2023 (9) TMI 772 - AT - Customs

Valuation of imported goods - rough diamonds - rejection of declared value - prohibited goods or not - discrepancy in value - absolute confiscation - penalty - redeption denied on the ground that the certificate submitted was not in conformity with other supporting documents - HELD THAT - On perusal of invoice and airway bill, both of which have declared the weight and value of the rough diamonds and the cavil on the lack of segregation in accordance with lots comprising the consignment appears to be more procedural than substantive; indeed, there is no finding of variation in total quantity to cast doubts on the certificate. Thus, the only discrepancy that the lower authorities could fall back on was the value of the goods and, that too, by ascertainment in accordance with a procedure peculiar to the diamond industry. If the certification was suspected to be faulty or not pertinent to the impugned goods, necessary verification should have been initiated with issuing authorities and taken to its logical conclusion. No such exercise was undertaken and thus the denial is to be tested solely on conformity of the re-determination with law. On the issue of valuation adopted for the diamond industry, the Tribunal did have cause to consider it in depth on cross-appeals of Revenue - The order of the Tribunal in COMMISSIONER OF CUSTOMS AIR SPECIAL CARGO AWAS CORPORATE POINT, MAKWANA LANE, MUMBAI VERSUS KIRAN GEMS PVT LTD AND KIRAN GEMS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, VALLABHBHAI S PATEL VERSUS COMMISSIONER OF CUSTOMS, MAVBJIBHAI S PATEL VERSUS COMMISSIONER OF CUSTOMS, RAVIRAJ ANIL KUMAR VERSUS COMMISSIONER OF CUSTOMS, KUSHAL KAMLES PATEL VERSUS COMMISSIONER OF CUSTOMS 2023 (6) TMI 1015 - CESTAT MUMBAI held that It is also not the case of the lower authorities that any other law, requiring declaration of value in bill of entry for any purpose other than assessment to duty, has been breached insofar as the present dispute in concerned. In such circumstances, section 14 of Customs Act, 1962, or any Rules framed thereunder, is not of relevance to the impugned goods. Consequently, the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 cannot be brought to bear on the impugned goods. In the light of the decision of the Tribunal, it is not just the legality of the re-valuation that is relevant in the present dispute but even the legality of considering the certification, based on declaration of supplier in country of export to appropriate authorities there, as liable to be discarded on the basis of a finding, such as it is, of re-valuation undertaken by customs authorities, empowered restrictedly and in a context, for purpose so limited as not to extend to verification of one detail in a certificate prescribed by law for furnishing at the time of import. The impugned order is set aside and appeals allowed.

Summary

Issues Involved:
1. Legality of re-valuation of imported goods.
2. Validity of the Kimberly Process Certificate (KPC).
3. Confiscation of goods and denial of redemption option.
4. Procedural adherence in valuation and confiscation.

Summary:

1. Legality of Re-valuation of Imported Goods:
The Tribunal examined the re-valuation of imported rough diamonds by customs authorities, which had led to a significant reduction in the declared value. The Tribunal noted that the valuation process was flawed as it did not adhere to the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Specifically, the valuation was not consistent with rules 4 to 9 after rejecting the declared value under rule 12. The Tribunal emphasized that valuation should be based on the transaction value and must follow the prescribed rules sequentially.

2. Validity of the Kimberly Process Certificate (KPC):
The Tribunal scrutinized the validity of the KPC submitted by the importer. The lower authorities had deemed the certificate invalid due to discrepancies in value and details. However, the Tribunal found that the discrepancies were procedural rather than substantive and that there was no evidence of the certificate being faulty. The Tribunal highlighted that any suspicion regarding the KPC should have been verified with the issuing authorities, which was not done.

3. Confiscation of Goods and Denial of Redemption Option:
The Tribunal addressed the issue of confiscation and the denial of the redemption option. The lower authorities had confiscated the goods absolutely without offering redemption, citing the goods as "prohibited" due to the invalid KPC. The Tribunal found this approach to be arbitrary and emphasized that the goods were not prohibited at the time of clearance. The Tribunal held that the denial of the redemption option was not justified and set aside the confiscation order.

4. Procedural Adherence in Valuation and Confiscation:
The Tribunal criticized the procedural lapses in the valuation and confiscation process. It noted that the original authority had not issued a show cause notice, which is a procedural requirement. The Tribunal also pointed out that the valuation process was not transparent, as the valuer did not disclose the method used to determine the value. The Tribunal stressed that statutory intervention must be within the intent of the statute and that any deviation could have legal consequences.

Conclusion:
The Tribunal set aside the impugned order, ruling that the re-valuation and the subsequent actions taken by the customs authorities were not in accordance with the law. The appeals were allowed, and the order pronounced in the open court on 14/09/2023.