Bhagyashree International Vs. Commissioner of Customs - Court Judgment

Excerpt:
1. after examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. accordingly, after dispensing with predeposit and allowing the application for out-of-turn hearing, we take up the appeal.2. the appellants had filed a bill of entry dated 24.08.2007 for clearance of goods declared as 'adhesive coated rolls', imported from china. the declared quantity of the goods was 191 rolls (including 96 rolls of clear tapes and 95 rolls of brown tapes). the declared gross weight of these goods was 48,640 kgs. and the declared net weight was 48,067 kgs. the declared value was rs. 3,98,948/-. the first-check examination of the goods indicated the declarations to be correct. the subsequent detailed examination, which was undertaken in the wake of letter dated 16.07.2007 received from the directorate of revenue intelligence, yielded the following results: based on the dri letter, the customs authorities rejected the declared value under rule 10a of the customs valuation rules, 1988 and enhanced the value of the goods to usd 93,590/- @ usd 2000 pmt (said to be "international price"). by applying the prevailing exchange rate, including 1% landing cost etc., the authorities worked out the assessable value at rs. 38,33,026/-. when confronted with a proposal to demand duty on this basis and to confiscate the goods on the ground of misdeclaration, the party waived show-cause notice and personally hearing and requested for early lenient decision. accordingly, the commissioner (imports) passed the imputed order enhancing the value of the goods as above under rule 8 of the cvr, confiscating the goods under section 111(m) of the customs act with option for redemption against payment of a fine of rs. 8 lakhs under section 125 of the act, and imposing a penalty of rs. 5 lakhs on the party under section 112(a) of the act. the present appeal is directed against the commissioner's order.3. it is the case of the appellants, reiterated by their consultant, that factually there was no misdeclaration of quantity of the goods inasmuch as the relevant bill of entry and packing list had declared a higher weight for the goods than what was found by the authorities. it is further submitted that, where the declared value was unacceptable, it was incumbent on the department to arrive at the correct assessable value through the process of sequentially applying valuation rules.4. however, in the present case, an assessable value was worked out merely on the basis of a letter of the dri, which allegedly furnished the 'international price' of the goods. this exercise of the commissioner has come under attack in this appeal. in this connection, learned consultant has relied on the tribunal's decision in commissioner of customs, jaipur v. jaipur times industries , wherein enhancement of value of the goods imported by the asses see, based on a letter of the directorate of valuation, was set aside by the tribunal after finding that there was no other material supporting such enhancement. thus the appellants pray for setting aside the impugned order.5. on the aforesaid facts, which are not in dispute, we have to accede to the assessee's prayer. we have found that the party declared net weight of 48,067 kgs. of adhesive tapes, whereas what was found by the customs authorities upon detailed examination of the goods was a quantify of only 46,795 kgs. on this fact, we are at a loss to understand as to how the party can be alleged to have misdeclared the weight of the goods with intent to evade duty. this finding is enough to set aside the confiscation ordered by the commissioner under section 111(m) of the act and attendant consequences. as regards assessable value, again, we are not able to accept the decision of the commissioner, which is arbitrary. in case the declared value was not acceptable, it was open to him to determine the correct assessable value in accordance with law. the law mandated that, where the declared value was not acceptable, the correct value required to be determined through a systematic process involving sequential application of the cvr to the relevant facts available on record. this was not done in this case. in the case of jaipur times industries (supra), the appeal of the revenue against a similar enhancement of value of imported goods was rejected by this tribunal. in that case, the enhancement was based merely on a letter of the directorate of valuation and there was no other material in support of the enhancement.6. in the result, the impugned order is set aside and this appeal is allowed.

Judgment:
1. After examining the records and hearing both sides, we are of the view that the appeal itself requires to be finally disposed of at this stage. Accordingly, after dispensing with predeposit and allowing the application for out-of-turn hearing, we take up the appeal.

2. The appellants had filed a bill of entry dated 24.08.2007 for clearance of goods declared as 'adhesive coated rolls', imported from China. The declared quantity of the goods was 191 rolls (including 96 rolls of clear tapes and 95 rolls of brown tapes). The declared gross weight of these goods was 48,640 kgs. and the declared net weight was 48,067 kgs. The declared value was Rs. 3,98,948/-. The first-check examination of the goods indicated the declarations to be correct. The subsequent detailed examination, which was undertaken in the wake of letter dated 16.07.2007 received from the Directorate of Revenue Intelligence, yielded the following results: Based on the DRI letter, the Customs authorities rejected the declared value under Rule 10A of the Customs Valuation Rules, 1988 and enhanced the value of the goods to USD 93,590/- @ USD 2000 PMT (said to be "international price"). By applying the prevailing exchange rate, including 1% landing cost etc., the authorities worked out the assessable value at Rs. 38,33,026/-. When confronted with a proposal to demand duty on this basis and to confiscate the goods on the ground of misdeclaration, the party waived show-cause notice and personally hearing and requested for early lenient decision. Accordingly, the Commissioner (Imports) passed the imputed order enhancing the value of the goods as above under Rule 8 of the CVR, confiscating the goods under Section 111(m) of the Customs Act with option for redemption against payment of a fine of Rs. 8 lakhs under Section 125 of the Act, and imposing a penalty of Rs. 5 lakhs on the party under Section 112(a) of the Act. The present appeal is directed against the Commissioner's order.

3. It is the case of the appellants, reiterated by their Consultant, that factually there was no misdeclaration of quantity of the goods inasmuch as the relevant bill of entry and packing list had declared a higher weight for the goods than what was found by the authorities. It is further submitted that, where the declared value was unacceptable, it was incumbent on the department to arrive at the correct assessable value through the process of sequentially applying Valuation Rules.

4. However, in the present case, an assessable value was worked out merely on the basis of a letter of the DRI, which allegedly furnished the 'international price' of the goods. This exercise of the Commissioner has come under attack in this appeal. In this connection, learned consultant has relied on the Tribunal's decision in Commissioner of Customs, Jaipur v. Jaipur Times Industries , wherein enhancement of value of the goods imported by the asses see, based on a letter of the Directorate of Valuation, was set aside by the Tribunal after finding that there was no other material supporting such enhancement. Thus the appellants pray for setting aside the impugned order.

5. On the aforesaid facts, which are not in dispute, we have to accede to the assessee's prayer. We have found that the party declared net weight of 48,067 kgs. of adhesive tapes, whereas what was found by the Customs authorities upon detailed examination of the goods was a quantify of only 46,795 kgs. On this fact, we are at a loss to understand as to how the party can be alleged to have misdeclared the weight of the goods with intent to evade duty. This finding is enough to set aside the confiscation ordered by the Commissioner under Section 111(m) of the Act and attendant consequences. As regards assessable value, again, we are not able to accept the decision of the Commissioner, which is arbitrary. In case the declared value was not acceptable, it was open to him to determine the correct assessable value in accordance with law. The law mandated that, where the declared value was not acceptable, the correct value required to be determined through a systematic process involving sequential application of the CVR to the relevant facts available on record. This was not done in this case. In the case of Jaipur times Industries (supra), the appeal of the Revenue against a similar enhancement of value of imported goods was rejected by this Tribunal. In that case, the enhancement was based merely on a letter of the Directorate of Valuation and there was no other material in support of the enhancement.

6. In the result, the impugned order is set aside and this appeal is allowed.