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2021 (12) TMI 853 - AT - CustomsMis-declaration of value of imported goods - non-inclusion of certain elements of cost incurred for the import of two tugs, Nancy 3 and Greenville 11, and of attempt to import Nancy 3 without declaration - Confiscation - penalty - HELD THAT:- Unlike ‘goods’, as conventionally understood, deployment of ‘conveyances’ in the territory of the country of import does not erase its identity. ‘Conveyances’, by reason of their very existence, are subject to control of the State while in use, commencing with registration, and till scrapping. Indeed, it is the compulsion of the registration statutes that triggers the transformation of ‘foreign going vessel or aircraft’ from ‘conveyance’ to ‘goods’ for that very purpose - The Flying Dutchman and Mary Celeste are stuff of legend that commercial consideration of contemporary shipping can acknowledge only at the cost of bottom line. The appellant-company stands to be deprived all commercial flows by non-declaration of intent to import and, hence, it would appear that the impugned order is in error for concluding so after withholding permission to amend the manifest. Confiscation under section 111(f) of Customs Act, 1962, as well as attendant penalty on the appellant-directors under section 112 of Customs Act, 1962, is unwarranted. Alleged undervaluation in the declaration pertaining to Nancy 3 for which, in addition to quantification of duty liability, the vessel has been confiscated under section 111(m) of Customs Act, 1962 - HELD THAT:- Conceptual commotion is manifest in this salmagundi of statutory provisions invoked by the Commissioner of Customs; while finalizing assessment, in exercise of authority conferred under section 18 of Customs Act, 1962 on ‘the proper officer’, the duty so assessed has been ordered for recovery under section 28 of Customs Act, 1962. It is also seen from the record that, by the time the bill of entry was permitted to be filed on 27th November 2009, the appellant-company had, on 31st October 2009 deposited ₹ 45,00,000 as the estimated duty liability on the payment of US$ 1,020,000 effected to the seller against two invoices which was appended to the bill of entry - it would appear that full value of both invoices were declared in the entry, made under section 46 of Customs Act, 1962 and, thus, precluding any scope for suggesting, let alone alleging, that importer had misrepresented or suppressed any material fact that offers the ingredient for invoking section 114A of Customs Act, 1962. The enhancement of declared assessable value is based on examination of the vessel and the reported improvements and additions during dry docking in August 2009. There is nothing on record to suggest that this work was undertaken at the instance of the appellant-company or that the cost, even if accurately estimated, was borne by, or on behalf of, the appellant to justify inclusion in assessable value - It may not be out of place to draw the attention of customs officers to the empowerment under rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, to be invoked to discard the value declared in the bill of entry, does extend to rejection of value in the invoice which is a commercial engagement between a buyer and seller under the law of contract. Uninformed approach to the provisions of law, manifest in inappropriate phraseology, does not reflect well on the professional credibility of the tax administration. Suffice it to say that the enhancement of 15% in the assessable value is arbitrary and not tenable. No evidence is on record that the any payment over and above the contracted, and declared, price was made to the seller. The allegation hinges on the said transaction price being on Free on Board (FOB) terms while duties of customs are to be computed on value appraised on Cost Insurance Freight (CIF) terms. The authority for adoption of the base arises from rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 which is not a consequence of rejection of declared value attended upon by re-determination through rule 4 to rule 9 of the said Rules. Recourse to confiscation under section 111(m) of Customs Act, 1962 is, therefore, not tenable in law. Appeal is allowed to the extent of setting aside the duty liability on Nancy 3 beyond that leviable on the value of the two invoices - appeal disposed off.
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