Arbitrary valuation of goods not subjected to BIS specifications is invalid

[CA Bimal Jain]

The CESTAT, Chennai in the matter of M/S. SK ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (GR. 3) CHENNAI II [2022 (6) TMI 1093 - CESTAT CHENNAI] set aside and held that the revaluation of the goods which are not subjected to Bureau of Indian Standards (“BIS”) specifications was made in arbitrary manner and was not adhere to the principles of natural justice.

Facts:

M/s. SK Enterprises (“the Appellant”) have imported a consignment of Kids Shoes, Plastic Goggles, Hot Fix Stone etc., and filed a Bill of Entry. During the course of examination of the goods by Revenue Department (“the Respondent”), it was found that there were 25 bales of optical lenses and 6 bales of soft toys with foam, and 2 bales of soft toys without foam. The issue was adjudicated by the Joint Commissioner enhancing the declared value and ordering confiscation of the goods and allowed the same to be redeemed in respect of goods for which the Appellants did not have BIS certificate and in an appeal filed by the Appellant, the Commissioner passed an order confirming the Order in Original (“the Impugned Order”) of the lower authority. The Appellant approached the Hon’ble High Court of Madras seeking to set aside reassessment and detention certificate for waiver of demurrage charges.

The Appellant contented that impugned order has enhanced the declared value and ordered confiscation of the goods and allowed the same to be redeemed in respect of goods for which the appellants did not have BIS certificate. The Respondent has confiscated the goods and allowed the redemption for re-export on payment of fine of Rs. 55,000/- and also imposed penalty under Section 112 (a) of the Customs Act, 1962 (“the Custom Act”). Further, in respect of shoes and sandals, the Integrated Goods and Services Tax (“IGST”) rate was levied at 18% whereas the same requires to be levied at 5%.

Issues:

• Whether the valuation and confiscation of goods, not requiring BIS certificate allowed to be redeemed?
• Whether Confiscation and allowing redemption of goods to which BIS specifications are applicable, for the purposes of export?

Held:

The CESTAT, Chennai in M/S. SK ENTERPRISES VERSUS COMMISSIONER OF CUSTOMS (GR. 3) CHENNAI II [2022 (6) TMI 1093 - CESTAT CHENNAI] held as under:

• Valuation of the goods was made in arbitrary manner without giving any cogent reasons whatsoever. The lower authorities have also not adhered to the principles of natural justice. The revaluation of goods was done at the back of the importer. Though the lower authority cursorily states that he has gone through the various the sequential Customs Rules for valuation, there is no evidence to that effect to indicate such diligent application of rules by the lower authorities.
• Further that, the reason for rejection of the declared value is also not brought out clearly. The value adopted was arbitrary on the basis of report claimed to have been submitted by the Respondent. Thus, find that revaluation of goods by the lower authorities do not show any application of own mind.
• Stated that, non-adherence to the principles of natural justice, the impugned order to the extent of revaluation of goods which are not subjected to BIS specifications cannot be sustained.
• Further noted, that this Tribunal is not a writ court cannot suo motu direct the authorities to issue a detention certificate and advised to the Appellant to approach the concerned authority for issuance of the same.
• Held that, manner in which duty is confirmed on the Appellant is evident from the fact that valuation of shoes and sandals was made at Rs.85 per pair and [Notification No. 01/2017 of Central Tax (Rate), dated the June 28, 2017] prescribes a rate of 5% for the shoes and sandals which are priced below Rs. 500.

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