2019 (11) TMI 500 - AT - Customs

Valuation of imported goods - hot rolled steel plates (non-alloy) - enhancement of value - similar goods or not - HELD THAT - Though there is no provision under section 128 of Customs Act, 1962 for hearing both sides before passing of an order by the Commissioner of Customs (Appeals) and it was necessary to issue a show cause notice proposing the grounds of enhancement, unless waived by the importer, the Tribunal was magnanimous enough to allow the pleas of Revenue to be argued before the first appellate authority on their appeal. It was expected that the first appellate authority would render its decision after hearing, and considering, the submissions of both sides. We are unable to satisfy ourselves that the imports by M/s Mazgaon Dock Ltd could be designated as similar merely because of being contemporaneous. From the records of the original authority, we perceive a trend of fall in price during the said period. It would also appear that no efforts have been made by the assessing officer to ascertain the manner in which the alleged undervaluation would have been compensated to such extent as to warrant adoption of a value that was almost double that of the declared value - Such excess undervaluation, as alleged, should have been subject to serious investigation and appropriate penalties imposed if found to be so. In the absence of such, it can only be deduced that the exercise of enhancement of value so undertaken was without sufficient evidence on hand. Appeal allowed - decided in favor of appellant.

Summary

Issues:
- Assessment of enhanced value of imported goods
- Applicability of decisions in similar cases
- Lack of consideration for market trends and circumstances

Assessment of Enhanced Value:
The appeal was against the confirmation of enhancement of value from declared US $400 per MT to US $892 per MT for the import of 'hot rolled steel plates (non-alloy)'. The Tribunal noted that the original order was ex-parte and lacked a show cause notice, leading to a fresh proceeding where the enhanced assessable value was upheld. The Tribunal considered the invoices provided with the bill of entry, import prices of similar goods by other entities, and various legal precedents to support the assessment of enhanced value. However, the Tribunal observed that the impugned order lacked findings on the applicability of cited decisions to the case at hand.

Applicability of Decisions:
The Tribunal highlighted the importance of considering market trends and circumstances while assessing the value of imported goods. It noted the rigidity of contracts entered by different entities and the impact of price fluctuations on import contracts. The Tribunal emphasized that the assessing officer should have investigated the alleged undervaluation thoroughly and imposed penalties if necessary. The Tribunal found the logic adopted by the first appellate authority to be insufficient and set aside the impugned order, allowing the appeal.

Lack of Consideration for Market Trends and Circumstances:
The Tribunal criticized the assessing officer for not considering the declining price of steel and the flexibility in contract negotiations due to market conditions. It pointed out discrepancies in prices of imports by different entities and emphasized the need for a detailed investigation into alleged undervaluation. The Tribunal concluded that the enhancement of value lacked sufficient evidence and overturned the impugned order, highlighting the importance of thorough assessment based on market trends and circumstances.

This judgment emphasizes the significance of considering market dynamics, contractual flexibility, and thorough investigation in assessing the value of imported goods. It underscores the need for evidence-based decisions and highlights the role of legal precedents in supporting assessment outcomes.