2019 (4) TMI 1188 - AT - Customs

Valuation of imported goods - FAG ball bearings - undervaluation - rejection of declared value - enhancement of assessbale value - HELD THAT - The enhancement has been effected on the basis of the published price of the manufacturer after extending permissible discount and the adjudicating authority has restricted the duty liability to 70% of the list price of 2002/01/1st March 2002. The rejection of the declared value cannot be cause of cavil as the declared value of the imported goods were not in consonance with the price list for the said goods. However, the applicability, and validity, of the price list for determining the value under section 14 of Customs Act, 1962 is questionable for not being consistent with section 14 of Customs Act, 1962 and rule 4 of Customs Valuation (Determination of Value of Imported Goods) Rules, 1988 - The proper officer is required to take recourse to the rules sequentially. Assessment of imported goods requires that each of the Rules, pertaining to identical or similar goods, rejected with cogent reason before proceeding to invoke rule 8 of the said Rules. In the absence of such sequential application, the adjudication order, and the impugned order upholding it, cannot be said to be correct in law. Matter is remanded back to the adjudicating authority for fresh consideration of the value in accordance with Section 14 of Customs Act, 1962, including the Rules framed thereunder - appeal allowed by way of remand.

Summary

Issues:
Import of 'FAG ball bearings' against six bills of entry filed in 2005, undervaluation of goods, differential duty, confiscation of goods, penalties imposed.

Analysis:
The appeals by M/s Nitin Bearing Co. and Shri Shyamlal B Agarwal were against orders-in-appeal dated 11th December 2012 of Commissioner of Customs (Appeals), Mumbai I regarding the import of 'FAG ball bearings' against six bills of entry filed in 2005. The lower authorities found the goods undervalued, leading to a differential duty of &8377; 12,74,090/- on re-assessed value, enhanced by &8377; 35,99,455/- from the original value of &8377; 1,51,23,265/-, along with confiscation of goods and penalties imposed.

The appellant's counsel argued that the customs authorities wrongly invoked the extended period in the show cause notice as they had the manufacturer's price list for the relevant period. They contended that the difference in value was explainable as profit on the sale of ball bearings, and it was an error to enhance values based on the last consignment. Reference was made to the Supreme Court decision requiring a cogent reason for rejecting the invoice price for enhancement.

The Authorized Representative cited a Tribunal decision upheld by the Supreme Court, asserting the legality of the impugned order. However, the Tribunal found that the first appellate authority did not address the appellant's contentions properly. The rejection of the declared value was based on the unavailability of data on identical or similar goods, and the enhancement was done using the manufacturer's published price after extending a discount.

The Tribunal noted that while the declared value was rightfully rejected, the application of the manufacturer's price list for valuation was questionable. The proper sequential application of valuation rules was deemed necessary, and it was found that the adjudication order did not follow this sequence. Therefore, the impugned order was set aside, and the matter was remanded back for fresh consideration in accordance with the Customs Act and relevant rules, taking into account all appellant's contentions, especially regarding the invoking of the extended period.

In conclusion, the Tribunal remanded the matter back to the adjudicating authority for a fresh valuation in compliance with the Customs Act and its rules, emphasizing the importance of sequential application of valuation rules and proper consideration of all contentions raised by the appellant.