2023 (6) TMI 1015 - AT - Customs

Tribunal Allows Re-export, Dismisses Revenue's Appeal; Emphasizes Statutory Compliance and Flawed Valuation Process.

The Tribunal set aside the impugned order, allowing the appeals of the importer and individual appellants with consequential relief, and dismissed the ... Confiscation of imported goods - rough diamonds - composition of lots/parcels and the reasoning for recourse to the ‘residual method’ of valuation after rejecting the declared value under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT:- The intention of circular no. 53/2003- Cus dated 23rd June 2003 of Central Board of Excise and Customs (CBEC) in aligning customs procedure to conform to the global crusade against ‘conflict diamonds’ but such a peremptory direction which deprives an adjudicating authority of inherent latitude in exercising powers conferred statutorily is certainly poor, even if wellintentioned, execution of such intent. After all, statutory exercise of power, in adjudication process, is also an acknowledged check on policy formulation that transcends legislative intent which should have been reasonably overcome, in overriding circumstances for conformity with the comity of nations, only by amendments in statute - A circular of an attached office of the Central Government to its subordinate formations is not to be presumed as articulation even of policy intent let alone legislative intent when it circumscribes statutory conferment. In the light of failure to contest the easing of restrictions on re-export, the argument of Learned Authorized Representative for absolute confiscation is unacceptable. It is quite possible that purposeful misdeclaration of value by importers of articles, such as ‘rough diamonds’, may warrant recourse to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but the peculiarities of a trade upon which customs officials may be entirely dependent for expertise and whose activities may, even validly, be veiled under layers of secrecy may not be found by assessing officers to be of concern but the law cannot be ignored. That supervisory level of customs officialdom may have found it necessary to bypass impediments to proper resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 does not make up for that want of credibility - Absent that, substituted value will fail the test of law, as it does in the present dispute, and will have to be held as untenable even at the cost of declaring such instructions, if any, as not implementable. It is not the case of the lower authorities that any prohibition, ‘under Customs Act, 1962 or any other law for the time being in force’, stood in the way of clearance for home consumption upon assessment of bill of entry; a subsequent proceeding under Customs Act, 1962 cannot rest upon a prohibition that, at the time of clearance, was not in existence for resort to section 124 of Customs Act, 1962 proposing confiscation of goods under section 111 of Customs Act, 1962 - To postulate that empowerment to confiscate, under section 111(m) of Customs Act, 1962, on the ground that misdeclaration of value empowers resort to valuation provisions of the statute, intended for specific purpose, is to put the cart before the horse and effect before cause. The orders of the lower authorities leave no room for doubt that there is no difference in rate of ‘nil’ duty, corresponding to either of the tariff items – declared or substituted, in dispute, with the implication that the Customs Tariff Act, 1975 is not germane to the impugned goods - It is also not the case of the lower authorities that any other law, requiring declaration of ‘value’ in bill of entry for any purpose other than assessment to duty, has been breached insofar as the present dispute in concerned. In such circumstances, section 14 of Customs Act, 1962, or any Rules framed thereunder, is not of relevance to the impugned goods. Consequently, the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 cannot be brought to bear on the impugned goods. The importer may, if it chooses to, exercise right to re-export without any restraint on the goods subject to compliance with section 50 of Customs Act, 1962. Upon seeking of re-export, the goods shall be released to them within a period of one month. The appeal of Revenue, devoid of merit and substance, is dismissed. Issues Involved:1. Confiscation of rough diamonds under section 111(m) of the Customs Act, 1962.2. Rejection of declared value and resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.3. Authority of the first appellate authority to impose conditions for re-export.4. Jurisdictional and procedural adherence in the review process under section 129D of Customs Act, 1962.5. Validity of additional grounds and supplementary reviews in the appeal process.6. Compliance with Kimberley Process Certification (KPC) and valuation procedures.Summary:1. Confiscation of Rough Diamonds:The adjudicating authority ordered the confiscation of rough diamonds under section 111(m) of the Customs Act, 1962, due to discrepancies in the declared value and documentation. The diamonds were allowed to be redeemed on payment of fines and re-exported, subject to conforming to declarations. The first appellate authority upheld these orders but found no authority in section 125 of the Customs Act, 1962, to impose conditions for re-export.2. Rejection of Declared Value:The original authority rejected the declared value of the diamonds, resorting to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The first appellate authority upheld the confiscation but did not validate the substituted value, which goes against the grain of rule 12 of the Customs Valuation Rules. The Tribunal found that the valuation process was flawed and that the substituted value was untenable.3. Authority to Impose Conditions for Re-export:The first appellate authority's decision to remove conditions for re-export was not contested by the Revenue at this stage. The Tribunal held that the first appellate authority had no jurisdiction to impose such conditions, and the removal of these conditions was upheld.4. Review Process under Section 129D:The appeal of the Commissioner of Customs was rejected for not being subject to review within the stipulated time under section 129DD of the Customs Act, 1962. The Tribunal affirmed that the review is an administrative exercise separate from the appeal process and that the first appellate authority's rejection of the appeal was legal and proper.5. Additional Grounds and Supplementary Reviews:The Tribunal noted that the first appellate authority correctly discarded the additional grounds sought by the Revenue, as these were not included in the initial review. The administrative character of the review process was upheld, and the Tribunal found no merit in the Revenue's argument for supplementary reviews.6. Compliance with Kimberley Process Certification (KPC):The Tribunal found that the Kimberley Process Certificates (KPC) were in order and that there was no evidence of non-compliance by the authorities in Dubai. The Tribunal also noted that the valuation process should adhere to the prescribed procedures and that the first report by the expert valuers should not have been discarded without proper justification.Conclusion:The Tribunal set aside the impugned order, allowed the appeals of the importer and the individual appellants with consequential relief, and dismissed the appeal of the Revenue. The importer was permitted to re-export the goods without any restraint, subject to compliance with section 50 of the Customs Act, 1962. The Tribunal emphasized the need for statutory intervention to be within the intent of the statute and not to exceed its authority.