TaxTMI 
TaxTMI 
2023 (6) TMI 1015
X X X X Extracts X X X X
X X X X Extracts X X X X
....tional Commissioner (AR) for the respondent ORDER PER : C J MATHEW The order impugned before us is significantly humungous. But then so is the order-in-original that is the fount of the grievance of M/s Kiran Gems P Ltd, S/Shri Vallabhai Patel, Mavjibhai S Patel, Raviraj Anil Kumar Vakani and Kushal Kamlesh Patel, as well as that of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai, all of whom are disappointed by the outcome of proceedings before Commissioner of Customs (Appeals) [order-in-appeal no. MUM-CUSTM-APSC-APP-1374 to 1379/2022-23 dated 15.9.2022], Mumbai -III and are in appeal before us. For comparison, in the Bible, an 800,000 word composition by several contributors, is the New Testament, comprising 200,000 words and, just about half of which is the word count in the order of Joint Commissioner, (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai to sustain confiscating 'rough diamonds' imported against bills of entry no. 2673556/02.04.2019 and 2812593/12.04.2019. The factual matrix, therefore, cannot but be as vast and as complex enough for holding inter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d Chairman & Director of M/s Kiran Gems P Ltd, and Rs. 25,00,000 and Rs. 15,00,000 respectively on S/Shri Kushal Kamlesh Patel and Raviraj Anilkumar Vakani, owner of M/s Unifacet Diam Dubai and General Manager of M/s Unifacet Diam Dubai, under section 114AA of Customs Act, 1962. 3. Appeal of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), Mumbai against discarding of proposal for confiscation under section 111(d) of Customs Act, 1962, and consequent grant of redemption on payment of fine, was rejected by the first appellate authority for not having been subject to review, the essential pre-requisite for filing of appeal against its own order, within the time stipulated in section 129DD of Customs Act, 1962. Concomitantly, the additional grounds sought to be incorporated in that appeal were, for not having been included in the determination by the competent authority in the review preceding the appeal itself, also not entertained. The appeal of Revenue, though seeking also to agitate grievance against the order-in-original, is about the rejection of their appeal by the first appellate authority. It has been brought to our ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... is no justification offered therein for the Tribunal to entertain pleas for relief that goes beyond the bounds of the order of the first appellate authority who had no jurisdiction, after rejection of appeal of Commissioner of Customs (Airport Special Cargo), Chhatrapati Shivaji Maharaj International Airport (CSMIA), to consider imposition of detriment on the importer and appellantindividuals that the adjudicating authority had not. We are, therefore, constrained to limit our consideration to subjecting the finding of the first appellate authority, that review is an administrative exercise, separate of appeal, prescribed in section 129D of Customs Act, 1962 which did not enjoy the latitude afforded by the order of the Hon'ble Supreme Court supra, to the test of legal and proper. Should it be found not to be so, we shall have no option but to restore that appeal back to the first appellate authority which would also require that the other appeals be deferred till the outcome of such remand be known. It is, therefore, of essence that the appeal of Revenue be decided first and within the limited scope of our remit. 6. Incidentally, the discarding of the additional ground is referred....
X X X X Extracts X X X X
X X X X Extracts X X X X
....on and, more so, as the decision of a Larger Bench of Hon'ble High Court of Delhi in re Japan Airline International Co Ltd, cited by Revenue in support of correctives made to decisions in review, has arrived at much the same conclusion. Therefore, the administrative character of the review procedure laid down in law is not a stand that Revenue can now seek to dispute. The order of the Hon'ble Supreme Court, as the apex judicial authority, is limited to its remit of supervision over appellate and adjudicatory forums, of all hues and shades in such a suo moto cognizance of disruption in this most unusual period in human history that, in some way or other and for an extended time, impeded external interface with public institutions. The same cannot be said to have intruded upon internal administrative arrangements; on the contrary, while the public at large were, more or less, sequestered at their homes, officialdom were accorded exclusive access to public transport systems, even skeletal as they may have been, for keeping the administrative machinery operational. Therefore, even circumstantially, there is no claim for Revenue to propose that the special context which prompted the Hon....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ed power to condone delays in filing appeals or applications. This proceeding is, thus, restricted to the pleas of the importer and the appellant-individuals. 11. All that remains for resolution in the dispute is that of valuation of impugned goods. Value, at the best of times, is difficult to ascertain for, ultimately, it remains a buyer-seller transaction and their mutual agreement on the price to be paid. More so, in a commodity such as 'rough diamonds' which is surrendered to Man by Mother Earth and, in the nature of all primary produce that is, generally, not used as such, 'price discovery' is a complex tangle of factors. Insofar as these goods, as presented for clearance, are concerned, its appearance is highly deceptive and contingent upon skill in cutting to reveal capability of capturing light for reflecting it back. Value of the impugned consignment was ascertained on three different occasions. The first, by a 'panel member' that took place on 2nd April 2019, certified the declared value to be 'fair' but the one undertaken by Committee of Panel Members, as certified in reports of 3rd April 2019 and 15th April 2019, elicited values, of Rs. 41.55 crores and Rs. 113.68 cror....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ss. 13. The first appellate authority appears to be proficient in 'dialectics' which, as seen from the disposal of two issues raised by appellants - limited cross-examination permitted and serial resort to valuers in breach of instructions on examination procedure - before her, is not to be faulted but suitability for deployment in determination of legal and proper is in question. It was concluded that a representative of each of the institutions concerned with examination had been subjected to requirement of section 138B of Customs Act, 1962 which sufficed to overcome any threshold objection to repudiation of that which had been permitted by the predecessor 'incumbent in office' empowered to adjudicate and that, notwithstanding the impropriety of seeking third examination, the difference in value elicited by the 'proper' second examination justifies confiscation under section 111(m) of Customs Act, 1962 for, thereby, not disturbing the order itself. In our view, invoking of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 thus in appellate jurisdiction, by confining the testing of adjudicatory determination of value not by aptness of substituted value of t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e with rule 3(2) and rule 3(3) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, he also drew attention to the findings in the impugned order which, with reference to economics of the purported transaction, cast doubts on 'round tripping' as the motive for the alleged overvaluation. Furthermore, he contended that, with the stringent procedures of public notice no. 30/2018 dated 19th December 2018, any attempt at 'misdeclaration' would be farthest from the minds of any entity importing through Precious Cargo Customs Clearance Centre (PCCCC) of Bharat Diamond Bourse (BDB). Both Learned Authorized Representative and he elaborated upon Kimberly Process International Certification scheme, the internationally acknowledged system for auditing of 'rough diamonds' established for cleaning up the transborder trade in that prized commodity. 15. From their elucidation, we gather that the regime was established in 2003, following the Fowler Report and resolution adopted at the World Diamond Congress at Antwerp in July 2000, with contracting States agreeing to implement safeguards on shipment of 'rough diamond' from mines to the buyers engaged in cutting and polishing....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ters such as brand, grade, specifications that have relevance to value; (f) the fraudulent or manipulated document' (emphasis supplied in impugned order) in Explanation (1) below rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as enabling recourse to rule 12, thereby, with notice, as intended therein, having been communicated in the show cause notice leading to adjudication and culminating thereafter by the impugned order. From this, it can be clearly deduced that classification itself was not an issue with the lower authorities except insofar as it enabled invoking of rule 12 and, thereupon, rule 9, of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. We have already made our observations supra about the catalytical, even if pivotal as such generally are, role of rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 in valuation - not as an end in, or of, itself - of imported goods by recourse to enumerated methods. We may also add to it, at this stage, with the observation that reliance upon the text of that rule is valid only within the context of the rubric in the Explanation. 17.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ntend that claim for a particular classification would not absolve the assessing officer of primary responsibility to ascertain the appropriate classification and in Advanced Spectra Tek Private Limited v. Commissioner of Customs (ACC & I), Mumbai [2019 (369) ELT 871 (Tri. Mumbai)] on the limitations of section 111 of Customs Act, 1962. 20. Ms Lakshmi Menon, Learned Counsel for the appellants from outside India, pointed out to us that the charge of having abetted in acts that rendered the goods liable for confiscation is extra jurisdictional overreach as any offence committed in the country, insofar as clearance of imported goods are concerned, would, by default, be invoked against suppliers and expressed concern that such was not the intent of law. She emphasized that the only document that formed the basis of the adjudication, viz. the Kimberley Process Certificates (KPC), had been found to be in order by the original authority. She contended that the decision of the Tribunal in Sahil Diamonds Pvt Ltd v. Commissioner of Customs, Ahmedabad [2010 (250) ELT 310 (Tri-Ahmd)] holding that '9. It stand contended before us that there is no evidence produced by the department to show t....
X X X X Extracts X X X X
X X X X Extracts X X X X
....have been absolutely confiscated. He also pointed out that it was insistence on the part of the importer that the diamonds were of 'gem' quality which necessitated the 'panchanama' that is now sought to be discredited. It was argued by him that due weightage should be accorded to the format of certificate issued by the Gem and Jewelery Export Promotion Council (GJEPC) before adjudging the acceptability of certificate produced by the importer. 22. We have no doubt about the intention of circular no. 53/2003- Cus dated 23rd June 2003 of Central Board of Excise and Customs (CBEC) in aligning customs procedure to conform to the global crusade against 'conflict diamonds' but such a peremptory direction which deprives an adjudicating authority of inherent latitude in exercising powers conferred statutorily is certainly poor, even if wellintentioned, execution of such intent. After all, statutory exercise of power, in adjudication process, is also an acknowledged check on policy formulation that transcends legislative intent which should have been reasonably overcome, in overriding circumstances for conformity with the comity of nations, only by amendments in statute. A circular of an at....
X X X X Extracts X X X X
X X X X Extracts X X X X
....alidly, be veiled under layers of secrecy may not be found by assessing officers to be of concern but the law cannot be ignored. That supervisory level of customs officialdom may have found it necessary to bypass impediments to proper resort to rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 does not make up for that want of credibility. It is the remit of the administration to find a solution but the solution, whatever that may be, should conform to the law - a law of valuation that was devised by them to be congruent with multilateral engagement. We cannot carve out exceptions to the law and, if at all, such opinion is to be relied upon, the valuer must, unequivocally, be prepared to narrate, and stand by, the justifications for such value. Absent that, substituted value will fail the test of law, as it does in the present dispute, and will have to be held as untenable even at the cost of declaring such instructions, if any, as not implementable. 25. Even as we hold so, another aspect, alluded by us supra, is of overwhelming concern. The orders of the lower authority appear to show concern about compliance with section 46 of Customs Act, 1962, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ut the cart before the horse and effect before cause. 27. The process that commenced with filing of bill of entry, under section 46 of Customs Act, 1962, acknowledges the importer in relation to the imported goods for further action thereto and requires section 17 of Customs Act, 1962, as the mechanism, to enable closure under section 47 of Customs Act, 1962. The determination of duty liability calls for application of the charging provision in '(1) Except as otherwise provided in this Act, or any other law for the time being in force, duties of customs shall be levied at such rates as may be specified under the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, on goods imported into, or exported from, India.' of section 12 of Customs Act, 1962 that, necessarily and save for exception therein which is not an issue here, has, in the first instance to proceed to First Schedule to Customs Tariff Act, 1975 for ascertainment of rate of duty liability - ad valorem or specific - as Customs Tariff Act, 1975 authorizes. The next step of '14. Valuation of goods. (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for t....