TMI Blog2023 (9) TMI 772X X X X Extracts X X X X X X X X Extracts X X X X ..... ndustry. If the certification was suspected to be faulty or not pertinent to the impugned goods, necessary verification should have been initiated with issuing authorities and taken to its logical conclusion. No such exercise was undertaken and thus the denial is to be tested solely on conformity of the re-determination with law. On the issue of valuation adopted for the diamond industry, the Tribunal did have cause to consider it in depth on cross-appeals of Revenue - The order of the Tribunal in COMMISSIONER OF CUSTOMS AIR SPECIAL CARGO AWAS CORPORATE POINT, MAKWANA LANE, MUMBAI VERSUS KIRAN GEMS PVT LTD AND KIRAN GEMS PVT LTD VERSUS COMMISSIONER OF CUSTOMS, VALLABHBHAI S PATEL VERSUS COMMISSIONER OF CUSTOMS, MAVBJIBHAI S PATEL VERSUS COMMISSIONER OF CUSTOMS, RAVIRAJ ANIL KUMAR VERSUS COMMISSIONER OF CUSTOMS, KUSHAL KAMLES PATEL VERSUS COMMISSIONER OF CUSTOMS [ 2023 (6) TMI 1015 - CESTAT MUMBAI] held that It is also not the case of the lower authorities that any other law, requiring declaration of value in bill of entry for any purpose other than assessment to duty, has been breached insofar as the present dispute in concerned. In such circumstances, section 14 of Custom ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to do so under any law. Before the Commissioner of Customs (Appeals), Mumbai-III, several grounds had been adduced, including discrepancy in value, for discarding the validity of certification furnished along with the bill of entry but the impugned order restricted findings to discrepancy in value for holding that the goods were prohibited and, thus, warranting confiscation without recourse to redemption. 2. At this stage itself, it may be noted that, following confiscation, adjudicating authority proceeds to decide on disposition of confiscated goods according to 125. Option to pay fine in lieu of confiscation. (1) Whenever confiscation of any goods is authorised by this Act, the officer adjudging it may, in the case of any goods, the importation or exportation whereof is prohibited under this Act or under any other law for the time being in force, and shall, in the case of any other goods, give to the owner of the goods or, where such owner is not known, the person from whose possession or custody such goods have been seized, an option to pay in lieu of confiscation such fine as the said officer thinks fit: Provided that where the proceedings are deemed to b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nation of value, therein as counter to the appeal, had been allowed to be filed by Commissioner of Customs (Appeals) and was on record. 3. Appellant had imported 13278.23 carats of rough diamonds against bill of entry no. 2157847/22.02.2019 from Belgium with declared value of US$ 345,769.04 and furnished invoice no. P08019/21.02.2109 as well as Kimberly Process Certificate (KPC) no. 00680530/21.02.2019. Valuation, entrusted to trade panel , as per prevailing mechanism, elicited the allegation that the actual value was substantially lower leading to proceedings before the original authority that was found to be not legal and proper by the jurisdictional Commissioner of Customs. The consignment comprised two lots of 6505.25 carats and 6772.98 carats declared to be worth US$ 193986.56 and US$ 151782.48 which were ascertained as limited to US$ 97578.75 and US$ 74502.78 respectively. It is on record that, at the request of the importer, adjudication proceedings were undertaken without issue of show cause notice. Thus, effectively, the plea entered on behalf of jurisdictional Commissioner of Customs was for invoking of section 111(d) of Customs Act, 1962 to be followed by discard o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ity with other supporting documents. We have perused the invoice and airway bill, both of which have declared the weight and value of the rough diamonds and the cavil on the lack of segregation in accordance with lots comprising the consignment appears to be more procedural than substantive; indeed, there is no finding of variation in total quantity to cast doubts on the certificate. Thus, the only discrepancy that the lower authorities could fall back on was the value of the goods and, that too, by ascertainment in accordance with a procedure peculiar to the diamond industry. If the certification was suspected to be faulty or not pertinent to the impugned goods, necessary verification should have been initiated with issuing authorities and taken to its logical conclusion. No such exercise was undertaken and thus the denial is to be tested solely on conformity of the re-determination with law. 8. On the issue of valuation adopted for the diamond industry, the Tribunal did have cause to consider it in depth on cross-appeals of Revenue [customs appeal no. 87726 of 2022] and M/s Kiran Gems Pvt Ltd [customs appeal no. 87811 of 2022] against order [order-in-appeal no.MUM-C ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tended for Bharat Diamond Bourse (BDB). The foundation of this administrative instrument is identity of consignment and anonymity of the importer. xxxxx 13. The first appellate authority appears to be proficient in dialectics which, as seen from the disposal of two issues raised by appellants - limited cross-examination permitted and serial resort to valuers in breach of instructions on examination procedure before her, is not to be faulted but suitability for deployment in determination of legal and proper is in question. It was concluded that a representative of each of the institutions concerned with examination had been subjected to requirement of section 138B of Customs Act, 1962 which sufficed to overcome any threshold objection to repudiation of that which had been permitted by the predecessor incumbent in office empowered to adjudicate and that, notwithstanding the impropriety of seeking third examination, the difference in value elicited by the proper second examination justifies confiscation under section 111(m) of Customs Act, 1962 for, thereby, not disturbing the order itself. In our view, invoking of Customs Valuation (Determination of Value of Im ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... arned Counsel for importer, denied any connections and, submitting that such relationship even if evidenced would not have sufficed for discarding value unless in accordance with rule 3(2) and rule 3(3) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, he also drew attention to the findings in the impugned order which, with reference to economics of the purported transaction, cast doubts on round tripping as the motive for the alleged overvaluation. Furthermore, he contended that, with the stringent procedures of public notice no. 30/2018 dated 19th December 2018, any attempt at misdeclaration would be farthest from the minds of any entity importing through Precious Cargo Customs Clearance Centre (PCCCC) of Bharat Diamond Bourse (BDB). Both Learned Authorized Representative and he elaborated upon Kimberly Process International Certification scheme, the internationally acknowledged system for auditing of rough diamonds established for cleaning up the transborder trade in that prized commodity. 15. From their elucidation, we gather that the regime was established in 2003, following the Fowler Report and resolution adopted at the World Diamond Con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production; the non-declaration of parameters such as brand, grade, specifications that have relevance to value; the fraudulent or manipulated document (emphasis supplied in impugned order) in Explanation (1) below rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as enabling recourse to rule 12, thereby, with notice, as intended therein, having been communicated in the show cause notice leading to adjudication and culminating thereafter by the impugned order. From this, it can be clearly deduced that classification itself was not an issue with the lower authorities except insofar as it enabled invoking of rule 12 and, thereupon, rule 9, of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. We have already made our observations supra about the catalytical, even if pivotal as such generally are, role of rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 in valuation not as an end in, or of, itself of imported goods by recourse to enumerated met ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ptance for customs purposes of the highest of the two alternative values; the price of the goods on the domestic market of the country of exportation; the cost of production other than computed values which have been determined for identical or similar goods in accordance with the provisions of rule 8; the price of the goods for the export to a country other than India; minimum customs values; or arbitrary or fictitious values. in rule 9 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, it cannot but escape our attention that it is not a free flowing empowerment but one designed to be consistent with rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and, in addition, to be irrefutably in conformity with stipulations supra. From the reports of the expert valuers, we are unable to ascertain that conformity; indeed, we note that in cross-examination at the adjudication stage, Mr Surajratan Agrawal was disinclined to disclose the manner in which the suggested value could be justified lest it compromise his professional and commercial interest. The lack of credibility of such reports cannot be ove ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ficer therein is vested with authority to grant clearance, upon which the goods cease to be imported for purposes of Customs Act, 1962; such proper officer is permitted to interfere with clearance only if the appropriate duty has not been paid and/or the goods are subject to some prohibition. 26. It is not the case of the lower authorities that any prohibition, under Customs Act, 1962 or any other law for the time being in force , stood in the way of clearance for home consumption upon assessment of bill of entry; a subsequent proceeding under Customs Act, 1962 cannot rest upon a prohibition that, at the time of clearance, was not in existence for resort to section 124 of Customs Act, 1962 proposing confiscation of goods under section 111 of Customs Act, 1962. Nor is it the case of the lower authorities that duty was to be collected or was short-collected on clearance for invoking section 28 of Customs Act, 1962. There is, thus, no scope for barring clearance for home consumption. The sole bar, as we can garner, is the finding that the goods were subjected to re-determination of value, arising from rejection of declared value under rule 12 of Customs Valuation (Determin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntry for any purpose other than assessment to duty, has been breached insofar as the present dispute in concerned. In such circumstances, section 14 of Customs Act, 1962, or any Rules framed thereunder, is not of relevance to the impugned goods. Consequently, the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 cannot be brought to bear on the impugned goods. The valuation is purely academic and we, thus, reiterate our earlier observation that agencies of the State must restrict their statutory intervention only within the intent of the statute. Any excess of that will not only imperil their action but also have consequences in law. 9. In the light of the decision of the Tribunal supra, it is not just the legality of the re-valuation that is relevant in the present dispute but even the legality of considering the certification, based on declaration of supplier in country of export to appropriate authorities there, as liable to be discarded on the basis of a finding, such as it is, of re-valuation undertaken by customs authorities, empowered restrictedly and in a context, for purpose so limited as not to extend to verification of one detail in a cer ..... X X X X Extracts X X X X X X X X Extracts X X X X
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