2026 (2) TMI 247 - AT - Customs

Customs valuation and DGFT minimum import price clash - accepting enhanced value removes import ban and penalties.

Customs valuation must be determined under the Customs Act and Valuation Rules by assessing declared transaction value; DGFT minimum import price operates ... Customs valuation and transaction value - Minimum import price (MIP) and import permissibility - seeking clearance of goods declared as Engineered Marble imported from China and classified under CTH 6802 9990 - Use of DGFT notifications for regulating importability, not for fixing assessable value - Confiscation and redemption in consequence of breach of import policy - Setting aside confiscation, fine and penalty where enhanced value accepted - HELD THAT:- While the Tribunal is presumed to know the law, it is not presumed to know the facts. Complete disclosure is therefore indispensable, especially since the Tribunal ordinarily accepts the submissions and averments of parties at face value, assuming they are made candidly, in good faith and with clean hands. We find that the contravention of DGFT Notification No. 18(RE)/2008 is not contested by the appellant. It was however submitted by them that the adjudicating authority wrongly imposed fine and penalty instead of merely assessing duty on the DGFT-fixed value and further that Section 17 of the FTDR Act bars confiscation of goods intended for personal use. The valuation rules under the Customs Act and the value-based restrictions prescribed in the DGFT notification operate in distinct domains. Under the Customs Act and the Rules framed thereunder, the assessable value is determined on the basis of the declared transaction value for the purpose of applying the ad valorem duty. In contrast, the value mentioned in the DGFT notification is meant to regulate the permissibility of importing the goods in question. Accordingly, it was incumbent upon the Proper Officer to first evaluate the declared transaction value strictly in terms of the Customs Act and the Valuation Rules. If the transaction value was correctly declared and happened to be lower than the minimum value permitted for free import as per the DGFT notification, the officer, after accepting the declared value, could have imposed penalties and taken action for violation of the DGFT notification, as provided by law. However, in the present case, the Adjudicating Authority without taking recourse to the Customs Valuation Rules has by ‘ORDER’ enhanced the declared value not on the basis of any findings on any misdeclaration of value or irregularity under the Customs Act, but solely to align the goods with the “policy conditions” under the Customs Tariff Act, 1975. We hence find force in the Ld. Counsel’s submission. In the circumstances, once the value is enhanced and aligned to USD 60 for import purposes, the goods are purged of the taint and are to be treated as compliant with DGFT Notification No. 18(RE)/2008, irrespective of the fact that such enhancement of value stems from departmental action. Hence if the importer does not contest the enhanced value, as in this case, the goods become freely importable and are no longer liable to penal consequences. This being so all other issues raised by the appellant looses relevance. Issues: Whether the confiscation of imported marble slabs and the concomitant redemption fine and penalty could be sustained where the departmental authority enhanced the declared value to the DGFT-prescribed minimum import price and the importer did not contest the enhanced value.Analysis: The Tribunal analysed the interaction between Customs valuation under the Customs Act and Valuation Rules and the value-based restriction imposed by the DGFT notification (minimum import price). It observed that Customs assessable value for duty must be determined by the Customs Valuation Rules based on transaction value and that the DGFT floor price regulates permissibility of import. The Adjudicating Authority had enhanced the declared value to align with DGFT policy conditions without applying the Customs Valuation Rules or making findings of misdeclaration under the Customs Act. Once the departmental enhancement of value to the DGFT floor price is accepted and not contested by the importer, the goods become compliant with the DGFT notification for import permissibility; consequently, penal consequences premised on the goods being below the floor price fall away. The Tribunal therefore treated the accepted enhanced value as rendering the goods freely importable subject to payment of duty at that enhanced value and considered confiscation, redemption fine and the penalty under Section 112(a) in that factual context.Conclusion: Confiscation of the goods, the redemption fine and the penalty are set aside; the goods shall be released on payment of duty as per the enhanced value and the appellant is entitled to consequential relief as per law.