2000 (2) TMI 181 - AT - Customs

Importers Win Tribunal Case: CIF Value Upheld, Duty-Free Clearance Granted under VBAL Scheme.

The Tribunal ruled in favor of the importers, allowing the declared CIF value and granting duty-free clearance based on the Value Based Advance Licence ... Valuation (Customs) - Under valuation - Related person - Evidence Issues Involved:1. Validity of the import under the Value Based Advance Licence (VBAL) Scheme.2. Correctness of the declared CIF value.3. Eligibility for duty-free clearance under Notification No. 203/92 Cus.4. Allegations of under-valuation.5. Related party transactions.6. Admissibility and authenticity of documents relied upon by the adjudicating authority.7. Compliance with the principles of natural justice.Detailed Analysis:1. Validity of the Import under VBAL Scheme:The Commissioner of Customs initially denied the benefit of Notification No. 203/92 Cus., dated 19-5-92, and imposed a penalty and redemption fine. However, the Tribunal held that the import was valid and the benefit of the notification was available based on condition (VII) of the notification, which allowed the benefit to a person other than the licensee if the license bore the endorsement of transferability. On remand, the Commissioner held that the main allegation regarding the license did not survive and that the goods were covered by the description in the list annexed to the license, thus allowing duty-free clearance.2. Correctness of the Declared CIF Value:The appellants declared a CIF value of US$ 1680 PMT. The Commissioner initially fixed the value at US$ 2477 PMT, which was later revised to US$ 2518 PMT based on documents obtained through diplomatic channels. The Tribunal found that the documents relied upon were not authenticated and lacked evidentiary value. The Tribunal concluded that the declared CIF value should be accepted as the Revenue failed to substantiate the charge of under-valuation with sufficient evidence.3. Eligibility for Duty-Free Clearance:The Tribunal directed that if the un-utilized value of the license was less than the declared value of the goods, the appellants should be given an opportunity to produce a Telegraphic Release Order (TRO) or another valid advance license for duty-free clearance. If not, the excess value should be allowed under Open General Licence (OGL) and duty at the appropriate rate should be charged. The Commissioner confirmed that duty-free clearance was permissible to the extent of the TRA value in dollars.4. Allegations of Under-Valuation:The show cause notice alleged that the declared value was incorrect and that the correct value was US$ 2675 PMT CIF. The Tribunal found that the inquiries made in London were not part of the original adjudication and were not referenced in the initial proceedings. The Tribunal held that the approach of the Commissioner was not based on sound principles of valuation and that the grounds taken in the show cause notice were not adequately considered.5. Related Party Transactions:The Commissioner alleged that the transactions were between related parties, which was disputed by the appellants. The Tribunal found that the observations regarding related party transactions were vague and not substantiated. There was no discussion on how the appellants and the suppliers fell within the categories of related persons as defined under the Valuation Rules.6. Admissibility and Authenticity of Documents:The documents relied upon by the Commissioner were found to be un-authenticated and lacked evidentiary value. The Tribunal referred to the Supreme Court's decision in Collector of Customs, Bombay v. East Punjab Traders, which held that documents obtained from foreign sources must be authenticated and properly verified to be admissible as evidence.7. Compliance with Principles of Natural Justice:The Supreme Court remanded the matter back to the Commissioner of Customs, Calcutta, as the Tribunal had permitted the importers to adduce evidence before it for the first time and proceeded to decide the case on merits. The Tribunal emphasized that the Commissioner should adhere to the principles of natural justice and provide both sides an opportunity to present their case.Conclusion:The Tribunal allowed the declared CIF value to be accepted, set aside the confiscation of the goods, and the imposition of penalty. The appeal was disposed of with the direction that duty-free clearance is permissible to the extent of the TRA value, and any excess value should be dealt with under OGL or appropriate duty charged. The Tribunal's decision emphasized the need for proper authentication of documents and adherence to the principles of natural justice.