2019 (6) TMI 1164 - HC - Customs

Jurisdiction - valuation of imported goods - It is submitted that in view of Section 130 of the Act, this Court would not have jurisdiction to entertain this appeal as the issues raised herein relate to valuation of imported goods for the purpose of assessment - HELD THAT - It is evident from the SCN that before the Revenue could come to the conclusion that there has been a misdeclaration of value in terms of Section 111(m) of the Act, the valuation of the imported goods as declared in the bill of entry has to be redetermined in terms of Customs Valuation Rules, 2007. It is only on this redetermination of the valuation of imported goods which involves assessment of goods for the purposes of duty (which would include nil rate of duty) that the occasion to proceed further to allege that the valuation declared in the bill of entry did not correspond with the valuation of the imported goods - Thus, before Section 111(m) could be invoked, the exercise to be carried out by the Revenue would be to redetermine the value of the goods declared by the respondents in the bill of entry - Thus, Section 130 of the Act ousts the jurisdiction of this Court with regard to any order relating to amongst other things to determination of any question having relation to the rate of duty of the custom or to the valuation of goods for the purpose of assessment. Valuation of goods for the purpose of assessment - HELD THAT - The provisions of Section 14 of the Act, which was relied upon by the appellant does not negate the prohibition of this Court exercising jurisdiction under Section 130 of the Act. The basis of the entire proceedings is redetermination of the valuation of the imported goods from that declared by the respondents and accepted by the Revenue. Thus, the correct valuation of the imported goods as declared in the bill of entry for the purpose of assessment is an issue that directly arising in this case. Appeal disposed of as not maintainable.

Issues Involved:

1. Applicability of Section 111(m) of the Customs Act, 1962 to over-invoicing cases.
2. Applicability of Section 111(m) to dutiable or prohibited goods.
3. Jurisdiction to hold goods cleared for home consumption liable for confiscation under Section 111.
4. Imposition of penalty under Section 112 for goods cleared for home consumption.
5. Imposition of penalty under Section 114A for goods cleared for home consumption.
6. Scope of Section 47 regarding clearance for home consumption.
7. Jurisdiction of Customs authorities to confiscate goods under Section 111 after clearance under Section 47.
8. Applicability of Customs Valuation (Determination of Valuation of Imported Goods) Rules, 2007 (CVR, 2007) to dutiable goods.
9. Valuation of imported goods for the purpose of penalty under Sections 112 and 114AA.
10. Transaction value of imported goods under Section 14 and Rule 12 of CVR, 2007.
11. Procedural propriety and adherence to Principles of Natural Justice by the Tribunal.

Detailed Analysis:

1. Applicability of Section 111(m) to Over-Invoicing:
The appellant questioned whether Section 111(m) of the Customs Act, 1962, which pertains to goods not corresponding in value with the entry made under the Act, implicitly covers all types of mis-invoicing, including over-invoicing. The Tribunal held that Section 111(m) was not intended to address over-invoicing in imports.

2. Applicability to Dutiable or Prohibited Goods:
The appellant argued that Section 111(m) applies to 'any goods,' not just dutiable or prohibited goods. The Tribunal, however, held that Section 111(m) is restricted to goods with a nexus to the assessment and collection of duty or enforcement of prohibitions.

3. Jurisdiction for Goods Cleared for Home Consumption:
The appellant contended that Section 111 applies to goods brought from outside India, including those cleared for home consumption. The Tribunal ruled that once goods are cleared for home consumption, they are beyond the jurisdiction of Section 111, limiting enforcement to infractions detected prior to clearance.

4. Imposition of Penalty under Section 112:
The appellant argued that liability to confiscation under Section 111 suffices for imposing a penalty under Section 112. The Tribunal held that goods cleared for home consumption are beyond the jurisdiction of the Customs Act, 1962, thus penalties under Section 112 cannot be imposed post-clearance.

5. Penalty under Section 114A:
The appellant contended that penalties under Section 114A are only for non-levy or short-levy of duty, while Section 112 covers goods liable to confiscation. The Tribunal held that penalties for goods cleared for home consumption and unavailable for confiscation could only be imposed under Section 114A, not Section 112.

6. Scope of Section 47:
The appellant argued that Section 47, which allows clearance of goods for home consumption, does not restrict the applicability of Section 111. The Tribunal held that duty liability and prohibited nature are the only aspects that could deny clearance under Section 47.

7. Jurisdiction Post-Clearance:
The appellant contended that Section 111 applies equally to goods cleared for home consumption. The Tribunal ruled that Section 111 cannot be invoked unless clearance under Section 47 is withheld or revoked.

8. Applicability of CVR, 2007:
The appellant argued that CVR, 2007 applies to all imported goods, not just dutiable goods. The Tribunal held that CVR, 2007 is restricted to dutiable goods.

9. Valuation for Penalty:
The appellant contended that valuation of goods is essential for quantifying penalties under Sections 112 and 114AA. The Tribunal held that the valuation scheme under the Customs Act, 1962, cannot be applied without revoking the assessment.

10. Transaction Value under Section 14 and Rule 12:
The appellant argued that the transaction value should be the price paid or payable for goods when sold for export to India. The Tribunal held that the declared value by the importer could not be substituted unless there was evidence of value inflation.

11. Procedural Propriety:
The appellant raised concerns about procedural propriety and adherence to the Principles of Natural Justice by the Tribunal. The Tribunal proceeded with the case despite objections and applications for recusal.

Jurisdictional Issue:
The Tribunal's decision was based on the jurisdictional issue that the valuation of imported goods for the purpose of assessment is excluded from the High Court's jurisdiction under Section 130 of the Customs Act, 1962. The Tribunal noted that the primary issue involved re-determining the value of goods declared in the bill of entry, which falls under the assessment of duty, thus ousting the High Court's jurisdiction.

Conclusion:
The appeal was disposed of as not maintainable due to the jurisdictional bar under Section 130 of the Customs Act, 1962, which excludes matters related to the valuation of goods for the purpose of assessment from the High Court's purview.

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