2013 (8) TMI 214 - AT - Customs

Tribunal sets aside order, remands for redetermination of goods value, clarifies confiscation rules

The Tribunal set aside the impugned order and remanded the matter for redetermination of the value of goods declared as 'wall lamps' and 'floor lamps.' It ... Valuation of goods - inquiry was made by the department to ascertain the actual value of the goods – they determined the transaction value on the basis of the wholesale market price in India - in case of import of pre-packaged commodities, the MRP at which the imported goods were to be sold was required to be declared on the goods, but the same had not been declared and hence the goods appeared to be liable for confiscation under Section 111(d) of Customs Act, 1962, besides being liable for confiscation under Section 111(m) for misdeclaration of description and value - held that:– order was set aside and the matter was remanded back to original authority - The quantum of penalty on the importer firm shall be in proportion to the value of the goods held to be liable for confiscation - No separate penalty on the partners would be required - goods were not liable for confiscation u/s 111(m) - there was no justification for rejecting the declared transaction value in respect of chandeliers lamps, ceiling lights, glass/spare parts, table lamps, down lamps, spot lights and the same has to be accepted and for the same reasons – the question of confiscation of the goods u/s 111(d) has to be decided only after giving a clear finding as to whether the goods imported were in pre-packaged form so as to attract the provisions of Note 5 (e) of General Note of the Foreign Trade Policy – decided in favour of assessee Issues Involved:1. Mis-declaration of imported goods.2. Rejection and enhancement of declared transaction value.3. Confiscation of goods under Section 111(d) and (m) of the Customs Act, 1962.4. Imposition of penalties under Section 112 of the Customs Act, 1962.Issue-wise Detailed Analysis:1. Mis-declaration of Imported Goods:The appellants firm imported two containers declared to contain various lighting fixtures. Upon examination by the Directorate General of Intelligence Unit, it was found that items declared as 'wall lamps' were actually wall clocks with LED, 'table lamps' were table lamps with CFL, and 'floor lamps' were humidifiers. The quantity of humidifiers was very small. The Tribunal observed that the description of 'table lamps' with CFL did not constitute a mis-declaration, as a table lamp with a light bulb is still a table lamp. However, the items declared as 'wall lamps' and 'floor lamps' were mis-declared, thus making their declared value suspect.2. Rejection and Enhancement of Declared Transaction Value:The investigation officers determined that the declared value was much lower than the per kg. value of the raw materials used in manufacturing these items. They sought the opinion of M/s. ORMA Lights, which provided estimated wholesale market prices. Based on this, the officers applied Rule 7 of the Customs Valuation Rules, 1988, and enhanced the transaction value. The Tribunal found that the department incorrectly jumped directly to Rule 7 without sequentially applying Rules 5, 6, 7A, and 8. The Tribunal noted that there was no evidence showing that M/s. ORMA Lights' quotation was based on the wholesale price of identical or similar imported goods, and the proprietor of M/s. ORMA Lights had denied importing such goods and providing the quotation. Thus, the Tribunal held that the value determination needed to be revisited.3. Confiscation of Goods under Section 111(d) and (m) of the Customs Act, 1962:The Joint Commissioner upheld the allegations and ordered the confiscation of the imported goods under Section 111(d) and (m) of the Customs Act, 1962. The Tribunal found that there was no basis for rejecting the declared transaction value of goods other than 'wall lamps' and 'floor lamps' and held that these goods were not liable for confiscation under Section 111(m). Regarding the confiscation under Section 111(d) for not affixing the MRP, the Tribunal noted that the impugned order did not provide a clear finding on whether the goods were in pre-packaged form meant for direct sale to consumers. Therefore, this matter needed to be remanded for de novo adjudication.4. Imposition of Penalties under Section 112 of the Customs Act, 1962:Penalties were imposed on the appellant firm and its partners under Section 112 of the Customs Act, 1962. The Tribunal held that the quantum of penalty on the importer firm should be proportionate to the value of goods held liable for confiscation. No separate penalty on the partners was required.Conclusion:The Tribunal set aside the impugned order and remanded the matter to the original adjudicating authority for de novo decision on:- Redetermination of the value of goods declared as 'wall lamps' and 'floor lamps.'- Liability of the goods for confiscation under Section 111(d) for not declaring MRP.The appeals were disposed of accordingly.