2024 (11) TMI 1238 - AT - Customs

Enhancement of value and additional duty - re-determine the value of the goods - appellant had imported Fuel Filters and other filters from China - consignment was ordered for examination and thereafter, it was found that the goods were of a much better quality i.e., made in Germany, South Korea, etc. - HELD THAT - We find that there is no dispute as to the fact that the filters carried the brand names of reputed parties such Komatsu, Deutz, Volvo, etc., along with the countries of origin embossed as Germany , Korea , etc. This basically would allow the importer to sell these filters to buyers who want to replace these filters with the original branded filters. Hence, we find that the value as shown in the invoice of the Chinese exporter cannot be accepted prima facie. The importer himself had volunteered to pay the differential Customs Duty as per the enhanced value arrived at by the Customs officials, but subsequently appears to have changed their stand and sought re-examination of the goods by the Chartered Engineer. There is nothing on record to indicate that the Chartered Engineer, who was also duly approved by the DGFT, has committed any mistake in examining the subject consignment and arriving at the value. Therefore, we do not find any merit in the arguments adduced by the appellant that the Revenue has not followed the proper procedure while enhancing the value. Therefore, we hold that the lower authorities have correctly arrived at the value as per which the appellant would be required to pay Rs.25,23,360/- (as per the original estimate of the Customs officials). Since it was not a very serious contravention by the appellant and initially, they were even ready to pay the differential duty arising thereon and further were also ready to re-export the consignment for which they had given a written request, we find that confiscation of the goods is not warranted. Accordingly, we set aside the said order of confiscation and consequently, the redemption fine imposed also stands set aside. We also set aside the penalty of Rs.2,50,000/- imposed on the appellant. We give an option to the appellant to pay the differential Customs duty along with interest, to clear the consignment.

Summary

Issues:
1. Determination of the enhanced value of imported goods based on examination results.
2. Compliance with Customs Valuation Rules in determining the value of the consignment.
3. Confiscation of goods under Section 111(m) of the Customs Act, 1962.
4. Imposition of penalty on the appellant.

Analysis:
1. The appellant imported filters from China, initially declaring a lower value. Upon examination, it was discovered that the goods were of higher quality, made in countries like Germany and South Korea. The enhanced value was determined, leading to a demand for additional duty.

2. The appellant contested the enhanced value, claiming the goods were compatible with specific brand equipment and origin details were correctly mentioned. A Chartered Engineer appointed by DGFT examined the goods and valued them at USD 161746.43, significantly higher than the declared value of USD 25046.09. The Customs Valuation Rules were invoked to re-determine the value, resulting in a Show Cause Notice for higher duty and proposed confiscation.

3. The adjudicating authority upheld the enhanced value, confiscated the goods under Section 111(m) of the Customs Act, and imposed a redemption fine and penalty. The appellant appealed, arguing that the proper procedure was not followed in determining the value and that the overseas exporter confirmed the Chinese origin of the goods.

4. The Revenue justified the enhanced value, citing the brand names and countries of origin on the filters, indicating compatibility with reputed manufacturers' equipment. The Tribunal found that the importer initially agreed to pay the differential duty but later sought re-examination. The Chartered Engineer's valuation was deemed appropriate, and the Tribunal upheld the value determined by the lower authorities.

5. Despite upholding the duty payment, the Tribunal considered the appellant's willingness to pay the differential duty and re-export the goods. Confiscation was deemed unwarranted, leading to the setting aside of the confiscation order and associated penalties. The appellant was given the option to pay the differential duty to clear the consignment, resulting in a partial allowance of the appeal.