2025 (6) TMI 1898 - AT - Customs

Valuation of imported goods - Rejection of value declared in the Bill of Entry - re-determination of value - non-finalization of provisional assessment of the goods - levy of penalties u/s 112(a) and 114AA of the Customs Act 1962 - HELD THAT - The Division Bench proceeded to examine the decision of the Tribunal in the own case of the appellant in M/s Shivam Marketing vs. CCE Indore 2017 (11) TMI 1258 - CESTAT NEW DELHI on which reliance was placed by the learned counsel for the appellant - It was held in the said case that The bill of entry which is a statutory document contained the description and value of the goods correctly. The invoice with stamp of the supplier was filed with the said bill of entry. We could not find any substantial evidence to hold that the invoice which is filed alongwith the bill of entry is not genuine or is a forged one. The invoice which is retrieved from the E-mail account of the appellant was never filed with the Department and the same was recovered during investigation. Such material particulars in possession of the appellant in his private capacity and not filed for clearance of any import consignments cannot substantiate a case of mis-declaration. The issue that has been referred to the Larger Bench of the Tribunal concerns a situation when the importer produces one invoice with the Bill of Entry that is filed with the customs authorities but another invoice for the same consignment is found in the private records or e-mails of the importer showing a different value. It is in such circumstances that the Division Bench required the Larger Bench to answer whether customs duty under section 14 of the Customs Act should be determined based only on the invoice produced with the Bill of Entry or should it be determined on the basis of the transaction value as reflected in the invoice found in the e-mail - The reason why the Division Bench considered it necessary to refer the matter to a Larger Bench of the Tribunal was because of the decision dated 19.10.2017 of the Tribunal in the matter of the appellant wherein it was held that when an invoice is retrieved from e-mail account of the appellant but is not filed with the department and is in possession of the importer in a private capacity it cannot substantiate the case of mis-declaration. The provisions of the Customs Act and the 2007 Valuation Rules do not prohibit the proper officer from taking into consideration the invoice retrieved from the e-mail account of the appellant which is in relation to the same consignment for the purposes of verification of the entries made under section 46 of the Customs Act. In fact after rejection of the transaction value it can be re-determined by proceeding sequentially through rules 4 to 9. Rules 4 and 5 deal with transaction value of identical goods or similar goods when sold for export to India and imported at or about the same time as the goods being valued - if the transaction value of identical or similar goods sold for export to India and imported at or about the same time as the goods being valued can be taken into consideration there can possibly be no reason as to why the transaction value contained in the e-mail account of the appellant for the imported goods cannot be taken into consideration for nothing can be more identical as the invoice relating to the same consignment. It is therefore not possible to accept the view taken by the Division Bench of the Tribunal in the decision rendered in 2017 (11) TMI 1258 - CESTAT NEW DELHI that the invoice retrieved from the e-mail account of the appellant cannot be considered for substantiating a case of mis-declaration. Conclusion - Even if the importer produces one invoice with the Bill of Entry and other invoice for the same consignment is found in the private records or e-mail of the importer showing a different value the customs duty under section 14 of the Customs Act can be determined on the basis of the transaction value reflected in the invoice retrieved from the e-mail account of the importer. The papers of the two appeals may be placed before a Division Bench of the Tribunal for deciding the appeals on merits.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal were:

• Whether, under Section 14 of the Customs Act, 1962, customs duty should be determined solely on the basis of the invoice produced along with the Bill of Entry, or whether an alternative invoice found in the private records or emails of the importer, showing a different (usually higher) value for the same consignment, can be considered for valuation and duty assessment.
• Whether an invoice found in the private records or emails of the importer but not filed with the customs authorities can substantiate a case of mis-declaration or undervaluation for customs duty purposes.
• The applicability and interpretation of relevant provisions of the Customs Act, 1962, particularly Sections 14, 17, 18, and 46, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, specifically Rules 3, 9, 11, and 12, in the context of valuation and assessment of customs duty where multiple invoices exist for the same consignment.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Whether customs duty should be determined only on the invoice filed with the Bill of Entry or on the true transaction value reflected in other invoices found in private records/emails.

Relevant legal framework and precedents: Section 14(1) of the Customs Act mandates that the value of imported goods shall be the transaction value, defined as the price actually paid or payable for the goods when sold for export to India, subject to certain conditions and rules. Rule 3(1) of the 2007 Valuation Rules states that subject to Rule 12, the value shall be the transaction value adjusted per Rule 10. Rule 12 empowers the proper officer to reject declared value if there is reason to doubt its truth or accuracy, and require further information or documents. Section 17 provides for self-assessment by the importer, verification by the proper officer, and reassessment if self-assessment is found incorrect. Section 46 requires the importer to present a Bill of Entry with prescribed documents including invoices.

A prior decision of the Tribunal (dated 19.10.2017) held that an invoice found in the importer's email but not filed with customs cannot substantiate mis-declaration, thus limiting valuation to the invoice filed with the Bill of Entry.

Court's interpretation and reasoning: The Division Bench expressed disagreement with the earlier view, reasoning that Section 14 requires valuation based on the actual transaction value, which is the price actually paid or payable. The Tribunal emphasized that an invoice reflecting the true transaction value cannot be dismissed as an invoice for "private purposes." Allowing an importer to file a lower-value invoice with the Bill of Entry while maintaining a higher-value invoice privately would enable undervaluation and evasion of duty. The Court reasoned that the law does not permit such dual invoicing practices to mislead customs authorities.

Key evidence and findings: In the present case, the importer filed a Bill of Entry with an invoice showing a lower value. However, during DRI investigations, another invoice for the same consignment was found in the importer's email showing a higher value. The DRI suspected the invoice filed with the Bill of Entry was fabricated or false.

Application of law to facts: The Tribunal held that the proper officer, empowered under Section 17(3) to require any document or information for verification, can consider the invoice found in private records/emails. Rule 12 empowers rejection of declared value if there is reasonable doubt about its accuracy. The invoice found in the email relates to the same consignment and thus is the most direct evidence of the transaction value. Since Rules 4 to 9 provide sequential methods for valuation if transaction value cannot be determined, and Rule 9 allows use of reasonable means consistent with principles and available data, the invoice in private records can be used to determine true transaction value.

Treatment of competing arguments: The appellant argued that valuation must be based only on the invoice filed with the Bill of Entry, and that an invoice found privately cannot be considered. The Tribunal rejected this, holding that such a view would open floodgates for undervaluation and evasion. The Tribunal also rejected the earlier decision which had excluded consideration of private invoices, noting that it did not refer to the statutory provisions governing valuation and assessment.

Conclusions: Customs duty under Section 14 can be determined on the basis of the transaction value reflected in an invoice found in the importer's private records or emails, even if a different invoice was filed with the Bill of Entry. The invoice filed with the Bill of Entry is not conclusive if there is reason to doubt its accuracy.

Issue 2: Whether an invoice found in private records/emails but not filed with customs can substantiate mis-declaration or undervaluation.

Relevant legal framework and precedents: Section 17(3) empowers the proper officer to require any document or information to ascertain duty liability. Rule 12 allows rejection of declared value if there is reasonable doubt. The Customs Act provisions on penalty and prosecution apply where wrong declarations or documents are furnished. The earlier Tribunal decision (2017) held that private invoices not filed with customs cannot substantiate mis-declaration.

Court's interpretation and reasoning: The Division Bench held that the earlier decision was not consistent with the statutory scheme. The Court emphasized that the proper officer's power to verify and reassess duty necessarily includes consideration of all relevant documents in the importer's possession, including invoices in private records or emails. The mere fact that an invoice was not filed with customs does not render it irrelevant if it pertains to the same consignment and indicates a different transaction value.

Key evidence and findings: The DRI's recovery of a higher-value invoice from the importer's email account, which was not filed with customs, was a critical piece of evidence suggesting undervaluation and mis-declaration.

Application of law to facts: The Tribunal held that the proper officer can rely on such invoices to form a reasonable doubt under Rule 12 and reject the declared value. This can lead to reassessment under Section 17(4) and imposition of penalties under the Act.

Treatment of competing arguments: The appellant's contention that private invoices cannot substantiate mis-declaration was rejected as inconsistent with the statutory provisions empowering customs officers to verify and reassess duty based on all relevant evidence.

Conclusions: An invoice found in the importer's private records or emails, even if not filed with customs, can substantiate a case of mis-declaration and undervaluation, allowing the proper officer to reject declared value and reassess duty.

Issue 3: Interpretation of statutory provisions and rules governing valuation and assessment of customs duty in the context of multiple invoices.

Relevant legal framework: Sections 14, 17, 18, and 46 of the Customs Act, 1962, and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, especially Rules 3, 9, 11, and 12.

Court's interpretation and reasoning: The Tribunal undertook a detailed examination of these provisions. Section 14 mandates transaction value as the basis for valuation. Section 17 requires self-assessment but empowers the proper officer to verify and reassess. Section 18 allows provisional assessment pending further enquiry. Section 46 requires presentation of Bill of Entry with supporting documents. Rule 11 requires full and accurate declaration by importer and allows the proper officer to seek any document for valuation. Rule 12 empowers rejection of declared value if there is reason to doubt its truth or accuracy. Rule 9 allows residual methods for valuation if transaction value cannot be determined.

The Tribunal concluded that these provisions collectively empower the customs authorities to consider all relevant evidence, including invoices found in private records, to ascertain the true transaction value and assess duty accordingly.

Application of law to facts: The importer filed a Bill of Entry with an invoice showing a lower value, but a higher-value invoice was found in the importer's email. The customs authorities exercised their powers under the Act and Rules to reject the declared value and re-determine the value based on the true transaction value reflected in the higher-value invoice.

Treatment of competing arguments: The appellant's argument that valuation must be confined to the invoice filed with the Bill of Entry was held to be legally untenable and contrary to the statutory scheme.

Conclusions: The statutory framework mandates valuation based on true transaction value, and customs authorities have the power and duty to verify and reassess duty using all relevant documents, including those found in private records or emails.

3. SIGNIFICANT HOLDINGS

The Tribunal answered the referred question as follows:

"Even if the importer produces one invoice with the Bill of Entry and other invoice for the same consignment is found in the private records or e-mail of the importer showing a different value, the customs duty under section 14 of the Customs Act can be determined on the basis of the transaction value reflected in the invoice retrieved from the e-mail account of the importer."

The Tribunal established the core principle that the transaction value under Section 14 is the price actually paid or payable, and customs valuation cannot be confined solely to the invoice filed with the Bill of Entry if there is credible evidence of a different transaction value.

The Tribunal emphasized that the powers under Sections 17 and 46 and Rules 11 and 12 empower customs authorities to verify, require documents, reject declared values, and reassess duty based on all relevant information, including invoices in private possession of the importer.

The Tribunal rejected the earlier contrary view that invoices found in private records but not filed with customs are irrelevant for valuation or mis-declaration purposes, holding such a view would facilitate undervaluation and evasion.

Thus, the final determination is that customs duty must be assessed on the true transaction value, which may be reflected in an invoice found in the importer's private records or emails, notwithstanding the existence of a different invoice filed with the Bill of Entry.