TMI Blog2023 (8) TMI 712X X X X Extracts X X X X X X X X Extracts X X X X ..... uation 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 identical or similar and certain reasons exists and justifies detailed investigation. It is found that the original adjudicating authority has rejected the declared transaction value in terms of Rule 12 of the Customs Valuation Rules, 2007 basing on the assessable value of identical goods imported vide Bill-of-Entry No. 699388 dated 25.11.2010, which was proposed to be adopted as the transaction value under Rule 4 of the Customs Valuation Rules, 2007 - The declared value of the impugned consignment, which was said to be based on the said contract, was rejected as not representing the actual transaction value contemplated in Rule 3 of the Customs Valuation Rules, 2007 and the contract was found to be ext ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an. 2.2 Suspecting under-valuation of the imported goods, considering contemporaneous import prices of similar goods of same description, the importer was asked to justify the declared value. In both the above appeals, the invoices were raised by M/s. Bedeil General Trading LLC., P.O. Box 52018, Dubai, U.A.E. 2.3 Being aggrieved, the importer had filed Writ Petition No. 30153 of 2010 before the Hon ble High Court at Madras for the acceptance of the contract value / declared value for the Bills-of-Entry filed. The Hon ble High Court directed the Revenue to release the imported goods on furnishing of a Bank Guarantee for 50% of the differential duty and further, a personal bond for the remaining 50% of the differential duty. In compliance with the above directions, the imported goods were assessed provisionally and cleared on the above terms. 3. As the Department noticed contemporaneous prices of imports of Raw Silk Yarn of Uzbekistan origin at USD 28.50 (CIF) per kg. vide Bill-of-Entry No. 699388 dated 25.11.2010, Show Cause Notices consequently came to be issued to the importer proposing final assessment after enhancement of the transaction value under Section 18(2) of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , a penalty of Rs.7,50,000/- was imposed on the respondent-importer under Section 112(a) of the Customs Act, 1962. 5.2 Similarly, Order-in-Original No. 18046A/2012 dated 05.03.2012 was passed by the Additional Commissioner of Customs thereby rejecting the declared value of Rs.44,17,699/- (@ USD 13.75 per kg.) for the imported Raw Silk Yarn in hanks imported vide Bill-of-Entry No.704225 dated 30.11.2010 and re-determining the transaction value at Rs.90,66,026/- (@USD 28.50 per kg.) under Rule 4 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 and thus, ordered for re-assessment of the goods in the above terms. The imported goods were held to be liable for confiscation under Section 111(m) of the Customs Act, 1962 and a redemption fine of Rs.2,50,000/- was imposed under Section 125 of the Act. Further, a penalty of Rs.1,00,000/- was imposed on the respondent-importer under Section 112(a) of the Customs Act, 1962. 6. Being aggrieved, the importer filed appeals before the Commissioner of Customs (Appeals), Custom House, Chennai, who has allowed their appeals with consequential relief. So, the Revenue has come in appeal before this forum against t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 provide grounds for rejection of transaction value in terms of Rule 12. The scheme of valuation does not envisage the value entered into a long term contract as the transaction value. The contract period in these appeals is more than one year and silk being price sensitive, the price of which tends to vary from week to week and thus, the acceptance of the contract itself raises the legal question as to whether such contract value can be accepted. (ii) The sale contract said to be entered into between the importer viz. M/s. Kaveri Silks Jute Pvt. Ltd. and the seller viz. M/s. Bedeil General Trading LLC., U.A.E. for import of 15,00,000 kgs. of Raw Silk was only a proforma invoice, which cannot be regarded as a contract. (iii) It has also been observed that the total quantity as per the said contract was not imported and only 53,177 kgs. of Raw Silk Yarn out of the contracted quantity of 15,00,000 kgs. was imported. (iv) As the importer had not fulfilled the conditions of the contract, the value of the goods has to be based on contemporaneous values and not as per the contract price. (v) When ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er of Customs, Chennai v. M/s. Pushpanjali Silks Pvt. Ltd. [2006 (202) E.L.T. 80 (Tri. Chennai)] wherein it was held basing on the judgement of the Hon ble Supreme Court in M/s. Eicher Tractors Ltd. (supra), that as the Department had not alleged that the assessee had mis-declared the price actually paid, they had not mis-declared the description of the goods and there was no case that the particular import fell within any of the situations enumerated under Rule 4(2) of the Customs Valuation Rules and as the goods were imported in terms of the contract indicating USD 13.75 per kg. as the price agreed between the contracting parties, the Department had no case that any amount over and above the contract price was paid to the supplier or the price was influenced by any extra commercial considerations. Thus, the ratio of the judgement in M/s. Pushpanjali Silks Pvt. Ltd. (supra) was followed. 10.3 Further, it has been observed by the lower appellate authority that many more evidences of contemporaneous imports at the same price or a little higher price by other importers of identical goods were put forth by the assessee, but the Department was only relying on one odd import and th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... laration against the importer is justifiable and order of confiscation of the imported Raw Silk Yarn under Section 111(m) of the Customs Act, 1962 is legally maintainable? and (iii) Whether the importer is liable for penalty under Section 112(a) of the Customs Act, 1962? 15. In order to examine the issue of under-valuation of the imported goods, we find it enlightening to refer to the Hon ble Supreme Court s analysis of the statutory provisions relating to valuation under the Customs Act, 1962 in the case of M/s. Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)]: - 9. As per Section 14(1) of the Act, value of the imported goods shall be the transactional value of such goods, which means the price actually paid or payable for the goods when sold for export to India where the buyers and sellers are not related and the price fixed is the sole consideration for sale. As per the first proviso to Section 14(1) of the Act, the transactional value for the purpose of Customs duty would include amounts paid or payable as costs and services like commission, brokerage, engineering, design work, cost of transportation, etc., as may be specified in th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 12 and therefore give primacy to Rule 12 which we shall subsequently elaborate and explain. Sub-rule (2) to Rule 3 states that value of the imported goods under sub-rule (1) shall be accepted i.e. accepted by the Customs authorities. The proviso then vide different clauses sets out the pre-conditions for accepting value of the imported goods. Rule 11 provides for declaration to be given by the importer or his agent certifying that they had disclosed full and accurate details of the value of the imported goods and any other statement, information and document including invoice of the manufacturer or producer of the goods where the goods are imported from or through a person other than the manufacturer of goods, as considered necessary by the proper officer for valuation of the imported goods. Sub-rule (2) states that the declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after an enquiry in consultation with the importers. 13. Sub-rule (3) to Rule 3 deals with cases when the buyer and seller are related. We would not dilate on the said sub-rule for this is not required for the purpose of the present decisi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cepted where the proper officer is satisfied about the truth and accuracy of the declared value after enquiry in consultation with the importers. Clause (i) to the Explanation states that Rule 12 does not provide a method of determination of value but provides the procedure or mechanism in cases where declared value can be rejected when there is a reasonable doubt that the declared transaction value does not represent the actual transaction value. In such cases the transaction value is to be sequentially determined in accordance with Rules 4 to 9 of the 2007 Rules. Sub-rule (2) of Rule 12 stipulates that on request of an importer, the proper officer shall intimate to the importer in writing the grounds, i.e. the reason for doubting the truth or accuracy of the value declared in relation to the imported goods. Further, the proper officer shall provide a reasonable opportunity of being heard to the importer before he makes the valuation in the form of final decision under sub-rule (1). 15. The requirements of Rule 12, therefore, can be summarised as under : (a) The proper officer should have reasonable doubt as to the transactional value on account of truth or accuracy ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r officer. The expression reason to believe which would have required the proper officer to refer to facts and figures to show existence of positive belief on the undervaluation or lower declaration of the transaction value. The expression reason to doubt as a sequitur would require a different threshold and examination. It cannot be equated with the requirements of positive reasons to believe, for the word doubt refers to un-certainty and irresolution reflecting suspicion and apprehension. However, this doubt must be reasonable i.e. have a degree of objectivity and basis/foundation for the suspicion must be based on certain reasons . 18. The expression proof beyond reasonable doubt in criminal law requires the prosecution to establish guilt and secure conviction of the accused by proving the charge beyond reasonable doubt . In Ramakant Rai v. Mad an Rai Ors. - (2003) 12 SCC 395 referring to the expression reasonable doubt in criminal law it was held as under : 24. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite other than the truth. To constitute reasonable doubt, it must be free from ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y on mere suspicion because one is distrustful and unsure without reasonable and certain reasons would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods. 16. The respondent viz. M/s. Kaveri Silks Jute Pvt. Ltd., Bangalore has imported Raw Silk Yarns in hanks, from M/s. Bedeil General Trading LLC., Dubai, of Uzbekistan origin. The value declared by the importer was at USD 13.75 per kg. Basing on contemporaneous value of import of Raw Silk of Uzbekistan origin at USD 28.5 per kg., the Revenue has sought to enhance the transaction value of the imported goods. The importer has contested the enhancement on the plea that the Raw Silk Yarn was imported by them even earlier vide Bills-of-Entry Nos. 521894 dated 26.05.2010, 6171918 dated 03.09.2010 and 63393 dated 20.09.2010 at a similar rate, which were cleared by the Department, that the impugned imports were undertaken in terms of a contract entered with the seller viz. M/s. Bedeil General Trading LLC, Dubai, for which even advance payment was made and that evidence of similar imports of Raw Silk Yarn at around the same price was submitted before the lower ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... unit price agreed upon between the contracting parties. The import was found to be made within the contract period. It is not the case of the Revenue that any amount over and above the contracted price was paid by the importer to the supplier, nor is it their case that the importer was related to the supplier or that the price paid was influenced by any extra commercial consideration. 19. As such, we find that there is no valid reason to reject the declared transaction value of the goods. 20. Further, we take note of the importer s contentions that their earlier silk imports were cleared at around the same price as in the impugned consignment and the supplier has given a small percentage of discount on account of payment in advance. Enhancement of the transaction value without first establishing the prices of contemporaneous imports of identical or similar goods is not legally sustainable. The lower appellate authority has also given a finding that the appellant had put forth evidence of contemporaneous imports at around the same price by other importers of identical goods whereas the Department relied on only one odd import and the same odd import was also not proved with do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... been observed as under: - 2. . In all the cases, we find that the transaction value has been arrived at purely on commercial considerations based on contracts. The supplier, in order to honour the contracts, supplied the goods at the contracted price. There is also no allegation that the appellants paid to the supplier more than the contracted value. Under these circumstances, there are actually no grounds to reject the transaction value . The above decision was affirmed by the Hon ble Apex Court in its judgement as reported in 2011 (272) E.L.T. 641 (S.C.). 23. In view of the above detailed discussion, we are inclined to accept the transaction value, as declared by the importer-respondent. As earlier imports of the respondent were cleared accepting the values declared and also since the value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority, the declared transaction value has to be accepted. Hence, there is no need to pass any order in respect of confiscability of the goods or on imposition of penalty. 24. We uphold the order passed by the lower appellate authority. 25. Consequently, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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