2005 (7) TMI 196 - AT - Customs

Valuation (Customs) - goods (white poppy seeds) - difference in duty on the refixed value - Contemporaneous imports - confiscation - Penalty - HELD THAT - The Commissioner while considering the question of difference in the purity of the goods dismissed the same by simply observing that a percentage difference in purity of 0.4 in agriculture products was not capable of accounting for a price difference of 23.5%. This he has done without examining the price difference between poppy seeds of 99.5% purity and 99.9% purity which was even evident from the imports made by M/s. Saccha Soudha Pedhi that had imported poppy seeds of 99.9% purity at US 1050 PMT FOB and poppy seeds of 99.5% purity at US 945 PMT FOB. This aspect has been totally over looked by the Commissioner while considering the question of price variation due to the difference in quality of goods. The most significant lacuna in the impugned order is non-consideration of the contentions raised in the reply submitted by the appellant in March, 2001 particularly as regards the contract dated 4-10-2000 at Exhibit-6 annexed to further reply as referred to in para 4(v) thereof. The said contract was with the same International Trading Company and seems to have been executed on 4-10-2000. The buyers M/s. Esjaypee Impex Private Limited of Chennai entered into this sales contract for the purchase of a quantity of 850 MTs of white poppy seeds of 99.5% purity for the price at US 850 FOB with the condition of prompt shipment to Chennai. This was transaction which was very near to the sales contract entered into by the appellant on 16-12-2000.The impugned order does not give any reason as to why the said transaction was discarded, especially when is was specifically stated by the learned counsel before the Commissioner that M/s. Esjaypee Impex Private Limited have also cleared the goods at US 850 FOB . It appears to us that the learned Commissioner has adopted a lopsided approach by simply relying upon the import made by M/s. Saccha Soudha Pedhi of white poppy seeds of 99.9% purity without taking into account the other relevant transactions particularly the sales contract dated 4-10-2000 entered into by M/s. Esjaypee Impex Private Limited for buying white poppy seeds of 99.5% purity at US 850 per M.T. FOB and the sales contract dated 21-10-2000 entered into by M/s. Saccha Souda Pedhi for buying white poppy seeds of 99.5% purity at US 945 FOB. Non-consideration of this important evidence and the material aspect of difference in quality in its right prospective, in our view, has vitiated the impugned decisions, and both the matters required to be remitted to the learned Commissioner for a fresh consideration and decision. The impugned order are, therefore, set aside in both these appeals and the matters are remanded to the Commissioner for taking fresh decision in accordance with law and in the light of this judgment, expeditiously, preferably within three months from the date of the receipt of this order. Both these appeals are accordingly allowed.

Summary

Issues:
1. Challenge to order confiscating goods under Section 111(m) of the Customs Act, 1962 for under-declared value.
2. Imposition of redemption fines and personal penalties on the importer.
3. Interpretation of Customs Valuation Rules and applicability of Rule 10(A).
4. Consideration of transaction value and exceptions under Rule 4(2) in light of Supreme Court decision.
5. Dismissal of purity difference as a factor in price variation without proper examination.
6. Non-consideration of evidence and contracts related to similar transactions by other importers.

Analysis:
1. The appeals contested the order confiscating white poppy seeds due to under-declared value, leading to duty discrepancies and imposition of redemption fines and personal penalties. The Commissioner held the goods liable for confiscation under Section 111(m) of the Customs Act, 1962, based on discrepancies in declared values compared to the actual values determined under the Customs Valuation Rules.

2. The Commissioner imposed redemption fines and personal penalties on the importer under Section 112(a) of the Act, in addition to confiscating the goods. These penalties were based on the duty differences arising from the under-declared values of the imported goods.

3. The judgment delved into the interpretation of the Customs Valuation Rules, specifically Rule 10(A), and its applicability in determining the transaction value of imported goods. The Tribunal disagreed with the Commissioner's interpretation and emphasized that subordinate legislation like Rule 10(A) cannot override the provisions of the parent Act.

4. The Tribunal analyzed the acceptance of transaction value under Rule 4(1) of the Valuation Rules and the exceptions outlined in Rule 4(2) in light of a Supreme Court decision. It highlighted that the transaction value should be accepted unless covered by exceptions, emphasizing the need for harmonizing subordinate legislation with the parent Act.

5. The Commissioner's dismissal of the purity difference as a factor in price variation between goods of different qualities was criticized for overlooking the price variances observed in imports by other entities. The Tribunal noted the importance of considering quality discrepancies in determining price differentials.

6. The judgment pointed out a significant flaw in the Commissioner's decision-making process, highlighting the non-consideration of crucial evidence and contracts related to similar transactions by other importers. This oversight was deemed to have vitiated the decisions, leading to the remand of both matters for fresh consideration by the Commissioner.

In conclusion, the Tribunal set aside the impugned orders, remanding the cases to the Commissioner for a fresh decision in line with the law and the judgment provided, emphasizing the importance of considering all relevant evidence and aspects in customs valuation disputes.