2005 (98) ECC 50 (Tri)

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL

West Regional Bench -- Mumbai

Shri S.S. Sekhon, Member (T) and Shri T. Anjaneyulu, Member (J)

Commissioner of Customs (Imports), Mumbai

Versus

Lord Shiva Overseas

Appeal No. C/666/04

[Arising out of Order-in-Appeal No. 109/2000 MCH dated 5.4.2004 passed by the Commissioner of Customs (Imports), Mumbai-I]

Order No. A-1327/WZB/2004/C-III, dt. 10.9.2004, Certified on 2.12.2004

Valuation (Customs)

The transaction value as per invoice and of the goods under-valuation and its acceptance under rule 4, for the consignment under-valuation, may be rejected on the grounds of misdeclaration, but the rejection of application of Rule 5 and 6 thereafter cannot be accepted on ground -- Because of the misdeclaration of the description of the goods, the Bills of Entry produced by the importers in support of declared value is of no consequence -- Rule 5 has to be applied and if ruled out then rule 6 has to be applied as rule 6A specifically mandates. Since that has not been done by the original authority, that order is bad in law.

Jurisdiction (Customs)

Proper officer -- The proper officer duty bound to make enquiries as he deemed fit, including enquiry about the natural goods its classification, contemparances values, market values etc. and then resort to as assessment of loading -- When the proper officer had reasons to believe that the declared value of US D 005 per piece was not as per section 14 and thereafter, making such enquiries, as he deemed fit, loaded it to US D 0.10 per pieces, then further proposal to reload the same cannot be approved since no ground of earlier enquire were inadequate or otherwise doubted or taken to be incorrect.

Assessment (Customs)

Section 17, Customs Act -- Assessment cannot be challenged by alleging misdeclaration of nature of goods, which the proper officer in the groups was in any case required to ascertain, the loading of value, on second check, Bill of Entry should not have been ordered.

Appeal dismissed

PRESENT :

Shri A.K. Saxena, JDR for the appellant.

Shri H.R. Shetty, Advocate for the respondent.

Cases Cited :

1. Auto Hardware Enterprise, 2003 (151) ELT 330......................................... [Paras 2 & 3]

2. CC Cochin v. Arvind Exports (P) Ltd., 2001 (130) ELT 54 (LB)........................... [Para 4]

3. Hitaishi Fine Craft Industries Pvt. Ltd., 2002 (148) ELT 364............................... [Para 4]

4. Mohan Mealun Ltd., 2000 (69) ECC 449 (SC).................................................... [Para 4]

5. R.G. Sales (P) Ltd., 2002 (148) ELT 1076................................................ [Paras 2 & 3]

Per : S.S. Sekhon

An import of 8,20,000 pcs of Plastic Lighters vide BE 408085 dated 20.11.2003 was made at declared price of US D 0.05 per pcs. Claiming classification under 9613.109 non-refillable lighter and assessed, after loading the value by 100%. DRI enquired into the matter and based on quotations, proposed re-enhancement of value and change in classification, as refillable lighter under 9613.20. Only value was enhanced to Rs. 48 per dozen under rule 7 of Custom Valuation Rules in re-adjudication by the Addl. Commissioner, who vide this order dated 31.2.04 imposed a fine of Rs. 1 Lakh for Section 111(m) confiscation liability, rejected the declared value loaded the same as proposed and fixed it at Rs. 13,12,000 and imposed a penalty of Rs. 25,000 under section 112 (d).

2. Commissioner appeals, set aside the order of Addl. Commissioner after holding that straight away applying rule 7 was not permissible and applied the tribunal decision is case of Auto Hardware Enterprise, 2003 (151) ELT 330, and on the grounds that market enquiry report relied was not given/shown the importer. As regards classification since no duty angle was involved, he relied upon R.G. Sales Pvt. Ltd., 2002 (148) ELT 1076 (T) and did not uphold misdeclaration. Therefore, penal action was not upheld.

3. Revenue has taken the grounds --

(i) Ratio of decision in M/s. R.G. Sales (P) Ltd., 2002 (148) ELT 1076; M/s. Auto Hardware Enterprise, 2003 (151) ELT 330 does not apply.

(ii) Rule 7 provides for determination of the value in terms of market enquiry, which has been conducted in the presence of CHA'S representative and cannot be rejected. Importers did not substantiate their claim with any BE, quantity commercial level and evidence or contemporary import not called for Commissioner (Appeal).

(iii) Reasonable discounts and abatements were afforded as per section 14 by the department. The rejection of Transaction value under rule 4 has been accepted by the importers, in accepting value of loading from 0.05 US D to 0.10 US D. When importer has accepted 100% loading the resort to rule 7, as made, cannot be questioned. Market enquiry for imported consumer goods is the Bench Mark.

(iv) Assessment was not complete since examination was required to be done and initial particulars declared did not have refillable nature and thus higher value should be upheld.

4. After hearing both sides and considering the issue, it is found --

(a) Section 17 of the Customs Act, 1962 provides for an assessment order. Thereunder, if assessments are made and arrived at on the basis of second check, the assessment cannot be incomplete as is being urged before us. In this case, the declared value has been enhanced from US D 0.05 as declared on BE, to 0.10 US D by the `proper officer' who assessed the BE. That has to be taken as having been done after due application of mind and enquiry, by the proper officer. Duty was paid on such `assessed value' of 0.10 US D. Thereafter, on examination further case was made out of an incorrect declaration of value, based on E-mail/quotations received by DR1 and alleged market enquiries. However, such value on E-mail/quotation was not accepted by the Additional Commissioner.

(b) The Addl. Commissioner has vide paragraph 9 of his order, dismissed the BEs produced by the importers to justify the valuation by finding --

"Because of the misdeclaration of the description of the goods, the Bills of Entry produced by the importers in support of declared value is of no consequence."

It is found that the Customs value etc. (Determination of Price of Imported Goods) Rule 1988, and the settled law on the subject, does not permit discarding of comparable prices as per assessed BE's of the Customs House, merely because the import under-valuation consideration determination have misdeclaration which are not upheld as of being of any consequence. The transaction value as per invoice and of the goods under-valuation and its acceptance under rule 4, for the consignment under-valuation, may be rejected on the grounds of misdeclaration, but the rejection of application of Rule 5 & 6 thereafter cannot be accepted on that ground as arrived by the Addl. Commissioner is this case. Rule 5 has to be applied and if ruled out then rule 6 has to be applied as Rule 6A specifically mandates. Since that has not been done by the original authority, that order is bad in law. We find therefore no reason to upset the order of CC (Appeal) is not upholding the order of Addl. Commissioner found by us to be bad in law.

(c) The respondents had produced BE No. 4/6/81 dated 8/2/2003 and 4/06/92 dated 10.12.2003 where assessment was made as declared at the same values as in this case. They had also produced Computer print outs given by Customs House, for the Bills cleared at 0.11 US D & 0.12 US D, 0.09 US D for lighters. Therefore, the value of 0.10 US D arrived at by the proper officer of Bombay Centre House initially, was arrived at 0.10 US D on comparative historical date available in custom House and the same cannot be impugned by these proceedings. There are no grounds, therefore to set aside that value determination by the proper officer & CC (Appeals) has wisely by not disturbed the same.

(d) The non-supply of the market report is fatal to the proceedings launched and conducted to upset the assessment made at US D 0.10 Orders based on such report is required to be set aside. Merely because an enquiry was made before the CHA's representative would not meet the requirement of Principle of Natural Justice which require service on the importers of all such reports/enquiries, before they could be relied upon. The plea made by Revenue in this appeal, on this aspect of non-supply of the report, do not merit consideration.

(e) This Tribunal, in the case of Hitaishi Fine Craft Industries Pvt. Ltd., 2002 (148) ELT 364 had held that when a BE was assessed and declared value of US D 490 PMT was loaded to US D 600 PMT, then further proposal by a issue of show cause notice consequent to DRs enquiries, to re-value at US D 710 PMT in the case, cannot be upheld. Nothing contrary has been shown. When the proper officer had reasons to believe that the declared value in the present case of US D 005 per piece was not as per section 14 and thereafter, making such enquiries, as he deemed fit, loaded it to US D 0.10 per pieces, then further proposal to reload the same cannot be approved since no ground of earlier enquire were in adequate or otherwise doubted or taken to be incorrect. The proper officer was duty bound to make such enquiries as he deemed fit, including enquiry about the nature of goods its classification, contemparances values, market values etc. and then resort to an assessment of loading. Piece meal value loading re-adjudication is not envisaged under the Customs Act, 1962 and cannot be upheld mere so when valuations as determined on the BE and assessed would be an order appealable adjudication order (see. CC Cochin v. Arvind Exports (P) Ltd., 2001 (130) ELT 54 LB). No review/appeal against such an order of determination of value by the proper officer was taken by Revenue. The loading for US D 0.05 per pcs to US D 0.10 per pcs is final. That assessment, cannot be challenged by alleging misdeclaration of nature of goods, which the proper officer in the groups was in any case required to ascertain, the loading of value, on second check BE should not have been ordered. In this respect, Apex Court observations in the case of Mohan Mealun Ltd., 2000 (69) ECC 449 (SC) : 2000 (118) ELT 3 SC paragraph 6 need appreciation 6....... If the Collector failed to make a proper enquiry as to the market value of the goods and released the same after half hearted adjudication. Half hearted adjudications and failure to make proper market enquiry in this case is to be believed, how the proper officer loaded only 0.05 US D pcs is not explained in the appeal. There is no cause to upset the CC (Appeals) order on valuation."

(e) We to set aside the proceedings initiated by the Addl. Commissioner find no infirmity in the reliance placed on decisions of Tribunal by Ld. CC (Appeal).

5. In view of the findings, the appeal is bereft of merits and is to be dismissed.

6. Ordered accordingly

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