2023 (10) TMI 1126 - AT - Customs

CESTAT allows appeal after customs officer improperly rejected declared value using Rule 7 without establishing reasonable grounds under Rule 12

M/s River Side Impex Versus Commissioner (Preventive), New Customs House, Near I.G.I. Airport, New Delhi

The CESTAT NEW DELHI allowed the appeal in a customs valuation case involving imported brass ceramic cartridge parts. The proper officer rejected the ... Valuation of imported goods - Brass Ceramic Cartridge (L) size ½” Parts for use in Sanitary ware - 2976 kg. weight of the consignment was found in excess than the declared weight - rejection of declared value - Confiscation - redemption fine - penalty - HELD THAT:- The basis of the order under challenge has been the market enquiry and the valuation in terms of Rule 7 of the Valuation Rules coupled with the acceptance of reassessed value by the appellant. The modus operandi for reassessment has been objected by the appellant - As per Section 14 of the Act, value of the imported goods shall be the transaction value of such goods, which means the price actually paid or payable for the goods when sold for export to India where the buyers and sellers are not related and the price fixed is the sole consideration for sale. Proper officer can reject the declared transactional value based on ‘certain reasons to doubt the truth or accuracy’ of the declared value in which event the proper officer is entitled to make assessment as per Rules 4 to 9 of the 2007 Rules. What is meant by the expression “grounds for doubting the truth or accuracy of the value declared” has been explained and elucidated in clause (iii) of Explanation appended to Rule 12 which sets out above-mentioned conditions when the ‘reason to doubt’ exists. These instances are not exhaustive but are inclusive for there could be other instances when the proper officer could reasonably doubt the accuracy or truth of the value declared. The expression “reason to doubt” cannot be equated with the requirements of positive reasons to believe, for the word ‘doubt’ refers to un-certainty and irresolution reflecting suspicion and apprehension - It is therefore held that in the context of the proviso to Section 14 read with Rule 12 and clause (iii) of Explanation to the 2007 Rules, the doubt must be reasonable and based on ‘certain reasons’. The proper officer must record ‘certain reasons’ specified in Clause (a) to (f) Rule 12 or similar grounds in writing at the second stage before he proceeds to discard the declared value and decides to determine the same by proceeding sequentially in accordance with Rules 4 to 9 of the 2007 Rules. Reverting to the facts of the present case, it is observed that the only reason to invoke Rule 12 of Valuation Rules was the difference in weight of the goods. It has been the apparent submission of appellant since the very first stage of interception of goods that the goods have been imported on piece basis and not on the basis of weight - there was no cogent reason to doubt the truth and accuracy of the value declared. Hence the transaction value mentioned in the Bills of Entry should have been accepted Rule 12 should not have been invoked. Appellants have no reason to be concerned about the actual selling price of the impugned goods in the retail market. He also conveyed vide the said statement that their supplier i.e. manufacturer in China is not related to them except that they have continuous business relations with the said manufacturers. In the light of this statement, there are no convenience to accept the statement of the appellant made the very next day as a cogent admission - Since it is apparent that the Department has not followed the statutory procedure nor there was any mis-declaration of quantity as alleged, the mere acceptance of the re-assessed value and payment thereof will not be sufficient to confirm the allegations of under valuation. The burden was still on the Department to prove the allegations levelled. The said burden has not been discharged. Appeal allowed. Issues Involved:1. Mis-declaration of Weight2. Alleged Under Valuation3. Application of Rule 12 of Customs Valuation Rules4. Rejection of Transaction Value and ReassessmentSummary:Mis-declaration of Weight:The appellant filed Bill of Entry for Brass Ceramic Cartridge, declaring a weight of 18144 kg. However, upon examination, the actual weight was found to be 21120 kg, leading to a discrepancy of 2976 kg. The appellant argued that the goods were imported on a per-piece basis, and the weight discrepancy was due to the inclusion of packaging materials. The Tribunal found these observations sufficient to hold that there was no cogent reason to doubt the truth and accuracy of the declared value, and hence, the transaction value should have been accepted.Alleged Under Valuation:The Department rejected the declared value of Rs. 28,08,128/- and reassessed it at Rs. 55,83,280/-, based on a market survey conducted in a specific area. The appellant contended that Rule 7 was wrongly adopted without proper market enquiry and that the reassessment was based on an arbitrary market survey. The Tribunal noted that no contemporaneous import data or evidence of similar imported goods was provided, and the reassessment did not follow the sequential application of Rules 4 to 9. The Tribunal held that the Department failed to produce cogent evidence to support the allegations of under valuation.Application of Rule 12 of Customs Valuation Rules:The Department invoked Rule 12, doubting the truth or accuracy of the declared value due to the weight discrepancy. The Tribunal explained that Rule 12 requires a two-step verification process, including a preliminary enquiry and an opportunity for the importer to clarify doubts. The Tribunal found that the Department did not follow this statutory procedure and that the doubt raised was not reasonable or based on 'certain reasons' as required under Rule 12.Rejection of Transaction Value and Reassessment:The Tribunal observed that the reassessment was not done sequentially as required by Rules 4 to 9. The Department directly invoked Rule 7 without following the necessary steps. The Tribunal also noted that the market survey report, which was the basis for reassessment, lacked corroborative evidence and did not follow the statutory procedure. The Tribunal concluded that the Department did not discharge its burden of proving the allegations of under valuation and mis-declaration.Conclusion:The Tribunal set aside the order under challenge and allowed the appeal with consequential relief, noting that the Department failed to follow the statutory procedure and did not provide sufficient evidence to support the allegations.Order Pronounced:(Order pronounced in open court on 20/10/2023.)