Whether enhancing value of imported goods solely on basis of market survey valid?

PJ/CASE LAW/2015-16/2777

Case:- SONAL ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS, NEW DELHI

Citation:-2015(316) E.L.T. 144 (Tri. –Del.)

Brief Facts:-M/s. Sonal prises imported cosmetics from China and filed bill of entry declaring the action value as the assessable value. The goods were assessed by the assessing officers and the value was loaded by 50%. The said value was accepted by importer, and the goods were cleared on payment of duty. Thereafter, 100% examination of the cosmetics was undertaken was found that the goods were branded goods of various brand names. Revenue conducted some market survey and found that the value of the cosmetics still on the lower side, even after loading the same by 50%. Accordingly, the proceedings were initiated against the appellant and the value was enhanced Rs. 27.68 lakhs to Rs. 44.29 lakhs. The goods were further confiscated with redemption fine of Rs. 5 Lakhs, duty of Rs. 6, 59,700/- was confirmed along interest and identical amount of personal penalty. Penalty of Rs. 1, 00,000 imposed upon the Director. The order passed by the original adjudicating authority was confirmed by the Commissioner (Appeals).

Appellant contentions:-The appellant have taken a categorical stand that the goods were purchased on stock lot basis and at the transaction value reflected in the invoice. This fact is clear from the fact that the different cosmetic goods like Air fresheners, lipsticks, perfumes, eye liner, mascara, etc. were of various brand names like Yodernia, Revelon, Dove, Lamani, Loreal, etc.

Respondent contentions:-The respondent reiterated the findings of the lower adjudicating authority.

Reasoning of Judgment:-The appellant have taken a categorical stand that the goods were purchased on stock lot basis and at the transaction value reflected in the invoice. This fact is clear from the fact that the different cosmetic goods like Air fresheners, lipsticks, perfumes, eye liner, mascara, etc. were of various brand names like Yodernia, Revelon, Dove, Lamani, Loreal, etc. Further, we also find that the Revenue has not adopted the Customs Valuation Rules for enhancing the value and instead have gone to do the market survey in India. Such market inquiries reflected the sale value of the products in India and as per the settled law cannot be adopted as the basis for enhancing the value or the imported goods. We also note that the cosmetics carry an expiry date and it is a matter of common knowledge that the same are disposed of by the sellers at a very low cost if the expiry is about to be reached. In any case, we find that the Revenue having not adopted the Valuation Rules sequential-wise and having not produced any evidence of contemporaneous nature to reflect upon the lower value of the imported goods, the adoption of market price cannot be held to be a method in accordance with law. As such, we find no justification in the impugned orders passed by the lower authorities. Accordingly, both the impugned orders are set aside. The appeals are allowed with consequential relief to the appellant.

Decision:- Appeal allowed.

Comment:-The essence of the case is that the Revenue has not adopted the Customs Valuation Rules for enhancing the value and instead has enhanced the value of imported goods on the basis of the market survey in India. Such market inquiries reflected the sale value of the products in India and as per the settled law cannot be adopted as the basis for enhancing the value or the imported goods. And also Revenue having not adopted the Valuation Rules sequential-wise and having not produced any evidence of contemporaneous nature to reflect upon the lower value of the imported goods, the adoption of market price cannot be held to be a method in accordance with law. Therefore, the value of goods cannot be enhanced and the appeal was allowed.

Prepared By:- Anash Kachaliya

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PJ/CASE LAW/2015-16/2777

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