2019 (3) TMI 712 - AT - Customs

Provisional release of the seized goods - Import of consignment of mixed article - rejection of transaction value - contemporaneous import prices of identical or similar goods being imported not followed - Held that - The appellant has imported the consignment of mixed article and filed the Bill of Entry for the clearance thereof after payment of assessed duty. However, the same was reported to be undervalued as per the DRI and, accordingly, the same proposed to be rejected - the Adjudicating Authority has not followed the contemporaneous import prices of identical or similar goods being imported during the relevant time, following Section 14 of the Customs Act and the Valuation Rules and also by not adopting the sequential application thereof the market survey was conducted for the price of the goods under assessment without exhausting the various other alternatives. The transaction value is proposed to be rejected under Rule 12 of the Customs Valuation Rules, and therefore, the Adjudicating Authority has to follow the procedure as prescribed under various Rules starting from Rule 3, 4, 5 and only thereafter to resort to Rule 7 of the Customs Valuation Rules. This is incorrect and illegal. The market survey is, therefore, not sustainable - Further the market inquiry report regarding the price of imported goods has not been provided to the appellant and also there is no mention thereof in the order of the Adjudicating Authority and in the impugned order. In view of above, the order is patently illegal and arbitrary. The provisional release of the seized goods ordered on the execution of bond to the extent of value proposed by the Department but with bank guarantee to the extent of 25 % declared value of the consignment by the appellant - appeal allowed - decided in favor of appellant.

Summary

Issues:
Provisional release of seized goods, Violation of Principle of Natural Justice, Customs Valuation Rules, Market survey legality, Adjudicating Authority's discretion, Contemporaneous import prices, Arbitrary valuation increase, Adjudicating Authority's reasoning, Legal validity of impugned order.

Detailed Analysis:
1. Provisional Release of Seized Goods: The appeal challenges the provisional release order of seized goods by the Adjudicating Authority based on alleged undervaluation and misdeclaration of imported items. The appellant contests the conditions imposed for release, including a substantial differential duty liability and a bank guarantee.

2. Violation of Principle of Natural Justice: The appellant argues that the provisional release order violated the Principle of Natural Justice by not following the Customs Valuation Rules sequentially. The market inquiry was conducted under Rule 9 without exhausting Rules 3 to 8, leading to an alleged unfair valuation increase.

3. Customs Valuation Rules and Market Survey Legality: The appellant contends that the Adjudicating Authority failed to consider contemporaneous import prices and conducted a market survey without providing the report to the appellant. The valuation was enhanced significantly, allegedly disregarding the Customs Valuation Rules.

4. Adjudicating Authority's Discretion and Reasoning: The judgment criticizes the Adjudicating Authority for not providing sufficient reasoning for the valuation increase and not justifying the rejection of the transaction value. The Adjudicating Authority's decision-making process is deemed arbitrary and lacking legal basis.

5. Contemporaneous Import Prices and Arbitrary Valuation Increase: The Adjudicating Authority's reliance on a market survey without considering contemporaneous import prices is highlighted as a flaw. The valuation increase from the declared value to a much higher amount is deemed unjustified and arbitrary.

6. Legal Validity of Impugned Order: The judgment concludes that the impugned order is illegal, arbitrary, and in violation of Customs Acts, Rules, and regulations. The order is set aside, and the provisional release of seized goods is ordered on specific conditions, including a bond and bank guarantee.

7. Adjudicating Authority's Discretion and Release of Seized Goods: The Adjudicating Authority is directed to release the seized goods promptly within two weeks upon fulfilling the specified conditions. The judgment emphasizes adherence to legal procedures and principles in customs valuation matters.