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2009(2) Supreme 274
SUPREME COURT OF INDIA
(From Gujarat High Court)
Markandey Katju and R.M. Lodha, JJ.
M/s Varsha Plastics Pvt. Ltd. & Anr. — Appellants
versus
Union of India & Ors. — Respondents
Civil Appeal Nos. 835-836 of 2002
Decided on : 05-02-2009
(b)Customs Valuation (Determination of Price of Imported Goods) Rules 1988 – Rule 4 – Exceptionally low invoice price was rightly rejected by the authorities – However, when the transaction value under Rule 4 is rejected, the value shall be determined proceeding sequentially through Rule 5-8 of the Rules. (Para 14)
(2001) 1 SCC 315; (1996) 10 SCC 42; (2007) 3 SCC 93; (2007) 6 SCC 373 – Relied upon.
AIR 1970 SC 1498; (1993) Supp. 4 SCC 57; (1995) Supp 3 SCC 320; (1991) 1 SCC 154 – Referred.
(c)The Customs Act, 1962 – Section 14(1) – Once nature of goods has been mis-declared, the value declared on the imported goods becomes unacceptable. (Para 17)
(d)The Customs Act, 1962 – Section 151A – An Assessing Authority under the Act being a quasi-judicial authority has to act independently in exercise of his quasi-judicial powers and functions – Section 151A does not in any manner control or affect the independent exercise of quasi-judicial functions by the Assessing Authority – High Court rightly reading down the standing orders giving detailed instructions as to the manner in which assessment is to be made as ditrectory and not mandatory. (Paras 18 and 19)
Facts of the case :
1. The first appellant M/s Varsha Plastics Pvt. Ltd., which is engaged in the business of importing various goods like plastic materials, imported a consignment of 18.45 metres of LDPE/HDPE mix granules/powder (floor sweeping) from USA in the month of July, 2000. These goods are claimed to have been purchased from M/s Pexim International of USA under Invoice No. 2827 at the total price of US $ 4151.25. The importer declared these goods as freely importable item under para 5.1. of the EXIM Policy 1997-2000.
2.On examination some of these goods were found to be mis-declared goods in terms of value and some were found mis-declared in terms of description, value and quality.
3.Customs Authority was of the view that these were liable to be confiscated and importer was liable for penal action. The Additional Commissioner of Customs, Kandla rejected the invoice price as was found to be very low as compared to prevalent international market price and in view of mis-declaration of goods in terms of value and description, enhanced the value of the goods for the assessment purpose as set out in the order.
4.Confiscation of under-invoiced goods as well as goods mis-declared in description was ordered but an option was given to the importer to redeem the same by payment of fine.
3.The present appellants, instead of assailing the order in original in a statutory appeal approached the High Court inter alia challenging the constitutional validity of the provision of Section 151A of The Customs Act, 1962 and also put in issue the legality and validity of the Standing Order No. 7493/99 issued by the Chief Commissioner of Customs, Mumbai with regard to valuation of plastic items.
4.The Division Bench did not find any merit in so far as the challenge to the constitutional validity of Section 151A of the Act was concerned. It also read down the impugned Standing Order and held that it was not liable to be struck down.
Finding of the Court :
No interference warranted.
Result : Appeal dismissed.
JUDGEMENT
R.M. Lodha, J. —
1. These two appeals by special leave are directed against the judgment and order of the High Court of Gujarat disposing of Special Civil Application and Miscellaneous Application for review.
2. The first appellant M/s Varsha Plastics Pvt. Ltd., is engaged in the business of importing various goods like plastic materials. They imported a consignment of 18.45 metres of LDPE/HDPE mix granules/powder (floor sweeping) from USA in the month of July, 2000. These goods are claimed to have been purchased from M/s Pexim International of USA under Invoice No. 2827 at the total price of US $ 4151.25. The importer declared these goods as freely importable item under para 5.1. of the EXIM Policy 1997-2000. The goods were subjected to examination. Some of these goods were found to be mis-declared goods in terms of value and some were found mis-declared in terms of description, value and quality. In view of mis-declaration of goods in terms of description and value, the Customs Authority was of the view that these were liable to be confiscated and importer was liable for penal action. A show cause notice was sought to be given but the importer waived issuance of show cause notice and personal hearing. The Additional Commissioner of Customs, Kandla vide order in original dated 29.11.2000 rejected the invoice price as was found to be very low as compared to prevalent international market price and in view of mis- declaration of goods in terms of value and description, enhanced the value of the goods for the assessment purpose as set out in the order. The Additional Commissioner of Customs ordered confiscation of under-invoiced goods as well as goods mis-declared in description but gave an option to the importer to redeem the same by payment of fine. In his order, the Additional Commissioner of Customs, Kandla also imposed a personal penalty of Rs. 2,50,000/- on the importing firm and its directors.
3. The present appellants, instead of assailing the order in original in a statutory appeal approached the High Court of Gujarat by filing a Special Civil Application inter alia challenging the constitutional validity of the provision of Section 151A of The Customs Act, 1962 (for short ‘the Act’ ) and also put in issue the legality and validity of the Standing Order No. 7493/99 issued by the Chief Commissioner of Customs, Mumbai with regard to valuation of plastic items.
4. It appears that few other Special Civil Applications raising identical issues were pending before the High Court of Gujarat. These Special Civil Applications were heard together by the Division Bench and disposed of vide Order dated 04.04.2001. The Division Bench did not find any merit in so far as the constitutional validity of Section 151A of the Act was concerned. As regards the power of the Chief Commissioner of Customs to issue the impugned Standing Order to the subordinate Assessing Authorities on the question of assessment of value of the concerned goods for imposing customs duty, the Division Bench held that the impugned Standing Order was not rigid direction or mandate but was only instructions containing flexible guidelines. The High Court held that the impugned Standing Order is to be taken only as assistance in exercise of quasi-judicial power of determining the value for the purpose of levy of customs duty by the concerned authorities. Having read down the Standing Order, the High Court held that the impugned Standing Order was not liable to be struck down.
5. An application seeking review of the order dated 04.04.2001 was made by the present appellants which came to be disposed of on 25.04.2001. It is from these orders that these two appeals arise.
6. In view of the limited leave granted by this Court, the controversy in these appeals is confined to the legality and validity of the Standing Order No. 7493/99.
7. Ms. Meenakshi Arora, learned counsel, appearing for the appellants, relying upon a decision of this Court in the case of Eicher T
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