2000 (7) TMI 725 - AT - Customs

Customs Tribunal Upholds Value Increase for Floppy Disc Drives, Rejects Appellants' Arguments

The Tribunal upheld the Customs authorities' decision to enhance the value of imported Floppy Disc Drives to US $29 per piece from the declared value of ... Valuation - Identical goods - Demand - Limitation Issues:1. Declaration of value of imported goods2. Enhancement of value by Customs authorities3. Classification of imported goods4. Contemporaneous evidence for valuation5. Application of Customs Act and Valuation Rules6. Limitation period for issuing show cause notice7. Justification of penalty imposedDeclaration of value of imported goods:The appellants imported Floppy Disc Drives and declared a value of US $13.50 per piece. Subsequently, an investigation revealed that the declared value was lower than the actual price at which identical goods were being cleared. A show cause notice was issued proposing to enhance the value to US $35.65 per piece. The Commissioner of Customs enhanced the value to US $29 per piece and imposed a penalty, which was challenged by the appellants.Enhancement of value by Customs authorities:The appellants argued that the declared value was based on contemporaneous evidence and should be accepted under Section 14 of the Customs Act, unless proven incorrect. However, the Customs authorities rejected the declared value, considering the price of identical goods imported at a much higher price. The Commissioner fixed the value at US $29 per piece after making adjustments, which was upheld by the Tribunal.Classification of imported goods:The goods were initially classified by the appellants under Heading 8473.30, but the Customs authorities classified them under Heading 8471.92. The Tribunal found no reason to interfere with this classification.Contemporaneous evidence for valuation:The appellants argued that the goods imported by them were unbranded and of different quality and quantity compared to the contemporaneous imports relied upon by the Revenue. They contended that the value should be based on transaction value unless proven otherwise. However, the Tribunal found evidence of imports of identical goods from the same manufacturer at a much higher price, justifying the rejection of the declared value.Application of Customs Act and Valuation Rules:The Tribunal referred to Rule 8 to fix the assessable value in the absence of identical goods' price during the relevant period. After adjustments, the value was fixed at US $29 per piece, which was considered reasonable and in accordance with the Customs Act and Valuation Rules.Limitation period for issuing show cause notice:The appellants argued that the show cause notice issued in 1996 for goods cleared in 1994 was barred by limitation. However, the Tribunal upheld the Commissioner's decision to invoke the larger period under the proviso to Section 28 of the Customs Act, considering the misdeclaration of value discovered during investigations.Justification of penalty imposed:The penalty imposed on the appellants was upheld by the Tribunal, as it found no merit in the contention that the demand was barred by limitation. The Tribunal rejected the appeal, affirming the Commissioner's decision on valuation, classification, limitation, and penalty.This detailed analysis covers the issues involved in the legal judgment delivered by the Appellate Tribunal CEGAT, Kolkata.