Cus - Merely on basis of Chartered Engineer's report, which is based on enquiry conducted behind appellant's back and which had not even been supplied to appellant, declared transaction value cannot be rejected: CESTAT by Majority
By TIOL News Service
NEW DELHI, APR 01, 2015: THE appellant had imported 980 pieces of old and used monitors from Germany in the year 2008 and the value was declared as Rs. 5,81,005/- CIF. The goods were subjected to examination under first check procedure to ascertain physical condition of the goods and its relation to the declared value. On the basis of chartered engineer's certificate, the goods were found to be old and used CRT monitors size 17"; year of manufacture between 1999-2004 and the market value of the said goods was found to be Rs.8,23,900/-. On the basis of the value proposed by the chartered engineer, the value of the goods was enhanced to Rs.6,91,711/- for assessment purpose after granting abatement from the market value. It was also noticed that since these old and used items required a licence under foreign trade policy 2004-2009 and no licence was produced by the appellant the goods were liable for confiscation, redemption fine and penalty.
The adjudicating authority did the rest - he confiscated the old and used CRT monitors u/s 111 (d) of the Customs Act, 1962 but was generous to allow redemption of the same on payment of a fine of Rs.1 lakh. A penalty of Rs.2 lakhs was also imposed on the appellant.
Incidentally, the appellant had waived issue of SCN and agreed to the o-in-o passed by the Additional Commissioner indicating that they accepted the finding in respect of non-availability of licence/permission of DGFT for import of old and used monitors of different brands and manufactured in different countries. The appellants also did not challenge the value arrived at by the chartered engineer. They had also waived personal hearing with the request to decide the case based on documents available on records.
Nonetheless, the appellant had filed an appeal before the lower appellate authority who upheld the order and, therefore, the matter is before the CESTAT.
The Member (T) inter alia observed that since the appellant waived his right to waive the SCN and defend the same he had foregone his right to challenge the proposed action in SCN for ever. The Member (T) rejected the appeal.
The Member (Judicial) did not agree with this order.
Inter alia, it was observed -
++ Revenue has not adduced any evidence to first discard the declared value as incorrect.
++ The fact that the appellant has challenged such enhancement before the higher appellate forum is itself indicative of the appellants non-acceptance of the enhanced value. Merely because the appellants waived the issuance of show cause notice for quick release of the goods does not mean that they are stopped from challenging the enhanced value by the Revenue.
++ The confiscation of the imported goods is upheld with an option to redeem the same on payment of redemption fine of 10% of the value of the goods and penalty of 5% of the value of goods.
The matter was, therefore, referred to the Third Member for a Majority decision. We reported this order as 2014-TIOL-229-CESTAT-DEL.
The third Member on reference has passed an order recently.
The Member (T) has observed thus -
++ There is no dispute that the import of the second hand capital goods required an import license and this import is without any import licence and, thus, in violation of EXIM policy. The goods, therefore, have been correctly confiscated under section 111 (d) of Customs Act, 1962.
++ While the redemption fine ordered by the Commissioner (Appeals) is Rs. One Lakh which amounts to about 20% of the declared CIF value, the penalty imposed is Rs. 2,50,000/-which would be about 45% of the declared transaction value.
++ It is seen that the appellant have placed on record a detailed calculation regarding the landed cost of the imported goods, their sale price and margin of profit according to which the margin of profit after taking into account the detention charges would be 2.5% of the value. In these circumstances, I am of the view that the redemption fine of 10% of the value and penalty of 5% of the value as ordered by Member(Judicial) would be correct.
++ The goods imported are of assorted brands and of different country origin and year of manufacture of goods is from 1999-2004. The goods thus are 4 to 8 year old and may be even obsolete models. There is no evidence of contemporaneous import of identical goods imported from the same suppliers at higher price. There is also no evidence placed on record to indicate that the appellant had paid any amount over and above the declared invoice value to the foreign suppliers. It is also not the allegation of the department that any of the conditions mentioned in proviso to Rule 3(2) of the Customs Valuation Rules 2007 are present.
++ In this situation merely on the basis of Chartered Engineer's report, which is based on the enquiry conducted behind the appellant's back and which had not even been supplied to the appellant, the declared transaction value cannot be rejected.
++ It is not the allegation of the department that the importer and the foreign supplier are related persons and that relationship has influenced the transaction value.
++ Therefore, merely on the basis of the value determined by Chartered Engineer, the declared transaction value of the second hand imported goods cannot be rejected, when the difference between the declared value and the value as ascertained by Chartered Engineer is marginal as, in this case, the value as ascertained by the Chartered Engineer is only about 16% higher than the declared value.
++ Merely on the basis of this variation, the declared transaction value cannot be rejected, as the importer may have negotiated with the supplier and also the goods being old and used and obsolete, the supplier may be willing to sell the goods at whatever price he could get.
In fine, the third Member (T) on reference agreed with the view of Member (Judicial) that there is no justification for enhancement of the transaction value to Rs. 6,91,711/-.
The Majority decision, therefore, is -
The appeal is allowed in respect of the assessable value. However, confiscation of the goods and imposition of penalty is upheld with reduction of redemption fine to the extent of 10% of the value of the goods and penalty to the extent of 5% of the declared value.
In passing : Also see 2015-TIOL-582-CESTAT-DEL
(See 2015-TIOL-592-CESTAT-DEL)
