By TIOL News Service

NEW DELHI, NOV 07, 2015: THE appellant imported two CT scanner machines and submitted a Chartered Engineer's certificate issued by Mr. Hirose Akira, Japan, according to which the 2001 make machine was valued at USD 29,000 and the 2003 make machine was valued at USD 31,000.These were the values declared by the appellant. They also submitted another inspection report issued by a Chartered Engineer from Jaipur, who estimated the value of the two machines at USD 66,000.

Revenue, on its part, sourced the information from a website which indicated USD 1,15,000 as the value of good condition scanner manufactured in 2001. Noticing the wide variation the department found it prudent to get the goods examined by a Chartered Engineer at ICD, CONCOR, Kanakpura, Jaipur, who after examination adopted the value which was USD 72,000 (average of USD 29,000 and USD 1,15,000) for the CT scanner of 2001 model. Similarly, value for the 2003 model was given as USD 78,750. Revenue adopted these values by citing Rule 9 of Customs Valuation Rules, 2007.

The appellant, thereafter, submitted a letter stating that it accepts the value proposed by Revenue as detention and demurrage charges were adding up and sought waiver of SCN/personal hearing.

Accordingly, the Commissioner passed the order assessing the value at Rs.70,03,969/- as against 27,51,551/- declared by the appellant. He also ordered confiscation of the goods and allowed redemption on payment of redemption fine of Rs.1,50,000/-. He also imposed penalty of Rs.1,50,000/-.

Before the Tribunal, in appeal against this order, the appellant submitted that they had acceded to the valuation arrived at by the Revenue only to avoid further detention and demurrage charges and delay. They also found fault in every act of the department in arriving at the fresh assessable value and contended that the principles of natural justice were not followed/no cross examination was offered etc. Case laws viz. Eicher Tractors 2002-TIOL-06-SC-CUS & Handtex 2008-TIOL-907-CESTAT-DEL were also cited in support.

The AR submitted that the order is legal and proper.

The Bench after considering the submissions observed -

++ We find that whatever may be the reasons, the appellant expressly gave its consent to the value proposed by Revenue and expressly stated that it did not want any Show Cause Notice or personal hearing. Even the duty was paid without protest. By consenting to enhancement of value and thereby voluntarily foregoing the need for a Show Cause Notice, the appellant made it unnecessary for Revenue to establish the valuation any further as the consented value in effect becomes the declared transaction value requiring no further investigation or justification.

++ To allow the appellant to contest the consented value now is to put Revenue in an impossible situation as the goods are no longer available for inspection and Revenue rightly did not proceed to further collect and compile all the evidences/basis into a Show Cause Notice as doing so, in spite of the appellant having consented to the enhancement of value and requested for no Show Cause Notice, could/would have invited allegation of harassment and delay in clearance of goods.

++ When Show Cause Notice is expressly foregone and the valuation is consented, the violation of principles of natural justice cannot be alleged. In the present case, while value can be challenged but such a challenge would be of no avail as with the goods not being available and valuation earlier having been consented, the onus will be on the appellant to establish that the valuation as per his consent suffered from fatal infirmity and such onus has not been discharged. Further, valuation of such goods requires their physical inspection and so re-assessment of value in the absence of goods will not be possible.

The valuation was upheld.

Nonetheless the Bench observed that there is nothing on record that the appellant mis-declared the goods or declared a value which was different from the amount which was actually paid to the suppliers; it is simply a case of valuation dispute devoid of any  mens rea  on the part of the appellant.

Furthermore, by waiving the SCN the appellant never consented for confiscation and penalty and did not forego its right for a show cause notice/personal hearing with regard thereto. Therefore, confiscation and penalty have to be held to have been ordered in violation of the principles of natural justice and for that reason also they cannot be sustained, the CESTAT added.

The appeal was partially allowed only to the extent that the confiscation/redemption fine and penalty were set aside (but the valuation was upheld).

(See 2015-TIOL-2383-CESTAT-DEL)