Section 14 of the Customs Act provides that for the purpose of valuation the value of imported goods shall be the transaction value of such goods, i.e. to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time of place of importation, or as the case may be for export from India, where the buyer and seller of the goods are not related and price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf. It is further provided that rules made in this behalf may provide for the manner and acceptance or rejection of value declared by the importer or exporter, where the proper officer has reason to doubt the truth or accuracy of such value and determine value for the purposes of this Section.
We find that there are no reasons recorded for rejection of transaction value before taking the exercise of revaluation and enhancement of transaction value. In this view of the matter, we find that the impugned order is bad in law and also on facts. Accordingly, we set aside the impugned order setting aside the enhancement of declared value, redemption fine and penalty. The appellant shall be entitled to consequential benefits including refund of differential duty deposited alongwith interest under Section 129EE of the Central Excise Act.
FULL TEXT OF THE CESTAT JUDGEMENT
The issue involved is whether transaction value is rightly rejected of the imported goods.
2. Acting upon a specific intelligence that M/s. Aureole Atelier Pvt.Ltd., 43/15, East Patel Nagar, New Delhi (hereinafter referred to as „the appellant/importer‟) has imported a consignment vide BE No.8131129 dated 10.01.2017 containing Sunglasses of various models, and evaded the applicable duties of Customs by way of undervaluation of imported goods. The consignment was accorded RMS (Risk Management Scheme) status, as such, the consignment was not subjected to usual customs procedure of examination before clearance and the consignment was cleared on 10.01.2017 itself. Since, the consignment was already cleared, a search was conducted at the registered premise of the importer at 43/15, East Patel Nagar, new Delhi. During the search, it was found that the address at which the importer had obtained IEC number was that of a residence and business premises were at Noida. On 12.01.2017, Mr. Deepak (employee) brought samples of each model of sunglass which they imported vide BE No.81311229 dated 10.01.2017. On examination of the samples brought, it was found that the sunglasses were of “PEPE JEANS” brand, a well known global brand and those models of sunglasses are sold on various E-Retail platforms like Flipkart, Snapdeal, Amazon, etc., as “PEPE JEANs” brand sunglasses.
3. A statement of Shri Deepak was recorded under Section 108 of the Customs Act, 1965 wherein, he inter-alia stated that he was working in the capacity of Manager (Logistics), with the importer company. However, on being asked about the value declared by their company in the BE No.8131129 dated 10.01.2017, in respect of the goods imported, he stated that he was not in a position to explain the same as he does not deal with the procurement of goods on behalf of the company. Accordingly, he was handed over summons issued in the name of his company for onward delivery to the management. The summons issued sought appearance of a responsible person of the company on 17.01.2017, who could explain the values declared by the importer company for the purpose of levy of customs goods on the goods imported under the BE No.8131129 dated 10.01.2017.
4. An inventory of the goods imported under BE No.8131129 dated 10.01.2017 was prepared on 16.01.2017, and during the preparation of the inventory, the goods were found to be tallying with the declaration made by the importer in terms of the quantity and description made. However, the goods were detained for further investigation.
5. In compliance to the summons dated 12.01.2017, Shri Vivek Kak, Chief Executive Officer of the importer company appeared before the Superintendent (Preventive) on 17.01.2017. Shri Vivek Kak submitted a copy of the authorisation signed by Smt. Amrita Khurana Sharma, Director of the importer company, authorising Shri Vivek Kak to appear before the Department in relation to the investigation. The statement of Shri Vivek Kak was recorded under Section 108 of the Customs Act, 1965, wherein he, inter alia, stated that he is working in the capacity of Chief Executive Officer of the Company, and he is authorised to appear before any Government Officer/Department in relation to any inquiry related to the company. He went through the copy of Bill of Entry No.8131129 dated 10.01.2017 filed by his company for import of “PEPE JEANS” brand of sunglasses of various models. He also went through the inventory of the goods imported by them under the said Bill of Entry. On being asked, he stated that PEPE JEANS is a brand owned by M/s. Pepe (Spain) and M/s. Mondottica Limited, U.K. is global licensee of M/s. Pepe (Spain), that they have an agreement dated 01.02.2015 with M/s. Mondottica Limited, U.K., for distribution of Pepe brand goods and all other brands dealt by M/s. Mondottica Limited, U.K., from the overseas approved factories with appropriate ISO 9001 accreditation, and with prior approval on any designs confirming production; that the goods imported by them in the current Bills of Entry is as per this agreement. He further stated that they have imported model Nos. PJ7241 CI to C4, PJ7242 CI to C4, PJ 7243 C1 to C4 and PJ 5111 C1 to C4. On being asked, he stated that C1, C2, C3 and C4 are colour codes of the sunglasses in a particular model. On being asked about those models, he stated that those models are manufactured by overseas factories approved by M/s. Mondittica Limited., U.K., and those models are being sold by them through online- retailers like M/s. Flipkart, M/s. Snapdeal, M/s. Amazon etc. On being asked about the prices on which those models are sold online, he stated that the goods are sold by the online retailers, as per their calculations and they get 40% of the value fixed by those retailers on which they give discount as per their policy and demand. Sh. Vivek Kak provided signed copies of the print outs of the online sale made by those retailers and stated that 40% of the price received by them includes the duties of Customs paid by them during the import, and 20% as their profit margin. Further, the amount received by them also includes Rs. 40/- as their outward freight in relation to shipment of each piece. Taking into consideration of the factors stated by Sh. Vivek Kak, import values for the purpose of levy of duties of customs on the models of sunglasses imported by the importer were re-determined, and a chart to this effect was tabulated by Revenue, which is as follows:-
|S.No.||Model No.||Price mentioned on the flip cart/Amazon/ Snapdeal before discount||Selling price of the importer (40% of website value)||Assessable value calculated (after deduction of 30% duty and 20% on amount receive by
|Assessable value after deduction of freight @Rs. 40/- on each
|Import value in USD||Qty.|
6. Thereafter, he was shown the chart tabulated by the department in relation to that import value of each piece of sunglasses imported by them, ought to be, after taking into consideration all the above mentioned charges and duties. Sh. Vivek Kak went through the chart and he agreed with the valuation arrived. In token of his acceptance of the re-determined value of the goods and the methodology adopted for arriving at the appropriate assessable value of the goods, imported by the importer company, Sh. Vivek kak appended his dated signatures on the chart tabulated. On being asked, he stated that in past also they had made one import of those models of sunglasses vide BE no. 5074250 dated 18.04.2016. On being asked, as to whether he agreed to pay differential duty to be worked out on the basis of valuation of the sunglasses arrived at by the department, to which he had agreed. He stated that they agree to pay the differential duty to be worked out. He further stated that they don‟t want any show cause notice, any personal hearing and their case may be decided on merits.
7. Assessable value in respect of both the Bills of Entries were reworked out on the purportedly agreed import values by the importer, and the working is as under:-
(A) Bill of Entry No. 5074250 dated 28.04.2016
(a) Declared Value of the imported consignment 6,64,291/-
(b) Total duty already paid by the importer 1,95,574/-
(c) Total Re-assessed value of all imported goods 24,19,672/-
(d) Total Re-determined duty 7,12,376/-
(e) Differential duty liable to be recovered 5,16,802/-from the importer (A)
(B) Bill of Entry No. 8131129 dated 10.01.2017
(a) Declared Value of the imported consignment Rs. 9,09,415/-
(b) Duty already paid by the importer 2,66,670/-
(c) Total Re-assessed value of all imported goods (@ USD 6.8/7.9 per gogles) Rs.30,84,966/-
(d) Re-determined duty 9,07,268/-
(e) Differential duty liable to be recovered 6,40,598/-from the importer. (B)
Total differential duty (A) + (B) = Rs.11,57,400/-. Further order of confiscation, with option to redeem on payment of fine was passed. Penalty of Rs. 1,15,000/- was also imposed under Section 112.
8. Being aggrieved, the appellant preferred appeal before the learned Commissioner (Appeals) challenging the adjudication order on the grounds among others, that confiscation of the goods and imposition of penalty is bad and uncalled for. Without transaction value being rejected as required under Section 14 of the Act, the revaluation undertaken by Revenue is ab initio void. Further, the MRP of Retailer (third party) like Flipcart, Amazon etc., cannot form the basis of valuation under the Valuation Rules. The provision of Rule 12 of Valuation Rules do not authorise rejection of declared/ transaction value and redetermination of the same for the purpose of CVD. Further, there is no case of any misdeclaration, and hence rejection of transaction value is hit by the provision of Section 14 of the Customs Act. Learned Commissioner was pleased to reject the appeal upholding the adjudication order.
9. Being aggrieved, the appellant is before this Tribunal on the grounds amongst others, that the transaction value has to be accepted as provided under Section 14 of the Act, when admittedly the authorities are not related, neither there is any data of contemporaneous import of higher values, nor there is any evidence of extra payment made to the foreign supplier, other than the recognised banking channel. The so-called admission by Sh. Vivek Kak, CEO, cannot be relied upon as the same is in defiance of the provisions of the Customs Act and the Rules thereunder. It is further urged that the Hon’ble Supreme Court held in Eicher Tractors Limited –2000 (122) ELT 321 (SC) that where there is no evidence to any extra payment to foreign supplier, the transaction value is to be accepted. Further, there is no evidence of any relationship, or any payment made by the importer indirectly to the seller. Declared transaction value can only be rejected with cogent reason, by undertaking the exercise as to on what basis the paid price was not the sale consideration or the transaction value, as has been held by Hon’ble Supreme Court in Century NF Casting. It is urged that reopening of the assessed Bill of Entry under Section 28 is bad, without resorting to process of appeal under Section 128 of the Act. It is further urged that payment of differential customs duty as demanded, does not mean that the enhancement in the transaction value has been accepted by the importer, in view of the appeal filed soon thereafter. Further, in view of the admitted fact that the goods never seized, the order of confiscation and redemption fine is bad.
10. Learned Authorised Representative appearing for the Revenue relied on the impugned order. It is further urged that as the appellant had agreed to the proposed re-valuation, enhancing the transaction value. Thus, the appellant cannot take a turn around and agitate in appeal. Reliance is placed on the ruling of coordinate Bench of this Tribunal in Advanced Scan Support Technologies vs. Commr. of Cus. Jodhpur -2015 (326) ELT 185 (Tri. Del.), wherein the case of consignment value enhancement, based on the website with respect to CT Scanner machine, which were used and old, it was held that enhancement of transaction value on the basis of information from website and report of Chartered Engineer at ICD, accepted by the importer since detention and demurrage charges were adding up, expressly stating no show cause notice or personal hearing required and duty paid without protest. Thus, the consented value, becomes declared value requiring no further investigation.
11. Having considered the rival contentions, we find that Section 14 of the Customs Act provides that for the purpose of valuation the value of imported goods shall be the transaction value of such goods, i.e. to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time of place of importation, or as the case may be for export from India, where the buyer and seller of the goods are not related and price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf. It is further provided that rules made in this behalf may provide for the manner and acceptance or rejection of value declared by the importer or exporter, where the proper officer has reason to doubt the truth or accuracy of such value and determine value for the purposes of this Section.
12. We find that there are no reasons recorded for rejection of transaction value before taking the exercise of revaluation and enhancement of transaction value. In this view of the matter, we find that the impugned order is bad in law and also on facts. Accordingly, we set aside the impugned order setting aside the enhancement of declared value, redemption fine and penalty. The appellant shall be entitled to consequential benefits including refund of differential duty deposited alongwith interest under Section 129EE of the Central Excise Act. Accordingly, the appeal is allowed.