2021 (9) TMI 295 - AT - Customs

Valuation of imported goods - Light Melting Scrap (LMS) - High Sea Sales - rejection of declared value - redetermination of the value under Rule 9 of CVR, 2007 - HELD THAT - The demand made as per the show cause notice has been mechanically confirmed by the adjudicating authority and upheld by the Commissioner (Appeal), without taking into account the fact that the total duty paid by the appellant on two consignments cleared by them was ₹ 2,65,198/- for which the Tr-6 Challans, No 10247825 dated 10.11.2009 and No 10247102 dated 10.11.2009 have been produced by the appellants. If the total duty determined on the four consignments is on enhanced value of ₹ 41,73,804/- is less than the total duty already paid by the appellants, then what the case of revenue is. There appears to be gross misapplication of mind by the authorities concerned. This issue needs to be reconsidered by the authorities below and proper speaking order needs to be passed. While reconsidering the issue on the above aspect, the authorities need to establish the charge of mis-declaration by referring to various evidence produced by the appellant to establish that prevailing international price of the LMS at the relevant time was as per their declared value. In any case appellants were always entitled to ask for a speaking order, for enhancement of the value of the consignments imported in November 2009, in terms of Section 17 (5) of the Customs Act, 1962. The entire issue of mis-declaration of value needs to be reconsidered by the authorities below and proper speaking order giving proper reasoning for the enhancement of value needs to given, just acceptance by the importer of the enhanced value in import of some consignment, solely cannot be ground for establishing the charge of mis-declaration against him - the matter remanded back to the original authority for reconsideration of matter against the two appellants - Appeal allowed by way of remand.

Summary

Issues Involved:
1. Rejection of declared value and redetermination of value under Rule 9 of CVR, 2007.
2. Demand for differential duty and recovery under Section 28 of the Customs Act, 1962.
3. Confiscation of goods under Section 111(d) and 111(m) of the Customs Act, 1962.
4. Imposition of redemption fine under Section 125 of the Customs Act, 1962.
5. Imposition of penalties under Sections 112(a), 114A, and 114AA of the Customs Act, 1962.

Detailed Analysis:

1. Rejection of Declared Value and Redetermination of Value:
The Additional Commissioner ordered the rejection of the declared value of four consignments imported by M/s Agrasha Alloy Trading Pvt Ltd. under Rule 12 of CVR, 2007, and redetermined the value under Rule 9 of CVR, 2007 at USD 86,488 (?41,73,804). The appellant had initially declared the value at USD 185 PMT, but the customs authorities enhanced it to USD 300 PMT based on the floor price fixed by Customs at Nhava Sheva. The adjudicating authority reiterated the DRI's contention that the value should be redetermined under Rule 9, considering the prevailing international prices.

2. Demand for Differential Duty and Recovery:
The Additional Commissioner demanded a total duty amount of ?2,04,814 on the redetermined value and ordered the recovery of differential duty of ?1,03,356 after adjusting the customs duty already paid (?1,01,458). The appellant argued that they had already paid the duty on the enhanced value of USD 300 PMT for the first two consignments, and thus, there should be no further liability. However, the adjudicating authority confirmed the demand mechanically without considering the duty already paid by the appellant.

3. Confiscation of Goods:
The goods, with a total weight of 282.64 MTS and a redetermined value of USD 86,488 (?41,73,804), were ordered to be confiscated under Sections 111(d) and 111(m) of the Customs Act, 1962. The goods were already released provisionally after taking a bond and bank guarantee. The adjudicating authority imposed a redemption fine of ?10,00,000 under Section 125 of the Customs Act, 1962, to be recovered from the bank guarantee provided by the importer.

4. Imposition of Redemption Fine:
A redemption fine of ?10,00,000 was imposed under Section 125 of the Customs Act, 1962. This amount was to be recovered from the bank guarantee given by the importer.

5. Imposition of Penalties:
Penalties were imposed on various parties involved:
- ?1,03,356 on M/s Agrasha Alloy Trading Pvt. Ltd. under Section 114A.
- ?1,00,000 each on M/s Viking International, FZE, M/s Leberry International Pvt Ltd., and Shri Madhukant R Agarwal under Section 112(a).
- ?1,00,000 each on Shri Madhukant R Agarwal and Shri Rajesh Agarwal under Section 114AA for knowingly making false declarations to evade duty.

Judgment and Remand:
The Tribunal found that the adjudicating authority had mechanically confirmed the demand without considering the duty already paid by the appellant. The Tribunal noted that the total duty determined on the enhanced value was less than the total duty already paid by the appellant. The Tribunal emphasized the need for a proper speaking order, giving proper reasoning for the enhancement of value and reconsideration of the issue of mis-declaration of value.

The appeals were allowed, and the matter was remanded back to the original authority for reconsideration in light of the Tribunal's observations. The adjudicating authority was directed to decide the matter within three months of receipt of the order.

Order Pronounced:
The order was pronounced in the open court on 06.09.2021.