TMI Blog2019 (5) TMI 1152X X X X Extracts X X X X X X X X Extracts X X X X ..... iable on the imported goods. Where duty is assessed provisionally, the importer or exporter has to furnish security as the proper officer deems fit for payment of deficiency, if any, between the duty provisionally paid and the duty finally assessed. On interpreting Section 18 of the Act, it is held that when there is a dispute between the customs authorities and the importer as regards the valuation of the imported goods, on satisfaction of the conditions enumerated in sub-section (1), the authorities should make provisional assessment of customs duty under Section 18 of the Act. As per sub Rule (2) of Rule 12, the proper officer when required must intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared. The said mandate of sub-Rule (2) of Rule 12 cannot be ignored or waived. Formation of opinion regarding reasonable doubt as to the truth or accuracy of the valuation and communication of the said grounds to the importer is mandatory, subterfuge to by-pass and circumvent the statutory mandate is unacceptable. Formation of belief and recording of reasons as to reasonable doubt and communication of the reasons when required is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2. Impugned order dated 12th September, 2017 passed by the Division Bench of the High Court of Judicature at Allahabad dismisses Writ Petition Tax No.307 of 2017 filed by the appellants, namely M/s Century Metal Recycling Pvt. Ltd. and Gauri Shankar Agarwala, inter alia, on the grounds that the High Court would not exercise extraordinary jurisdiction under Article 226 of the Constitution of India as the matter relates to the valuation of imported aluminium scrap which could be assailed in a statutory appeal and it would not be appropriate for the writ court to decide whether the appellant had or had not agreed to valuation by the customs authorities. 3. The appellant Company is stated to be engaged in the manufacture of aluminium alloys, for which they regularly import aluminium waste as a raw material for self-consumption. Imported scrap, it is accepted, falls under different code names as per specifications of the Institute of Recycling Industry. The grievance raised by the appellants is that the 2nd respondent i.e. the Principal Commissioner of Customs, Noida Customs Commissionerate and its Officers almost uniformly do not clear the consignments as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of 2017 decided on December 10, 2018, the latter being the sister concern of the first appellant in this case. Further, having heard learned counsel for the parties, we would like to clarify the legal position and therefore in the facts of this case would exercise our discretion to entertain this appeal despite the alternative remedy. 6. We would begin by reproducing Section 14 of the Act and Rules 3 and 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ( the 2007 Rules , for short) which read as under: Section 14: Valuation of Goods. (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such oth ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and clause (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999). xx xx xx RULES Rule 3. Determination of the method valuation: (1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10; (2) Value of imported goods under sub-rule (1) shall be accepted: Provided that (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which- (i) are imposed or required by law or by the public authorities in India; or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation. - (1) For the removal of doubts, it is hereby declared that: - (i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 9. (ii) The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after the said enquiry in consultation with the importers. (iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may inclu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3, 4 and 12 of the 2007 Rules, had held as under: 10. The law, thus is clear. As per Sections 14(1) and 14(1-A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of deemed value of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. This is also the effect of Rule 3(1) and Rule 4(1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ction 14(2) of the Act when it is satisfied that it is necessary or expedient. Thus, whenever tariff has been fixed vide notification issued by the Board under Section 14(2) of the Act, then notwithstanding the transactional value of the imported goods under sub-section (1) to Section 14 of the Act, as per sub-section (2) to Section 14 of the Act the customs duty is payable as per the tariff value so fixed. In the present case, the Board has not considered it necessary and expedient to issue a notification under Section 14(2) of the Act to fix a tariff for the imported aluminium waste. 11. The second proviso to Section 14 (1) deals with different situations, enumerated under the three clauses; (i) when buyers and sellers are deemed to be related; (ii) when there is no sale, or buyers and sellers are related or the price is not the sole consideration for sale, etc. and (iii) where the proper officer has reason to doubt the truth or accuracy of such value. When the conditions specified in the second Civil Appeal arising out of SLP (C) No. 33602 of 2017 Page 12 of 30 proviso are satisfied, the transactional value for the purpose of charging of customs duty is to be mad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d for computing the transaction value. What is important to note is that Rules 4 to 9 are subject to the provisions of Rule 3 thereby giving primacy to Rule 3 which in turn gives primacy to Rule 12 of the 2007 Rules. 14. Rule 12, which as noticed above enjoys primacy and pivotal position, applies where the proper officer has reason to doubt the truth or accuracy of the value declared for the imported goods. It envisages a two-step verification and examination exercise. At the first instance, the proper officer must ask and call upon the importer to furnish further information including documents to justify the declared transactional value. The proper officer may thereafter accept the transactional value as declared. However, where the proper officer is not satisfied and has reasonable doubt about the truth or accuracy of the value so declared, it is deemed that the transactional value of such imported goods cannot be determined under the provision of sub-rule (1) of Rule 3 of the 2007 Rules. Clause-(iii) of Explanation to Rule 12 states that the proper officer can on certain reasons raise doubts about the truth or accuracy of declared value. Certain reasons woul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not have reasonable doubt, the goods are cleared on the declared value. (e) When the doubt persists, sub-rule (1) to Rule 3 is not applicable and transaction value is determined in terms of Rules 4 to 9 of the 2007 Rules. (f) The proper officer can raise doubts as to the truth or accuracy of the declared value on certain reasons which could include the grounds specified in clauses (a) to (f) in clause (iii) of the Explanation. (g) The proper officer, on a request made by the importer, has to furnish and intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to the imported goods. Thus, the proper officer has to record reasons in writing which have to be communicated when requested. (h) The importer has to be given opportunity of hearing before the proper officer finally decides the transactional value in terms of Rules 4 to 9 of the 2007 Rules. 16. Proper officer can therefore reject the declared transactional value based on certain reasons to doubt the truth or accuracy of the declared value in which event the proper officer is entitled ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the case. Proof beyond reasonable doubt is certainly not the requirement under proviso to Section 14 of the Act and Rule 12 of the 2007 Rules, albeit the above quote draws a distinction between a simple doubt and a doubt which is reasonable. In the context of the proviso to Section 14 read with Rule 12 and clause (iii) of Explanation to the 2007 Rules, the doubt must be reasonable and based on certain reasons . The proper officer must record certain reasons specified in (a) to (f) or similar grounds in writing at the second stage before he proceeds to discard the declared value and decides to determine the same by proceeding sequentially in accordance with Rules 4 to 9 of the 2007 Rules. It refers to a doubt which the proper officer possesses even after the importer has been asked to furnish further information including documents and evidence during the preliminary enquiry to clear his doubt about the truth and accuracy of the value declared. Therefore, there has to be a preliminary enquiry by the proper officer in which the importer must be given an opportunity for clarification of the doubts of the officer by furnishing of documents and evidence as to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... isionally assessed. (1A) Where, pursuant to the provisional assessment under sub-section (1), if any document or information is required by the proper officer for final assessment, the importer or exporter, as the case may be, shall submit such document or information within such time, and the proper officer shall finalise the provisional assessment within such time and in such manner, as may be prescribed. (2) When the duty leviable on such goods is assessed finally or re-assessed by the proper officer in accordance with the provisions of this Act, then- (a) in the case of goods cleared for home consumption or exportation, the amount paid shall be adjusted against the duty finally assessed or re-assessed, as the case may be and if the amount so paid falls short of, or is in excess of, the duty finally assessed or reassessed, as the case may be, the importer or the exporter of the goods shall pay the deficiency or be entitled to a refund, as the case may be; (b) in the case of warehoused goods, the proper officer may, where the duty finally assessed or re-assessed, as the case may be, is in the excess of the du ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Clause (d) is wider and would apply when the importer or exporter does not produce necessary documents or furnish information. In all cases covered under Clauses (a) to (d), the proper officer may direct provisional assessment of the duty leviable on the imported goods. Where duty is assessed provisionally, the importer or exporter has to furnish security as the proper officer deems fit for payment of deficiency, if any, between the duty provisionally paid and the duty finally assessed. On interpreting Section 18 of the Act, it is held that when there is a dispute between the customs authorities and the importer as regards the valuation of the imported goods, on satisfaction of the conditions enumerated in sub-section (1), the authorities should make provisional assessment of customs duty under Section 18 of the Act. This expedites clearance, pending final adjudication on merits which may take time. This is also the mandate of the Board Circular No.38/2016 dated 22nd August, 2016. Any insistence and compulsion by the authorities that the importer should disclaim and forgo his statutory right under Section 18 of the Act would not be correct. Neither would it be right ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he doctrine of prospective application with the direction that the past cases will be decided on a case to case basis, depending upon the factual matrix and considerations like whether the importer has asked for certain reasons , whether the reasons were not communicated, whether certain reasons can be deciphered from the assessment/valuation order, whether misdescription or false declaration was apparent, etc. 22. In Commissioner of Customs vs. Prabhu Dayal Prem Chand 2010 (13) SCC 535, this Court had rejected the plea that the Revenue was justified in redetermining the value of brass and copper scrap on the basis of information received from London Metal Exchange on the price of the said metals on the ground that the importer was not confronted with any contemporaneous material for enhancing the transaction value. This Court affirmed the order of the Tribunal in Prabhu Dayal Prem Chand (supra) and held that the order in original had not indicated details of any contemporaneous import or other material in the form of corroborative material which had necessitated the enhancement in the transaction valuation. 23. We would now refer to the findings ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt dated 7th April, 2017 can be sustained and upheld. It is set aside and quashed. 25. Before closing, we would observe that the Valuation Alerts, as also stated by the respondents, are issued by the Director General of Valuation based on the monitoring of valuation trends of sensitive commodities with a view to take corrective measures. They provide guidance to the field formation in valuation matters. They help ensure uniform practice, smooth functioning and prevent evasion and short payment of duty. However, they should not be construed as interfering with the discretion of the assessment authority who is required to pass an Assessment Order in the given factual matrix. Declared valuation can be rejected based upon the evidence which qualifies and meets the criteria of certain reasons . Besides the opinion formed must be reasonable. Reference to foreign journals for the price quoted in exchanges etc., to find out the correct international price of concerned goods would be relevant but reliance can be placed on such material only when the adjudicating authority had conducted enquiries and ascertained details with reference to the goods imported which are identica ..... X X X X Extracts X X X X X X X X Extracts X X X X
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