2026 (3) TMI 995 - AT - Customs

Customs valuation based on expert certificates is unsustainable; declared transaction value accepted and fines moderated accordingly.

Customs valuation determined solely on an empanelled expert certificate without sequential application of the Customs Valuation Rules and without current ... Validity of reassessment/enhancement of assessable value based solely on an empanelled Chartered Engineer's certificate (without following the sequential application of the Customs Valuation Rules, 2007 and without adequate market evidence) - Appropriate quantum of redemption fine and penalty in the circumstances. Revision of assessable value under Customs Valuation Rules - HELD THAT: - The Appellant has imported MFDs which were declared as the parts of copier, and were examined by the Chartered Engineer who found that these goods were old and used parts of MFDs and determined the value which is higher than declared value. We also find that the enhanced value was determined without following the rules as prescribed in CVR, 2007. Further, we find that the Adjudicating Authority confiscated the goods and allowed the clearance on payment of fine & penalty. We further note that on appeal, the learned Commissioner (Appeals) rejected the declared value and upheld the enhancement of value and confiscation of goods, but reduced the redemption fine and penalty. Enhancement of value set aside and declared value accepted. Redeemability of restricted imports under Section 125 - Whether goods imported without required authorisation (restricted MFDs) were liable for absolute confiscation or eligible for redemption - HELD THAT: - Tribunal's earlier decision in the appellant's own case titled as BE Office Automation Products Pvt Ltd [2019 (11) TMI 1091 - CESTAT CHANDIGARH], by relying upon the judgment of Hon’ble Apex Court in the case of Atul Automation Pvt Ltd [2019 (1) TMI 1324 - SUPREME COURT], has set aside the enhancement of the value based on Chartered Engineer Certificate and also reduced the redemption fine and penalty. It is seen from the said decision that there was no absolute confiscation and approximately 10% of the value of the goods was imposed as redemption fine in the similar facts and circumstances. Penalty of 5% of assessable value was imposed in the similar facts and circumstances. Redemption fine fixed at 10% and penalty fixed at 5% of the assessable value. Final Conclusion: Following earlier Tribunal and Apex Court rulings, the enhancement of value was set aside, the declared value accepted, absolute confiscation dismissed, and the redemption fine and penalty reduced to 10% and 5% respectively; both appeals were partially allowed. Issues: (i) Whether the reassessment/enhancement of assessable value based solely on an empanelled Chartered Engineer's certificate (without following the sequential application of the Customs Valuation Rules, 2007 and without adequate market evidence) is sustainable; (ii) Whether the quantum of redemption fine and penalty imposed should be sustained or reduced.Issue (i): Whether the enhanced assessable value determined on the basis of the Chartered Engineer's report is sustainable.Analysis: The Tribunal examined the record and found that the enhanced value was determined without following the sequential application of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and that the Chartered Engineer's certificate did not establish current market value or adequate supporting data as required under the Rules. The Tribunal noted that the impugned order did not indicate the specific Rule under the CVR, 2007 relied upon for the revision and found flaws in the Chartered Engineer's methodology and evidence for reassessment.Conclusion: The enhancement of assessable value based solely on the Chartered Engineer's certificate is not sustainable; the declared transaction value is accepted and the revision of value is set aside in favour of the assessee.Issue (ii): Whether the redemption fine and penalty imposed should be upheld or reduced.Analysis: The Tribunal considered prior decisions of the Tribunal and the Apex Court addressing similar consignments of used MFDs, which approved release on redemption with fines and penalties calibrated to past practice. The Tribunal relied on principles governing Section 125 of the Customs Act and on precedent approving approximate redemption fines around 10% of assessable value and penalties around 5% of assessable value where confiscation is not required to be absolute. The Tribunal found no basis to impose confiscation absolutely and concluded that the fines and penalties should be aligned with the established practice in comparable cases.Conclusion: Redemption fine is reduced to 10% of the assessable value and penalty under Section 112(a) is reduced to 5% of the assessable value, in favour of the assessee.Final Conclusion: The appeals are partly allowed; the reassessment of value is set aside and the quantum of redemption fine and penalty is moderated to 10% and 5% of assessable value respectively, resulting in relief to the assessee while leaving the adjudicatory framework for fines and penalties intact.Ratio Decidendi: Where reassessment of customs value rests solely on an expert certificate that fails to apply the sequential valuation rules or to establish current market data for similar or identical goods, such enhancement is unsustainable and the declared transaction value must be accepted; redemption fines and penalties should be proportionate to established practice (approximately 10% and 5% respectively) where confiscation need not be absolute.