Customs authorities can reject declared values on the face of misdeclaration of the goods

PJ/Case Laws/2010-11/1177

Case: M/s Viral Copier Services v/s Commissioner of Customs, Chennai

Citation: 2011-TIOL-648-CESTAT-MAD

Issue: - Customs authorities can reject declared values on the face of misdeclaration of the goods and/or when the values are abnormally low.

Brief Facts: - Information was received by DGCEI that certain importers were importing old and used photocopiers by mis-declaring them as old used components/mainframes and thereby evading payment of excise duty. DGCEI conducted investigations. Appellants are importers & traders in various office equipments. The consignment imported during February 2003 from foreign company in Singapore were claimed as component parts of photocopiers and bill of entries were filed.

Department ordered detailed examination of imported goods by independent Chartered Engineers. M/s Superintendence Company of India Ltd, Chennai reported that the items were fairly complete photocopiers with few external parts missing. The appellants did not accept the said valuation and approached the High Court by filing writ petitions for release of the goods pending further investigation by the authorities. The High Court gave direction to the appellant to obtain another report from M/s Best Mulyankan Consultants Ltd, Mumbai and submit the same with the original adjudicating authority. The said Chartered Engineers certified that the said sub-assemblies cannot be called a ‘photocopier’ as there were no punching marks/specification showing manufacturing year and brandname. It was reported that in the present condition the said machinery have to be assembled with other missing parts and put into operation before their condition can be explained.

After receipt of this report, Department issued show cause notice alleging that the imported goods were having essential characteristics of complete photocopiers and assessed accordingly. Confiscation of goods and imposition of penalty was proposed. The declared value by the appellant was not accepted by the Department.

The original authority valued the goods which was not based on the submissions made by the appellant. It was held that the confiscated goods of heavy duty mainframe assemblies holding the same to be incomplete photocopiers having essential character of complete photocopiers and classifying the same under the relevant heading. It was held that the old/used photocopiers were restricted items and the same have been imported without a specific import licence, they were liable for confiscation. It was also held that the impugned goods were mis-declared with reference to description as well as value, the same were also liable to confiscation.

The first appellate authority upheld the order in original. It was held that the impugned goods should be treated as photocopiers for the purpose of classification, she has also upheld the valuation, confiscation, imposition of redemption fine and penalty as ordered by the original authority. The lower authorities rejected the report given by M/s Best Mulyankan Consultants Ltd and have placed reliance on the report given by M/s Superintendence Company of India Ltd.

In appeal, the High Court examined the reports submitted by both the Chartered Engineers and held that the report issued by M/s Superintendence Company of India (Pvt) Ltd, Chennai was more specific as they had taken the assistance of a technical expert well-versed with photocopying machines. It was held that the report issued by M/s Best Mulyankan Consultants Ltd, Mumbai had various deficiencies and inconsistencies. The High Court held that the imported goods declared as “Mainframe Assemblies” appeared to be having essential characteristics of “photocopiers”. It was held that the goods were misdeclared and therefore, the declared value could not be accepted as transaction value under Rule 4 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Therefore, the valuation was held to be done under subsequent rules by proceeding sequentially. Since the goods under import were old and used goods the same could not be compared to similar such imports and hence the value was required to be determined under Rule 8.

The High Court further held that the facts and circumstances appeared to suggest that the importer had purchased these second hand photocopying machines and imported the same after systematically removing certain components and erasing the punching marks/specifications in order to mislead the department and evade huge amount of duty. On the basis of the report issued by M/s Superintendence Company India Pvt Ltd, Chennai, the value of the goods was computed. It was held that there was evasion of duty by deliberately misdeclaring the description and value of goods.

Against the said judgment, appellant have filed appeal before the Apex Court.

Appellant’s Contentions: - Appellant relied upon decision given in Office Tec Industries v/s Commissioner of Customs, Chennai [2004 (172) ELT 480], Data Enterprises v/s Commissioner of Customs, Cochin [2003 (154) ELT 437], Motor Industries Co. Ltd v/s Commissioner of Customs [2009 (244) ELT 4 (SC), Omex International v/s Commissioner of Customs, Chennai [2007 (216) ELT 248], Tolin Rubbers Pvt Ltd v/s Commissioner of Customs, Cochin [2004 (163) ELT 289 (SC), Eicher Tractors Ltd v/s Commissioner of Customs, Mumbai [2000 (122) ELT 321 (SC)].

Respondent’s Contention: - Revenue relied upon the decision given in Collector of Customs, Calcutta v/s Sanjay Chandiram [1995 (77) ELT 241 (SC)], Radhey Shyam Ratanlal v/s Commissioner of Customs [2009 (238) ELT 14 (SC)].

Reasoning of Judgment: - The Supreme Court held that concurrent finding of the lower appellate authority upholds the finding of the original authority. It was noted that the appellants have cleared the impugned goods on payment of duty on assessed value, redemption fine and penalty which goes to indicate the reasonableness of the assessment done by the customs authorities as no trader would normally clear the goods from customs control if such clearance was not profitable to him.

The Supreme Court perused the judgments cited by the Revenue and held that they provide adequate amplitude to the customs authorities to reject declared values on the face of misdeclaration of the goods and/or when the values are abnormally low. Customs authorities cannot be precluded from determining correct values for the purpose of charging customs duty and cannot be compelled to accept abnormally low values declared by the importers, as has been done by the appellants in this case to the detriment of public revenue. Further relying upon the decision in Commissioner of Customs (Gen), Mumbai v/s Abdulla Koyloth [2010 (259) ELT 481 (SC)], it was held that the decisions cited by the appellant were not applicable to the present case/ Impugned order upheld.

Decision: - Appeal dismissed.

************

Comments

PJ/Case Laws/2010-11/1177

Post a Comment

Query