2023 (8) TMI 1330 - AT - Customs

Overvaluation of imported goods - cut and polished diamonds - reliance placed upon two trade advisory panel reports to discard the declaration - confiscation - penalties - difference between the declared value and the ascertained value is about 20% - request for cross-examination was rejected on the ground that the difference between the estimation of the first and the second panels was a mere 8.3%. In the light of these variations - HELD THAT - There is no finding that the declared value is inconsistent with the essence of section 14 of Customs Act, 1962 nor of any ground, within the prescription of rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 enabling recourse to subsequent alternatives. Nor is there any narration in the impugned order that can lead us to conclude that the process set for invoking rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had been taken to its logical conclusion. The value adopted in the impugned order has not been shown to lack the impediments enumerated in rule 9(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 which is essential as the reasons that prompted the trade advisory panel to arrive at the disputed values is not on record. There has been blatant disregard not only of the scheme of valuation, now in force and consistent with international convention, as set out in Customs Act, 1962 and Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but also in the particulars of process and method embodied therein. The re-determination of value is not in accordance with the law. As the penal consequences arise from confiscation based on illusory foundation, the detriment to the individual appellants lack authority of law - Appeal allowed.

Summary

Issues involved:
The issues involved in this judgment are the alleged overvaluation of 'cut and polished diamonds' by the importer, the reliance on two 'trade advisory panel' reports to discard the declared value, and the imposition of penalties under the Customs Act, 1962.

Issue 1: Alleged overvaluation of 'cut and polished diamonds'
The appellant, an importer of 'cut and polished diamonds', procured 1461.23 carats in 26 lots valued at US $522,591. The 'trade advisory panel' recommended a different value, indicating overinvoicing. The Commissioner re-determined the value under Customs Valuation Rules and confiscated the goods, imposing fines and penalties. The appellant challenged these actions, arguing that the valuation was inconsistent with the rules, lacked evidence of complicity, and that the declared value was supported by transaction evidence.

Issue 2: Reliance on 'trade advisory panel' reports
The adjudicating authority relied on two 'trade advisory panel' reports to conclude that the goods were overvalued, leading to confiscation and penalties under the Customs Act. The appellant contended that the authority selectively extracted from the reports, and cross-examination of individuals was wrongly refused. The Authorized Representative defended the valuation process, emphasizing the expertise of the panel members and the acceptable variation in diamond valuation.

Issue 3: Compliance with Customs Valuation Rules
The Tribunal assessed the valuation discrepancies between the two panels and the declared value, noting a 20% difference. It questioned the exactitude of the panels' valuations and suggested rejection of the declared value under Customs Valuation Rules. The Tribunal emphasized the importance of adhering to valuation rules without dilution, highlighting the need for reasoned justifications in assessment.

Conclusion:
The Tribunal found that the re-determination of value was not in accordance with the law, leading to the lack of authority in imposing penalties. The impugned order was set aside, and the appeals were allowed, emphasizing the importance of following valuation rules and avoiding arbitrary assessments in tax collection.