2025 (6) TMI 1604 - AT - Customs

Valuation of imported goods - whether the revised tariff value could be applied to the imports against Bill of Entry No. 9967123 dated 26.04.2013 and No.50/2013-Customs (N.T) dated 26.04.2013 which was not uploaded on the website and brought on public domain by Gazette notification on the said date? - HELD THAT - The said issue is no more res integra and addressed by the Hyderabad Bench of this Tribunal in Bank of Nova Scotia s case 2024 (11) TMI 1468 - CESTAT HYDERABAD wherein it is observed that Moreover this is a case of RMS clearance and self-assessment where the system itself would have applied revised tariff Value which admittedly was not done in the present case. In fact the revised Tariff rate was available in system with effect from 01.06.2013 and that is why the present appellant finally had to pay revised rate for import on and after 01.06.2013. Accordingly in view of the settled law position cited supra there is no merit in Department s insistence on demanding duty as per the revised tariff rate in respect of these 3 Bill of Entries. The appellant did not contest the amount of Rs.12, 807/- being insignificant. Consequently the impugned order is modified to the extent of setting aside the duty of Rs.7, 74, 560/- with interest and penalty. Conclusion - The revised tariff value notification dated 26.04.2013 was not effective on the date of import clearance and hence could not be applied for duty assessment on the Bill of Entry dated 26.04.2013. Appeal allowed in part.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

• Whether the revised tariff value notified on 26.04.2013 for import of gold bars can be applied retrospectively to imports made on that date when the notification was not uploaded on the official Customs website or brought to public notice by Gazette notification at the time of import clearance.
• Whether the appellant was liable to pay customs duty based on the revised tariff value of USD 472 per 10 grams instead of the earlier tariff value of USD 449 per 10 grams for the Bill of Entry dated 26.04.2013.
• Whether the duty demand confirmed on the basis of the revised tariff value, along with interest and penalty under Section 114A of the Customs Act, 1962, was justified.
• Whether the appellant's contention that the notifications increasing tariff value were not publicly available at the relevant time and hence could not be applied, is legally sustainable.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Applicability of Revised Tariff Value Notification Not Uploaded or Gazetted at Relevant Time

Relevant Legal Framework and Precedents: The Customs Tariff Act, 1975 and Customs Act, 1962 govern the assessment and levy of customs duty. Notifications issued under these Acts specify tariff values for valuation of imported goods. The principle of natural justice and legal certainty requires that notifications imposing or increasing duty must be brought to the knowledge of the public, generally by publication in the Official Gazette or uploading on the official Customs website, before they can be applied.

The Tribunal relied heavily on its earlier decision in Bank of Nova Scotia's case, where it was held that a notification is effective only from the date it is published or brought to public notice by Gazette notification or other official means such as uploading on the Customs website. Unless the notification explicitly states otherwise, it cannot be applied retrospectively or without public knowledge.

Court's Interpretation and Reasoning: The Tribunal observed that the revised tariff value notification dated 26.04.2013 was neither uploaded on the CBEC website nor published in the Gazette on that date. Therefore, it was not brought to the public domain at the time the Bill of Entry dated 26.04.2013 was filed and cleared. The appellant had adopted the tariff value of USD 449 per 10 grams, which was valid up to 25.04.2013, in good faith.

The Tribunal emphasized that since the imports were cleared under the Risk Management System (RMS) with self-assessment, the system itself would have applied the revised tariff value if it were effective. The fact that the system did not apply the revised tariff value indicated that the notification was not effective at that time.

Key Evidence and Findings: The appellant demonstrated that the notification increasing tariff value to USD 472 per 10 grams was not accessible on the official Customs website or Gazette on 26.04.2013. The appellant had paid duty based on the then available tariff value of USD 449 per 10 grams. The Department's audit objection was based on applying the revised tariff value retrospectively, which was not publicly available.

Application of Law to Facts: Applying the settled legal principle from the Bank of Nova Scotia case, the Tribunal held that the revised tariff value notification could not be applied to imports cleared on 26.04.2013. The notification's effectiveness was contingent upon its publication or public availability, which was lacking.

Treatment of Competing Arguments: The Department argued for application of the revised tariff value notification dated 26.04.2013 to recover differential duty. The Tribunal rejected this on the ground that the notification was not brought to public notice as required. The appellant's argument that the notification was not available on the CBEC website or Gazette was accepted as legally valid.

Conclusion: The Tribunal concluded that the revised tariff value notification dated 26.04.2013 was not effective on the date of import clearance and hence could not be applied for duty assessment on the Bill of Entry dated 26.04.2013.

Issue 2: Validity of Demand for Differential Duty, Interest, and Penalty

Relevant Legal Framework and Precedents: Section 114A of the Customs Act, 1962, provides for imposition of penalty in cases of duty evasion or short payment. The demand for differential duty arises if the correct tariff value is higher than the value declared by the importer. However, the demand must be based on legally effective notifications and proper valuation principles.

Court's Interpretation and Reasoning: Since the revised tariff value notification was found ineffective at the relevant time, the demand for differential duty based on that notification was not sustainable. Consequently, the penalty imposed under Section 114A for short payment of duty was also not justified.

Key Evidence and Findings: The appellant had paid duty based on the tariff value available and applicable at the time of clearance. The short payment alleged by the Department was premised on applying a notification that was not in force at the material time.

Application of Law to Facts: The Tribunal applied the legal principle that penalty and interest can only be imposed if the duty demand is valid. Since the demand was quashed, the penalty and interest related thereto were also set aside, except for a minor amount of Rs.12,807/- which the appellant did not contest.

Treatment of Competing Arguments: The Department maintained the correctness of the demand and penalty. The Tribunal, relying on the principle of legal certainty and prior precedent, rejected the Department's insistence on the revised tariff value and upheld the appellant's defense.

Conclusion: The Tribunal modified the impugned order by setting aside the duty demand of Rs.7,74,560/-, along with interest and penalty, except for the uncontested minor amount.

Issue 3: Applicability of Tariff Value for Bill of Entry dated 10.04.2012

Relevant Legal Framework and Precedents: The valuation of imported goods under Customs law is governed by the Customs Tariff Act and related notifications specifying tariff values. The tariff value applicable is that which is in force on the date of filing of the Bill of Entry.

Court's Interpretation and Reasoning: The appellant had paid duty on ad valorem basis based on transaction value for the Bill of Entry dated 10.04.2012. The Department contended that tariff value as per Notification No. 30/2012 dated 30.03.2012 should have been applied. However, the appellant argued that the notification was not available on the CBEC website or Gazette at the time of payment and clearance.

Key Evidence and Findings: The appellant's submission that the notification was not publicly available at the relevant time was accepted. The Tribunal's reasoning on the necessity of public availability of notifications applies equally here.

Application of Law to Facts: The tariff value notification not being publicly available at the relevant time, the appellant's payment on transaction value basis was held valid.

Treatment of Competing Arguments: The Department's contention was rejected on the ground of non-publication of the notification.

Conclusion: The Tribunal upheld the appellant's valuation and duty payment for the Bill of Entry dated 10.04.2012.

3. SIGNIFICANT HOLDINGS

The Tribunal, relying on the principle that a Customs notification becomes effective only upon publication or public availability, held:

"It is now a settled law that a notification would be effective from the date of publication or when it is brought to the notice of people by way of offer for sale of notification/gazette or by way of any other means like uploading on Official Website etc. On all these parameters, unless otherwise specifically indicated in the notification itself in exercise of relevant statutory power by the Competent Authority, the existing/old notifications could be considered as effective on the date on which Bill of Entries were filed."

The Tribunal further observed:

"Moreover, this is a case of RMS clearance and self-assessment where the system itself would have applied revised tariff Value, which admittedly was not done in the present case."

Accordingly, the Tribunal concluded that the demand for differential duty, interest, and penalty based on the revised tariff value notification not brought to public notice was unsustainable and modified the impugned order by setting aside the demand except for a minor uncontested amount.

The core principles established include: