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2010 Supreme(SC) 1062
2010 (7) Supreme 492
SUPREME COURT OF INDIA
D.K. Jain and T.S. Thakur, JJ.
Commissioner of Customs (Gen), Mumbai — Appellant
versus
Abdulla Koyloth — Respondent
Civil Appeal No. 1608 of 2005
Decided on : 29-10-2010
IMPORTANT POINT
Once the nature of goods has been misdeclared, the value declared on the imported goods becomes unacceptable.
Headnote:(a) Customs Act, 1962 – Section 14 r/w rule 4, Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 – Method of computation of transaction value – Customs authorities are bound by the declaration of the importer unless Revenue is able to demonstrate that the invoice does not reflect the correct value – It is only when the transaction value under Rule 4 is rejected, that by virtue of Rule 3(ii), the value shall be determined by proceeding sequentially through Rule 5 to 8 of the 1988 Rules. (Para 15)
(2008) 16 SCC 576; (2007) 6 SCC 373; (2005) 3 SCC 265; (2001) 1 SCC 315 – Relied upon
1996 (87) E.L.T. 518 (Tri.-Del); 1996 (87) E.L.T. 518 (Tri.-Del) – Referred
(b) Customs Act, 1962 – Section 14(1) – Transaction value – Once the nature of goods has been misdeclared, the value declared on the imported goods becomes unacceptable. (Para 16)
(2009) 3 SCC 365; (1995) 4 SCC 222 – Relied upon
Facts of the case:
1. M/s. IPCO Enterprise imported a consignment of assorted consumer goods ranging from glass ware, hair dryers etc. to gas filled cylinders and refrigerant-22 gas (R-22).
2. The bill of entry for the said goods was filed on 3rd May 2002, by M/s Vegha Shipping & Transport Pvt. Ltd. on behalf of M/s. IPCO Enterprise, whereby the total assessable value of the goods was declared at ‘ 6,75, 796.90/- with duty liability of ‘3,86,352/-.
3. Due to large number of discrepancies found in the bill of entry, and the fact that the import of R-22 gas filled cylinders required actual user license, the goods were seized on 4th July 2002.
4. The Commissioner of Customs rejected the assessable value declared in the bill of entry.and confirmed the assessable value of the goods at ‘23,69,838/- and the duty demand of ‘13,17,091/- as customs duty on them. Additionally, the Commissioner ordered the confiscation of the said goods under Sections 111(d) and (m) of the Act, with the option of redemption on payment of fine of ‘30,11,525/-. However, R-22 gas filled cylinders were confiscated absolutely under Section 111(d) of the Act. The Commissioner also imposed a penalty of ‘10 lakhs on the respondent under Section 112(a) of the Act.
5. The respondent’s appeal before the Tribunal was allowed.
Finding of the Court:
Tribunal needs to re-examine the entire matter afresh.
Result : Matter remanded back.
JUDGMENT
D.K. Jain, J. —
1. Challenge in this appeal, by the revenue, under Section 130E(b) of the Customs Act, 1962 (for short “the Act”) is to the order dated 10th December 2004 passed by the Customs, Excise and Service Tax Appellate Tribunal, (for short “the Tribunal”) whereby the appeal preferred by the respondent has been allowed holding that the assessable value declared by the respondent in the bill of entry should be accepted for the purpose of valuation in terms of Section 14 of the Act.
2. M/s. IPCO Enterprise, Thane, a proprietorship concern of the respondent imported a consignment of assorted consumer goods ranging from glass ware, hair dryers etc. to gas filled cylinders and refrigerant-22 gas (R-22). The bill of entry for the said goods was filed on 3rd May 2002, by M/s Vegha Shipping & Transport Pvt. Ltd. on behalf of M/s. IPCO Enterprise, whereby the total assessable value of the goods was declared at ‘ 6,75, 796.90/- with duty liability of ‘ 3,86,352/-.
3. On an examination of the bill of entry, invoice dated 17th April 2002, and packing list issued by one M/s. Plizer Trading, Dubai, certain discrepancies were noticed by the Central Intelligence Unit, and therefore, first check appraisement was ordered. Subsequently, 100% examination of the goods was carried out on 13th-14th May 2002, and it was found that there was mis-declaration with respect to country of origin, quantity and value of the imported items.
4. On 31st May 2002, the respondent was summoned by the Central Intelligence Unit, and his statement under Section 108 of the Act was recorded. Subsequently, another statement was recorded on 6th June 2002, wherein the respondent stated that he was not aware that he required license for import of certain goods, and that he did not remember the country of origin of some of the goods.
5. Due to large number of discrepancies found in the bill of entry, and the fact that the import of R-22 gas filled cylinders required actual user license, the goods were seized on 4th July 2002.
6. On 26th August 2002, the respondent wrote a letter to the Central Intelligence Unit whereby he stated that he had accepted the wholesale prices found out by the department by market survey, and that the case be finalized and settled at the earliest. Thereafter, duty liability was calculated in terms of Rule 6A and 7(1) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (for short “the 1988 Rules”) as it was observed that Rules 3(i) and 4 were not applicable due to mis-declaration, and Rule 5 and 6 could not be invoked as there were no contemporaneous imports of similar or identical goods.
7. On 13th September 2002, another statement of the respondent was recorded under Section 108 of the Act, wherein he admitted, inter alia, that there was difference in the items declared and the items actually found and seized under Panchnama, and that the prices of the items, in question, found by the market survey were acceptable to him.
8. Vide his order dated 21st April 2003, the Commissioner of Customs rejected the assessable value declared in the bill of entry. Dealing with explanation furnished on behalf of the respondent regarding some of the crockery items, the Commissioner observed thus :
“As regards the contention that inadvertently in the packing list and the invoice, the word “Set” was omitted and officers took it as single piece in place of set, I find that whoever there are dinner sets mentioned in the invoice and packing list, the quantities in sets have been specifically mentioned while for other items the declaration have been in pieces. If the contention of the learned advocates that value declared is for a set is accepted then the value of these crockery items would become so low that such a proposition itself appears ridiculous. For example, the wholesale price of a single Arc brand, 25 CI, glass mug of France origin in the local markets is Rs.40/- and of a set of 6 mugs is Rs.240/-, the declared CIF
