2016 (6) TMI 567 - SC - Customs

Supreme Court directs CESTAT for fresh review on Customs Valuation Rules & disputed payment

The Supreme Court referred the case back to the CESTAT for fresh consideration, focusing on the application of Customs Valuation Rules and the disputed ... Import of machines for chip placing - Under-valuation of machines - Demand of duty and confiscation of machines - appellant had made payment of US $ 1,03,000 towards the cost of these machines to M/s 'SMART' in December, 2004 when started earning profita - Held that:- it is clear from the observations of the CESTAT that the point was not urged before the Commissioner is palpably wrong. We may record that though no evidence is produced in these proceedings that payment of US$ 1 lakh 30 towards the cost of the machines was made, the reply which is extracted above shows that the documentary proof in this behalf was placed before the Commissioner. In any case the submission of the learned counsel is that the payment was made through banking and the such proof can always be given to CESTAT. Therefore, the impugned order passed by the Commissioner is set aside and the case is remitted to the CESTAT for fresh consideration. - Appeals disposed of Issues:1. Under-valuation of imported machines2. Application of Customs Valuation Rules3. Discrepancy in payment for machines4. Appeal against CESTAT judgmentUnder-valuation of imported machines:The case involved the import of two machines for chip placing in memory module manufacturing, declared at a value of US$ 39,000 CIF. The Department alleged gross under-valuation as the machines were used and refurbished. A Chartered Engineer valued them at $ 1,21,875. Investigations revealed a relationship between the supplier and the receiver, with technical know-how and equipment provided. Previous imports also faced similar under-valuation issues. The Commissioner confirmed duty on the machines and enhanced it under Customs Act and Valuation Rules, leading to a penalty and confiscation order.Application of Customs Valuation Rules:The Commissioner applied Rule 8 of the Valuation Rules for best judgment assessment, which the appellant contested. They argued that transaction value could be determined based on material before the Commissioner, invoking Rule 4 of the Transaction Valuation Rules. The appellant claimed to have made a payment in December 2004 towards the machines, disputing the Department's assertion of non-payment. Despite specific contentions and evidence presented, the Commissioner allegedly overlooked crucial aspects, leading to an appeal before the CESTAT.Discrepancy in payment for machines:The appellant contended that they had made a payment of US$ 1,03,000 towards the machines in December 2004, contradicting the Department's claim of non-payment. The appellant emphasized the understanding with the supplier regarding payment upon profitability, supported by documentary evidence. The CESTAT's failure to consider this argument raised concerns, prompting the Supreme Court to set aside the Commissioner's order and remit the case back to the CESTAT for fresh determination.Appeal against CESTAT judgment:Various arguments were presented by the appellant challenging the CESTAT judgment. The Supreme Court decided to refer the matter back to the CESTAT for fresh consideration, focusing on the principal submission regarding the application of Valuation Rules and the disputed payment for the imported machines. The Court allowed the appellant to present all relevant submissions during the fresh appeal process, ensuring a comprehensive review of the case.In conclusion, the Supreme Court's judgment addressed the issues of under-valuation, application of Customs Valuation Rules, discrepancy in payment for imported machines, and the appeal against the CESTAT judgment. The decision highlighted the need for a thorough reevaluation by the CESTAT, emphasizing the importance of considering all arguments and evidence presented by the appellant for a fair and just determination.