TMI Blog2023 (4) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... plied. Thus, the rights and liabilities of the two parties are decided by the transaction value. An agreement to which the consent of the promisor is freely given is not void merely because the consideration is inadequate - Rule 12 of the Valuation Rules gives the officer the power to reject the transaction value but not to change it. The officer can reject the transaction value and determine the assessable value of the goods under the Customs Act as per the Valuation Rules but he cannot change the transaction value. So far as the prohibition under the notification issued by the DGFT is concerned, it is based on the CIF value, i.e., the transaction value including the cost, freight and transit insurance. It is not based on the assessable value under the Customs Act. Therefore, so long as the CIF value is as per the DGFT Notification, import of the goods is not prohibited. Therefore, the areca nuts which were imported were not prohibited because the CIF value was not below the threshold. Confiscation of the LLDPE granules - HELD THAT:- The confiscation was correctly set aside by the Commissioner (Appeals). As far as the areca nuts are concerned, although their confiscation w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sand only) under Section 125 of the Customs Act, 1962. The Customs duty as self-assessed in the Bill of Entry No. 8200903 dated 08.04.2022 shall be paid for 25.28 Metric Tonnes of Linear Low-Density Polyethylene. (3.) I impose a penalty of Rs. 10,00,000/- (Rupees Ten Lakh only) under Section 112 of the Customs Act, 1962 on the Importer M/s Salasar Impex, 822/1, Nanak Pio Colony, GT Karnal Road, Mukherjee Nagar, North West Delhi 110009. 4. I impose a penalty of Rs. 5,00,000/- (Rupees Five Lakh only) under Section 114AA of the Customs Act, 1962 on the Importer M/s Salasar Impex, 822/1, Nanak Pio Colony, GT Karnal Road, Mukherjee Nagar, North West Delhi 110009 . Impugned order In view of above discussions and findings, I allow the appeal of the appellant and modify the OIO No. DLI/CUSTOM/PREV/GSS/ADC/56/ 2021-22 dated 19.5.2022 as under- a) The confiscated areca nuts are allowed to be re-exported on payment of redemption fine of Rs. 2.5 lakhs under section 125 of the Customs Act, 1962 and other dues; b) Confiscation of LLDPE under section 119 of the Customs Act, 1962 and redemption fine thereon is set aside. The same should be allowed to be cleared for home consump ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er kg. The declared CIF value in the Bill of Entry was Rs. 251/- per kg and if this value is considered, the import of the areca nuts is free. Suspecting the areca nuts to be overvalued so as to avoid the prohibition on imports, the officers conducted a market enquiry and determined the market price of the imported areca nuts in India to be between Rs. 100 and Rs. 110/- per kg. Reckoning Rs. 110/- per kg as the CIF price, the original authority held that import of the areca nuts was prohibited and accordingly, found that they were liable for confiscation under section 111(d). 6. The original authority also found that the areca nuts were not mentioned in the Import General Manifest [IGM] and the Bill of Lading and hence, they were also liable to confiscation under section 111(f). He also found that they were liable to confiscation under section 111(m). Accordingly, he absolutely confiscated the areca nuts. 7. He also confiscated the LLDP holding that it was used to conceal the areca nuts and hence was liable for confiscation under section 119. However, he allowed the LLDP to be redeemed on payment of a fine of Rs. 1,50,000/- and appropriate duty. 8. He imposed a penalty of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the impugned order. We now proceed to examine the relevant legal provisions, submissions on both sides and how the legal provisions apply to the case on hand. Confiscation of the areca nuts and their redemption allowed by the impugned order 12. Section 111 provides for confiscation of goods of various categories of which the relevant clauses are as follows: Section 111. Confiscation of improperly imported goods, etc.- The following goods brought from a place outside India shall be liable to confiscation: - .... (d) any goods which are imported or attempted to be imported or are brought within the Indian customs waters for the purpose of being imported, contrary to any prohibition imposed by or under this Act or any other law for the time being in force; .... (f) any dutiable or prohibited goods required to be mentioned under the regulations in an arrival manifest or import manifest or import report which are not so mentioned; . (m) any goods which do not correspond in respect of value or in any other particular with the entry made under this Act or in the case of baggage with the declaration made under section 77 in respect thereof, or in the cas ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e for confiscation under section 111(m). 17. The original authority re-determined the CIF value based on the market price of the imported areca nuts in the domestic market. Reckoning this as the CIF, he concluded that import of the areca nuts is prohibited and that they were liable for confiscation under section 111(d). 18. It needs to be determined as to what is the nature of the CIF value and if it can be altered by the Customs officers. Cost, Insurance and Freight (CIF) is one of the terms of international commerce (INCOTERMS) according to which, the seller and buyer agree on the cost of the goods including the cost of transporting them to the destination and the transit insurance required for the purpose. There are other INCOTERMS such as free on board (FOB) which includes only the cost of the goods, Cost freight (C F) which includes the cost of the goods plus the cost of transportation to the destination but not the transit insurance. These are all transaction values which are decided as per the implicit or explicit contracts between the importer and his overseas exporter of the goods. The goods and the value form the consideration for each other and they determine the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule (1) of rule 3. 21. If the declared transaction value is rejected, valuation of the imported goods, (i.e., determining the value to calculate the duty payable) is to be done as per Valuation Rules 4 to 9 based on value of identical goods or value of similar goods, etc. Thus, while the proper officer can reject the transaction value and assess duty based on some other value determined as per the Valuation Rules, the transaction value- be it CIF, C F, FOB- cannot be changed by him. It is the consideration to be paid by the buyer to the seller for the goods as per the contract (either explicit or implicit) between them. What constitutes a contract has been explained in Section 2 of the Indian Contract Act, 1872 which reads as follows: 2. Inte ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... di to change the rights and liabilities of the parties. It is for this reason, that Rule 12 of the Valuation Rules gives the officer the power to reject the transaction value but not to change it. The officer can reject the transaction value and determine the assessable value of the goods under the Customs Act as per the Valuation Rules but he cannot change the transaction value. 23. While the transaction value (CIF, FOB C F etc.) determined the lis between the buyer and seller, the assessable value decided the lis between the importer and the Revenue. The customs officers cannot change the transaction value and the overseas exporter cannot either contest or claim any benefit from the assessable value for imports. If for instance, the transaction value is Rs. 100/- which is rejected and the proper officer determines the assessable value at Rs. 150/- say, based on, contemporaneous imports, the overseas exporter does not get the right to claim Rs. 150/- nor is the exporter obliged to remit Rs. 150/- for the consignment. 24. So far as the prohibition under the notification issued by the DGFT is concerned, it is based on the CIF value, i.e., the transaction value including the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t both the areca nuts and the LLDPE granules were mentioned in the Bill of Entry and the goods were found as per the description. The IGM (which is filed by the master of the vessel or his agent) did not mention the areca nuts. However, it did mention the LLDPE granules. The respondent importer had not, initially filed the Bill of Entry and therefore, an alert was placed in the Customs EDI system and thereafter the respondent filed the Bill of Entry the next date. The reason for delay in filing in the Bill of Entry was, according to the respondent, the death of the person who had initially placed the order. According to the Revenue, the respondent filed the Bill of Entry knowing that the alert was placed in the system. Commissioner (Appeals) held in the impugned order that to say that the respondent filed the Bill of Entry because of the alert amounts to saying that the confidentiality of the alert placed by the department is not maintained. We fully agree with the Commissioner (Appeals). If the Revenue suspected any foul play and put an alert in the Customs EDI system, it is for it to at least ensure that it is not done in a manner as to be available to the importer. In the absenc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng aside of penalty under section 114AA and reduction of penalty under section 112 to Rs. 2.5 lakhs 32. Section 114AA reads as follows: Section 114AA. Penalty for use of false and incorrect material If a person knowingly or intentionally makes, signs or uses, or causes to be made, signed or used, any declaration, statement or document which is false or incorrect in any material particular, in the transaction of any business for the purposes of this Act, shall be liable to a penalty not exceeding five times the value of goods. In this case, the only declaration made by the respondent is the Bill of Entry and the goods were found as per the declaration in the Bill of Entry. The IGM was not filed by the appellant and if there is any error or inaccuracy in the IGM, it cannot be held against the respondent. Therefore, the Commissioner (Appeals) was correct in setting aside the penalty under section 114AA. 33. The original authority imposed a penalty of Rs. 10,00,000/- on the respondent which the Commissioner (Appeals) reduced to Rs. 2,50,000/-. Section 112 reads as follows: SECTION 112. Penalty for improper importation of goods, etc .- Any person, (a) who, in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the foregoing paras, it is clear that the importer has mis-declared the value of the imported goods so as to make them come under the ambit of freely importable goods. The goods i.e., Areca Nuts have been found mis-declared in IGM filed and Bill of Lading when compared to the goods declared in the Bill of Entry. Therefore, I come to the conclusion that the imported goods are prohibited and liable for confiscation under Section 111(d), 111(f) and 111(m) of the Customs Act, 1962 as discussed in the paras supra. Further, since LLDPE (Linear Low-Density Polyethylene) was declared in the Bill of Lading and used as concealing material for Areca Nuts, hence 25.28 Metric Tonnes of Linear Low-Density Polyethylene valued at Rs. 17,95,536/- (Rupees Seventeen Lakh Ninety Five thousand Five Hundred and Thirty Six only) is also liable for confiscation under Section 119 of the Customs Act, 1962. 14. 25.28 Metric Tonnes of Linear Low-Density Polyethylene valued at Rs. 17,95,536/- (Rupees Seventeen Lakh Ninety Five Thousand Five Hundred and Thirty Six only) is rightly classifiable under Tariff Item 3901 10 10 with Basic Customs Duty 7.5% with IGST 18% and same is required to be collected fr ..... X X X X Extracts X X X X X X X X Extracts X X X X
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