2022 (12) TMI 1250 - AT - Customs

Appellate Tribunal Upholds Commissioner's Decision on FOB Value and Penalty

Commissioner of Customs, ICD, Export Tughlakabad, New Delhi Versus M/s. BHA Exim Pvt. Ltd.

The Appellate Tribunal CESTAT NEW DELHI dismissed the appeal, upholding the Commissioner (Appeals) decision to set aside the re-determination of the FOB ... Duty Drawback - Redetermination of export value - rejection of declared value of the goods in the 13 shipping bills - seizure of goods under section 110 of the Customs Act, 1962 - HELD THAT:- It cannot be doubted that under rule 12 of the 2007 Valuation Rules, the adjudicating authority has to first give cogent reasons to reject the declared value and thereafter re-determine it. In the instant case, the adjudicating authority noted only two questions to be answered, namely, re-determination of value of the export goods for drawback purpose and whether the exporter was liable to penalty under section 114 of the Customs Act. The adjudicating authority, after observing that the export goods were over-valued by the exporter with an intent to avail higher drawback, observed that the declared value of the goods attempted to be exported should, therefore, should be rejected under rule 8 of the 2007 Valuation Rules. The adjudicating authority had to first examine the correctness of the declared value of the export goods and after recording a finding that they were not correctly valued re-determine the value, but this was not done. This mistake has been noticed by the Commissioner (Appeals) in the impugned order. Appeal dismissed. Issues:1. Re-determination of FOB value of export goods for drawback purpose.2. Liability of exporter to penalty under section 114 of the Customs Act, 1962.Re-determination of FOB value of export goods for drawback purpose:The case involved the appeal filed by the Department against the order of the Commissioner of Customs (Appeals) regarding the re-determination of the FOB value of export goods. The respondent had filed 13 shipping bills for the export of goods, which were seized under the Customs Act due to mis-declaration and overvaluation. The Department conducted a market enquiry under the 2007 Valuation Rules to re-determine the FOB and duty drawback amount based on lower mean values obtained. The adjudicating authority re-assessed the declared FOB value, rejected it, and imposed a penalty on the respondent. The authority found that the goods were over-valued by the exporter to avail higher drawback. The Commissioner (Appeals) set aside the order of the adjudicating authority, noting that there were no cogent reasons provided for rejecting the declared value and directly re-determining the value based on market enquiry alone. The Commissioner emphasized the need for a two-step process in rejecting the declared value, as per Rule 8 of the 2007 Valuation Rules. The rejection of the declared value solely on the grounds of market enquiry was deemed improper and not legally sound.Liability of exporter to penalty under section 114 of the Customs Act, 1962:The adjudicating authority imposed a penalty on the respondent under section 114(iii) of the Customs Act for over-valuation of goods. However, the Commissioner (Appeals) found that the rejection of the declared value under Rule 8 of the 2007 Valuation Rules was not proper and legal. The Commissioner highlighted that there were no significant variations in the declared value compared to the lower mean market values obtained from the market enquiry. The rejection of the declared value without providing cogent reasons or evidence of misdeclaration or related-party transactions was deemed incorrect. The Commissioner emphasized the need for the proper officer to follow detailed guidelines, similar to those laid down by the Hon'ble Supreme Court regarding the rejection of declared value and redetermination of value of goods.In conclusion, the appeal was dismissed by the Appellate Tribunal CESTAT NEW DELHI, upholding the order of the Commissioner (Appeals) that set aside the re-determination of FOB value and the penalty imposed on the exporter. The Tribunal found no infirmity in the impugned order and emphasized the importance of providing cogent reasons for rejecting declared values and following a two-step process in re-determining values based on market enquiries.