficient evidence of mis-declaration or undervaluation. The appeal was allowed, and the demand and penalties were deemed unsustainable.