Whether early clearance of imported goods can be reason for disputing the enhancement of value accepted at the adjudication stage?

PJ/Case Law/2013-14/1706

Case:-COMMISSIONER OF CUTSOMS (SEA), CHENNAI-I Vs M R ASSOCIATES, NEW DELHI

Citation:- 2013-TIOL-672-HC-MAD-CUS

Brief Facts:-The respondent herein imported two consignments under two Bills of Entry. The consignments consisted of printer calculators canon brand. On examination of the consignments by the Officers of Docks Intelligence Unit, Chennai Customs House, it was noticed that there were discrepancies with regard to quantity, description and valuation. A statement was recorded from the proprietor of the respondent. He stated that the imported models were obsolete and they needed a converter to put to use in Indian Market; he however agreed to a loading of the value by 50% for the calculators packed in cartons and by 25% for calculators without cartons. He also agreed to submit the manufacturer's invoice. It is seen from the facts that the import was from Hong Kong and supplied by M/s. Asia Lucky Industrial Limited, Hong Kong. However, originally, the allegation was that there were discrepancies on the model, quantity and the valuation. Yet, after issuing the show cause notice, the Adjudicating Authority noted that there was no mis-declaration as regards the model. As regards the quantity, the Adjudicating Authority, however, rejected the importer's contention that the same was on stock-lot basis. As regards the valuation, the Authority, however pointed out that to the enquiries made with Cannon (India) Limited, Malaysia, based on which, the valuation was proposed to be revised; the order however pointed out that the evidence relied upon was based on the quotation price for Cannon (India) Limited, Malaysia, which could not be taken as the basis for valuation, since the quotation was from Malaysia and the country of origin of the goods was Hong Kong. The Adjudicating Authority further pointed out that in any event, the respondent did not produce any corroborative evidence. Thus, having noted all the above facts on the valuation and mis-declaration, and quantity, the Adjudicating Authority rejected the value declared by the respondent and determined the value under Rule 8 of the CVR Rules based on the importer's voluntary submission for enhancement as per his statement under Section 108 of the Customs Act, 1962. Thus, while revising the value, the Adjudicating Authority proposed penal action on the respondent.

Aggrieved by this, the respondent went on appeal before the Commissioner of Customs
(Appeals) questioning the correctness of the enhanced value of the goods imported. The First Appellate Authority, however rejected the appeal including the prayer for reduction of quantum of fine and penalty. Aggrieved by this, the respondent went on further appeal before the Customs, Excise and Service Tax Appellate Tribunal. On going through the materials, the Customs, Excise and Service Tax Appellate Tribunal pointed out that even though show cause notice started with the quotation price of M/s. Cannon (India) Ltd., Malaysia, yet, the vigour of the allegation was however reduced stating that the quotation price of M/s. Cannon (India) Ltd., Malaysia could not be taken as a basis for valuation. The Customs, Excise and Service Tax Appellate Tribunal pointed out to the respondent's statement for enhancement of value by 50% and 25% in respect of the calculators with cartons and calculators without cartons respectively. The Customs, Excise and Service Tax Appellate Tribunal held that mere quotation raised from M/s. Cannon (India) Ltd, Malaysia could not be held to be a basis for enhancing the value. Thus, setting aside the order of the lower authorities, it restored the matter to the files of the Customs Officer concerned to complete the assessment of the goods on the basis of the declared value. Aggrieved by this, the present Civil Miscellaneous Appeal is preferred by the Revenue.

Appellant’s Contention:-The Revenue reiterated the view on the aspect of mis-declaration, on the valuation of the items imported and the description, yet, when the Adjudicating Authority, himself had given up the case on mis-declaration, the one and only question that now survives for consideration is in the context of the respondent itself agreeing for enhancement of the value, whether the Customs, Excise and Service Tax Appellate Tribunal was justified in directing the Adjudicating Authority to complete the assessment based on the value declared based on the quotation received from M/s. Cannon (India) Ltd., Malaysia.

The Revenue also pleaded that the quotation from Cannon (India) Limited could not be a proper base for finalizing the assessment. Thus, rightly, the Customs, Excise and Service Tax Appellate Tribunal rejected the reasoning of the Revenue and thereby set aside the order of the Adjudicating Authority and remanded the matter to the files of the concerned Customs Officer to complete the assessment of the goods. Thus, to that extent, the order of the Customs, Excise and Service Tax Appellate Tribunal merits to be confirmed. However, when the Customs, Excise and Service Tax Appellate Tribunal itself pointed out to the concession accepted by the respondent to 50% and 25% in respect of the calculators with cartons and without cartons respectively and that the basis of the assessment was not to be based on the declared value.

Respondent’s Contention:- The respondent pointed out that such concession was for the purpose of enabling the respondent for an early clearance of the goods, hence, it could not be taken as the basis.

Reasoning of Judgment:- The High Court heard both the parties and finds that they do not agree with the said contention of the respondent for there are no materials to hold that the concession agreed to was only to enable an early clearance. In any event, when the respondent accepted the enhancement of the value and it did not in any manner disputed the same at any time thereafter, The High Court did not find any justification in the contention now taken by the respondent. It may also be noted that the respondent himself gave an undertaking that he would produce the manufacturer's invoice. However, before the Adjudicating Authority, no corroborative material or evidence was placed to substantiate the stand that the value given was based on the documents filed before the Officer. The respondent submitted that the import was made from the trader and hence, it would be difficult for getting the manufacturer's invoice.

The High Court did not accept such contention of the respondent on its face value considering the fact that it was always open to the respondent to produce such contemporaneous records certified from the Foreign Supplier to substantiate the value declared by the importer. In such circumstances, while confirming the order of the Customs, Excise and Service Tax Appellate Tribunal, directing the Officer concerned to complete the assessment, we direct that in the absence of any material evidence, the statement made by the respondent for valuation in respect of calculators with cartons and without cartons and the enhancement of the value would be of the order of 50% and 25% respectively, assumes significance while arriving at the value for the purpose of adjudication.

The High Court also finds that the respondent submitted that considering the penal action contemplated, such a direction would be harsh on the respondent and further submitted that the statement under Section 108 of the Customs Act, 1962 is not of a binding character. The High Court did not accept such contention of the learned counsel for the respondent. Even if such concession made by the respondent, was for the purpose of clearance, yet, the fact remains that the respondent had not produced contemporaneous documents to substantiate the value. However, for the purpose of invoking penal provisions, the High court did not think such a concession made would in any way provide a good ground to invoke the penal provision. In the circumstances, the High Court direct the Adjudicating Authority to complete the assessment taking note of the value agreed for enhancement in respect of calculators with cartons by 50% and the calculators without cartons by 25%, but without penal action therein.

Decision:-Appeal allowed.

Comments:- The crux of this case is that if the assessee accepted the enhancement of the value and did not in any manner disputed the same at any time, the enhancement would be valid even if the contemporaneous value of the goods of different origin are taken as the basis for enhancement.

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PJ/Case Law/2013-14/1706

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