2020 (1) TMI 308 - AT - Customs

Tribunal overturns decision on imported goods valuation due to procedural flaws and lack of justification.

The Tribunal set aside the Commissioner's decision to enhance the assessable value of imported goods, citing violations of natural justice, improper ... Valuation of imported goods - 'O General” window/split Air-conditioners in assembled condition - enhancement of value - rejection of declared value - Rule 8 of Customs valuation Rules, 1988 - case of appellant is that the importer was not informed of the reasons for rejection of the declared value and the manner of finalization of the assessment - principles of natural justice - HELD THAT:- The case appears to have been built upon the imports made somewhere in 2003 by another importer M/s. Vaz Enterprises who have imported components parts of the same brand of Air conditioner, whereas the present imports are in 2005; it is also not made out as to how the said imports of M/s. Vaz Enterprises are comparable with the impugned import in 2005; except mentioning that the goods are of the same brand nothing more is forthcoming from the OIA and OIO - this cannot be a reason for rejecting the transaction value declared by the appellants as no comparable parameters like supplier, importer, quantity, quality time of import are matching - Moreover in addition to the above, the principles of natural justice have been grossly violated as no sufficient time was given to the respondent to reply to the show cause notices or prepare for personal hearing. Issuance of two SCNs - HELD THAT:- Issuing 2 notices in too short a time may suffice the requirements of law in letter but the spirit of the same defeated. We find that the action of the lower authority is not at all sustainable under law. On merits also the case does not stand on even one leg. Firstly, no reasons were recorded for rejecting the declared value; Secondly, the valuation rules have not been pursued in the sequential manner in terms of Rule 4 of CVR 1988; thirdly no reasons for adopting the value of import which occurred a couple of years ago and lastly difference of additional duty payable was arrived at without rejecting the declared RSP - the instant case serves as a perfect example to show case as to how adjudication order is not supposed to be passed. The impugned order set aside - appeal allowed - decided in favor of appellant. Issues:Customs Valuation - Rejection of declared assessable value and enhancement by the department under Rule 8 of Customs Valuation Rules, 1988; Violation of natural justice in the assessment process; Comparison of valuation with invoices of another importer; Sequential application of valuation rules; Alleged errors in calculating the differential duty; Violation of principles of natural justice in the adjudication process.Analysis:The appeal challenged an Order in Appeal passed by the Commissioner (Appeals) Mumbai, Zone-I, regarding the valuation of imported 'O General' window/split Air-conditioners by M/s. Ambitius Marketing. The department had enhanced the assessable value from the declared amount of Rs. 16,42,058 to Rs. 22,29,999.20 under Rule 8 of Customs Valuation Rules, 1988. The appellant contended that the Deputy Commissioner's actions lacked natural justice as they did not inform the importer of reasons for rejection of the declared value. The appellant argued that the burden to establish the declared price was on the department, citing relevant case laws like Eicher Tractors v/s. CC and Rashesh & Co. v/s. CC, Mumbai.The appellant further argued against the valuation comparison with invoices of another importer, stating that such documents alone cannot establish undervaluation. They criticized the Deputy Commissioner's direct jump to Rule 8 without sequential application of Rules 4 to 7, referencing the case of Krishna Trading Co. v/s CC. Additionally, the appellant highlighted errors in calculating the differential duty and the failure to dispute the declared RSP for the imported goods, citing cases like ABB Ltd. v/s. CC, Bangalore and Sanjivani Non ferrous Trading Pvt.Ltd.Upon review, the Tribunal found that the case was built upon imports made by another importer in 2003, which were not directly comparable to the appellant's imports in 2005. The Tribunal noted a violation of natural justice due to insufficient time given for response to show cause notices. They criticized the lack of reasons for rejecting the declared value, the non-sequential application of valuation rules, and the calculation of additional duty without rejecting the declared RSP. The Tribunal concluded that the lower authority's actions were unsustainable under the law and set aside the impugned order, allowing the appeal with consequential relief.In conclusion, the Tribunal's decision highlighted the importance of adhering to principles of natural justice, proper application of valuation rules, and providing adequate reasoning in customs valuation cases to ensure a fair and lawful adjudication process.