TMI Blog2018 (12) TMI 448X X X X Extracts X X X X X X X X Extracts X X X X ..... such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reach the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. In the absence of any special circumstances indicated in Section 14(1) of the Customs Act, 1962, the price paid or payable should be taken as transactional value. The charges under invoices have to be supported by evidences of prices of contemporaneous of imports like goo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... department on examination of consignments, found an invoice as well as another bill of lading which showed under valuation as well as mis-declaration. 2. The matter was referred by Cochin Customs to DRI who in turn referred to US Customs. The report received indicated that the goods were essentially scrapped in nature and the seller himself had purchased for $ 0.04 to 0.08/Kg. A Show Cause Notice dated 22.06.2006 was issued to the appellants proposing recovery of additional duty of ₹ 54, 43,464 along with interest under Section 28AB and Penalty under Section 28AC. The Commissioner of Customs passed impugned order dated 30.11.2016 holding that the charge of mis-declaration had not been proved; recovered bills of lading were not directly relevant to the issued at hand; transaction value was liable to be rejected and the import was on FOB basis and not CIF as claimed. He confirmed differential duty of ₹ 24, 62,021 along with interest and equal penalty. 3. Ld. Counsel for the appellants submitted that the Commissioner has dropped the charges of mis-declaration holding that the Bill of Lading alleged to have been found had no direct relevance. For the same reason, char ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... oods are Non-Woven Interlining . The Commissioner has no case that these goods are similar to or identical to the good imported. No effort has been made to ascertain the nature of goods imported by the Appellant. Therefore no reliance can be placed on invoice at Annexure-V. 3.5. It is submitted that the materials covered under the 52 import documents were released on examination by the proper officer and each of those consignments were subjected to chemical analysis both in the customs laboratory and by the approved agencies for providing AZO-DYE Certificate. There is nothing to show that the chemical analysis made by the customs laboratory and the AZO-DYE certificate issued are wrong and contrary to the declarations. When that be the position, the issuance of the show cause notice on an assumption that the goods would have been something different and therefore there is mis-declaration and under valuation is mischievous and bad. 3.6. Commissioner revised the price on the basis of an invoice dated 10-3-2003 raised by streamer lines for the supplier one M/s. PGI Non-Woven on M/s. ASC International and Master packing list with Bills of Lading numbers 4050229-239224 for the supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng other: - 3.8. Even assuming that the price indicated the FOB value and not the CIF value, then too going by Rule 9(2)(i), the cost of transport could only be 20 % of the FOB value of the goods. Therefore, assuming 0.18$ to be the FOB value, 20% thereof 0.036$ could alone be added, taking the value of goods to 0.216 $ per kg. As such, the Commissioner having thoroughly misdirected himself in law and facts, the impugned order is liable to be set aside. 3.9. After coming to such wrong conclusions, the adjudicating authority confiscated the 58 Bills of Entry listed as Annexure I to the said order totally valued at ₹ 1,36,11,176/- under Section 111(m) of the Customs Act. It is submitted that there is no law, which authorizes the confiscation of a Bill of Entry, which has been released provisionally under Section 18 of the Customs Act. Further the adjudicating authority has assessed the differential duty on 52 Bills of Entry at ₹ 24,62,021/- and imposed the same amount as the penalty on the appellant under Section 114 A of the Customs Act. In so far as the six Bills of Entry are concerned which were provisionally assessed and released on bank guarantee an order under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the parties with whom the adjudicating authority carried out his enquiries or unearthed by the customs officers. The only evidence available on record is the licit payment effected by the appellant as per the invoice and purchase order presented along with the Bill of Entry which is US Dollars 0.18/Kg CIF, Cochin. 3.11. What has been added to the invoice value in the in original is not the actual freight incurred in the shipment of the goods from USA to Cochin but a flat rate as per freight schedule provided by various steamer lines for the carriage of one FCL container load. In respect of the three Bills of Entry indicated separately by the adjudicating authority in the order even this fiat rate was not available and therefore the adjudicating authority included an arbitrary rate towards freight. Thus it can be seen that actually the adjudicating authority has failed to appreciate vital facts brought out by the customs authorities themselves in the course of their investigation and included as part and parcel of the show cause memo and therefore the onus to prove that there is deliberate mis-declaration and suppression fact was never shifted to the appellant as the same was ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 22/KG whereas the value declared in the invoice No.12171 was only USD 0.1/KG only. The Commissioner, however, gave a finding that this invoice was though raised in the course of domestic trade, is indicative of the FOB value. 5.2. Thereafter, the Commissioner proceeded of the valuation on the basis of the freight charges obtained from various streamer lines in respect of all the imports except three consignments. The Commissioner concluded that the contracted price of 0.18 USD/KG is not reflective of the transaction value and that the importer could not explain the value and could not explain as to why the freight was more than CIF value. We find force in the appellants contention that even assuming that the price indicated the FOB value and not the CIF value; going by Rule 9(2)(i), the cost of transportation could only be 20 % of the FOB value of the goods i.e. 0.036$ and the total assessable value per Kg could be 0.216 $ per kg. However, Ld. Commissioner has taken transportation charges on the basis of information claimed to have been obtained from carriers, which was not at all proposed in the SCN. 5.3. We find that the Commissioner has not given a clear finding as to why ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the value adopted is correct is squarely on the Revenue. We find that no such onus has been discharged by the Revenue. No evidence has been shown that there were contemporaneous imports at higher price. Under such circumstances, the value adopted by the adjudicating authority is liable to be held unsubstantiated and unreasonable. 5.5. The issue of rejection of assessable value and the redetermination of the same was subject matter of a various decisions of Honorable Supreme Court. A few are discussed as below for better appreciation of the provisions of Law. We (i). In the case of Commissioner of Customs, Calcutta Vs South India Television (p) Ltd (supra), it was observed that 6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), value is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under- valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the document ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he original declaration in the Court. No reply has been filed to the said I.A. till date. In the circumstances, we are of the view that the Department had erred in rejecting the invoice submitted by the importer herein as incorrect. Further, the Department received from the Hong Kong supplier a Fax message dated 22.7.1996. That was produced before the Commissioner. In that message, he had explained that the manufacturer of the impugned goods was getting export rebates and, therefore, it is possible that the manufacturer had over-invoiced the price in order to claim more rebate. The goods were of Chinese origin. In the Fax message it is further stated by the foreign supplier that he was required to show the export value on the higher side in order to claim the incentives given by his Government. This explanation of the foreign supplier, in the present case, had been accepted by the Commissioner. In his order, the Commissioner has not ruled out over-invoicing of the export value by the foreign supplier in order to obtain incentives from his Government. For the afore stated reasons, we find no infirmity in the impugned judgment of the Tribunal. (ii). In the case of Mirah Exports ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ring Industries, etc. has also imported comparable quantities of similar bearings at the same or lesser prices as that of Mirah Exports and that discount from 50% to 70% on the list prices was the normal invoice price for a number of unconnected importers during the period. The Collector of Customs, while passing the order dated December 5, 1986 and march 20, 1987 and the Tribunal in the impugned judgment have not taken note of the said documents and the fact that the importers had been given 50% to 70% discount on the prices indicated in the list price. (iii). We further find that Supreme Court in the case of Commissioner of Customs, Vishakhapatnam Vs Aggarwal Industries (supra) observed that 11. On a plain reading of Sections 14(1) and 14(1A), it is clear that the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in Section 14(1) of the Act. Section 14(1) is a deeming provision as it talks of deemed value of such goods. The determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1) of the Act. Conjointly read, both Section 14(1) of the Act and Rule 4 of CVR 1988 pr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 12. In Eicher Tractors Ltd. (supra), relied upon by the Tribunal, this Court had held that the principle for valuation of imported goods is found in Section 14(1) of the Act which provides for the determination of the assessable value on the basis of the international sale price. Under the said Act, customs duty is chargeable on goods. According to Section 14(1), the assessment of duty is to be made on the value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed it has to be decided under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold or offered for sale, for delivery at the time and place and importation in the course of international trade. The word ordinarily implies the exclusion of special circumstances. This position is clarified by the last sentence in Section 14(1) which describes an ordinary sale as one where the seller or the buyer have no interest in the business of each other and price is the sole consideration for the sale or offer for sale. Therefore, when the above conditions regarding time, place and absence of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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