2021 (11) TMI 802 - HC - Customs

Valuation of imported goods - Star Aniseeds - rejection of declared value - suppression of value of goods - Retraction of voluntary statements - Section 46(4) of the Customs Act, 1962 - principles of natural justice was not complied with - HELD THAT - The writ Court had specifically noted the steps that contemplated in Rule 12 of the Customs Valuation(Determination of Value of Imported Goods) Rules and found that once the value declared by the importer is rejected, the proper Officer will have to determine the value by separate proceedings sequentially in accordance with Rules 4 to 9. The appellant failed to do so and therefore, the writ Court had rightly remitted back to the authorities for fresh consideration in accordance with law. Having failed to follow the procedure prescribed and the steps to be followed, the case had been remitted only for a fresh consideration for which, the authorities cannot have any grievance - there are no merit in the case of the appellant and the writ appeal is dismissed as devoid of any merits. Appeal dismissed.

Summary

Issues:
Undervaluation of imported goods leading to evasion of duty; Rejection of value declared by importer; Compliance with Customs Act, 1962 and Customs Valuation Rules; Principles of natural justice in determination of value; Validity of voluntary confession statement.

Analysis:
The case involved an appeal by the Department of Customs against an order passed in a writ petition concerning the undervaluation of 'Star Aniseeds' imported by the respondent. The investigation revealed that the respondent had undervalued the goods to evade duty by declaring values significantly lower than those declared by other importers of the same product. The appellant found evidence supporting the undervaluation and issued a show-cause notice under Section 28 of the Customs Act, 1962, for violating Section 46(4) of the Act.

The order in original directed the payment of a substantial differential duty amount with interest and imposed penalties for evasion. However, the Writ Court set aside the order, citing non-compliance with principles of natural justice as the value declared by the importer was rejected without proper determination by the Officer in accordance with Customs Valuation Rules. The case was remitted back to the authorities for a fresh consideration.

The appellant contended that the investigation was thorough, and the order in original was justified based on the evidence and the respondent's voluntary admission of undervaluation. The appellant argued that there was no need for remitting the matter back to the authorities as the case was clear-cut.

The High Court, after considering the arguments and perusing the record, upheld the decision of the Writ Court. It noted the failure of the appellant to follow the prescribed procedure for determining value after rejecting the importer's declaration. The Court emphasized the importance of following Customs Valuation Rules and remitted the case back to the authorities for proper consideration. The Court dismissed the appeal, confirming the order of the Writ Court, and closed the case without costs.

In conclusion, the judgment focused on the procedural lapses in determining the value of imported goods, the importance of following Customs rules, and the need for compliance with principles of natural justice in such cases. The Court's decision highlighted the significance of a proper investigation and adherence to legal procedures in matters involving customs duty evasion.