Madras High Court
M/S. Unit Traders vs The Commissioner Of Customs on 25 August, 2011
Author: Vinod K. Sharma
Bench: Vinod K. Sharma
BEFORE THE MADURAI BENCH OF MADRAS HIGH COURT
Dated: 25/08/2011
Coram
THE HONOURABLE MR. JUSTICE VINOD K. SHARMA
Writ Petition (MD) No.8409 of 2007
M/s. Unit Traders,
No.140, Old Tharagupet,
Bangalore - 560 053,
represented by its Partner
Shri Hanif Thara ...... Petitioner
Vs
1. The Commissioner of Customs,
Custom House, New Harbour
Estate, Tuticorin - 628 004.
2. The Assistant Commissioner of
Customs (Imports),
Office of the Commissioner of
Customs,
Custom House, New Harbour
Estate, Tuticorin - 628 004. ...... Respondents
Writ Petition filed under Article 226 of the Constitution of India
praying for issuance of a Writ of Certiorari to call for the records passed in
Order in Original No.204/2007-AC (Imports) dated 31.08.2007 in File
No.C.No.VIII/48/424/2007 - PD(Adj) on the file of the second respondent and
quash the same as arbitrary, illegal and against the principles of natural
justice.
!For Petitioner ... Mr. B. Satish Sundar
^For Respondents... Mr. B. Vijay Karthikeyan
Central Government Standing Counsel
- - - - - - - -
:ORDER
M/s. Unit Traders has approached this Court for issuance of a Writ, in the nature of Certiorari, for quashing the order passed by the Assistant Commissioner of Customs, Tuticorin dated 31.08.2007.
2. The petitioner is a partnership concern engaged in the business of import of various spices and dry fruits, and is registered with Directorate General of Foreign Trade. The petitioner is allotted the Import and Export Code No.0791011917. The petitioner is also assessed to Income Tax and Sales Tax. The petitioner imported ten consignments of white poppy seeds of Turkey origin and filed ten Bills of Entry No.412997 to 412999 dated 15.06.2007, 413246 to 413250 dated 19.06.2007, 413305 and 413306 dated 20.06.2007, totalling to 540 MTS and sought for clearance of goods. The unit price declared was USD 1510/MT (FOB) or after including freight and Insurance at USD 1575/MT (CIF).
3. The goods were not cleared by the Assistant Commissioner of Customs (Imports), on the ground, that the importers were attempting to import the white poppy seeds by under invoicing.
4. The petitioner sought provisional release of the goods through CHA vide its letter dated 21.06.2007. The request of the petitioner was not accepted for the reason, that contemporaneous import of similar goods was cleared at USD 2700/MT, and the goods of the petitioner were held to be under invoiced. It was decided to assess the value by resorting to the correct assessable value system.
5. Being aggrieved by the decision of the Department, in rejecting the declared value, the petitioner filed W.P.No.5573 of 2007 before this Court, praying therein for issuance of a Writ in the nature of Certiorari, for quashing the order passed by Respondent No.2, with further direction to the respondents, to release the goods covered under the Ten Bills of Entry, provisionally in terms of Section 18 of the Customs Act.
6. The writ petition was disposed of by this Court, by passing the following order:-
"Under these circumstances considering the perishable nature of the goods and the undertaking given by the learned Assistant Solicitor General that adjudication will be completed within a period of four weeks, therefore pending final adjudication, it is hereby directed that the petitioner shall pay 20% of the differential duty and for the balance amount, the petitioner shall furnishing a personal bond.
On furnishing of the differential duty at the rate of 20% and on execution of the personal bond, the respondent shall release the goods without fail. However, the rights of the parties will be subject to final adjudication by the respondents.
The writ petition and the connected M.Ps are disposed of to the extent as indicated above. No costs".
7. In pursuance to the order passed by this Court, the goods were provisionally cleared on the condition set out in the order. The second respondent also issued a show cause notice dated 05.07.2007, received by the petitioner on 09.07.2007, proposing to reject the transaction value in respect of the Ten Bills of Entry under Rule 10 - A of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 read with Rule 4(2)(a) and 4(2)(b) of the said Rules. It was also proposed to fix the unit price of the imported goods at USD 2700 PMT (CIF) in terms of Rule 6 of the Customs Valuation (Determination of Price of Imported Goods) Rules 1988, and to seek appropriate duties on the assessed unit price. The date of hearing was fixed on 16.08.2007 and for finalisation of provisional assessment on 28.08.2007 at 12 hours.
8. The petitioner did not submit reply to the show cause notice, but on the other hand, requested for deferment of the proceedings, on the ground, that application was in this Court for extension of time for completion of adjudication proceedings. Thereafter another letter was written to defer the proceedings till the order was passed by this Court.
9. The case of the petitioner is that the letters addressed to the respondent was not considered, and the impugned order was passed, assigning the value of the goods at USD 2700 PMT (CIF). The operative part of the order reads as under:-
"O R D E R Final Assessment of the Bills of Entry 412997 to 412999/15.06.07, 413246 to 413250/19.06.07, 413305 & 413306/20.06.07 under which the subject cargo have been imported are to be finally assessed by adopting the USD 2700 PMT (CIF) in terms of Rule 6 of Customs Valuation Rules 1988 read with Section 14 of Customs Act, 1962, and from the final duty arising out of such finalisation, the duty already paid plus the Cash Deposit paid as per High Court's direction has to be adjusted and the remaining amount is to be demanded from the importer under Section 18 of the Customs Act, 1962. Here, as the duty on the declared value has not been paid in respect of the Bills of Entry at Sl.No.9 & 10 as detailed below, after deducting the Cash Deposit shown in column 6 of the Table from the total duty worked out and shown in column 5, the balance amount has to be demanded from the importer. The detailed worksheet is given below:-
Sl. BE No./Date Qty(MT) Duty paid as per Duty Arrived 20% diffl Balance amount No. their declared On the Enhanced amount paid to be paid value of USD value of 1575(CIF) USD 2700 (CIF) 1 2 3 4 5 6 7 1 412997 / 15.06.2007 54.000 2775443 4757090 396330 1585317 2 412998 / 15.06.2007 54.000 2775443 4757090 396330 1585317 3 412999 / 15.06.2007 36.000 1850295 3171393 264220 1056878 4 413246 / 19.06.2007 72.000 3701679 6342786 528222 2112885 5 513247 / 19.06.2007 54.000 2775443 4757090 396330 1585317 6 413248 / 19.06.2007 54.000 2775443 4757090 396330 1585317 7 413249 / 19.06.2007 54.000 2775443 4757090 396330 1585317 8 413250 / 19.06.2007 54.000 2775443 4757090 396330 1585317 9 413305 / 20.06.2007 54.000 4757090 396330 4360760 10 413306 / 20.06.2007 54.000 4757090 396330 4360760 Total 21403185
10. It is pleaded in the writ petition, that though the petitioner has an alternative remedy of Appeal under Section 128 of the Customs Act, 1962, the writ petition was filed, as the alternative remedy was not efficacious, and that the order was in violation of equity, fair play, and principle of natural justice, as also in contravention of provisions of the Customs Act.
11. A reading of the impugned order shows, that there was no violation of principle of natural justice, and that the writ petition is not competent as the statutory alternative remedy is available. However, as the writ petition was admitted in the year 2007, it will not be proper at this stage, to relegate the petitioner, to the statutory remedy of Appeal.
12. The learned counsel for the petitioner challenged the impugned order, by contending it to be in violation of the principle of natural justice. It is the contention of the learned counsel, that the document, forming the basis of prima facie opinion to assess the value at USD 2700 PMT (CIF) were not supplied to the petitioner and in support thereof, referred to the show cause notice dated 16.08.2007.
13. This contention of the learned counsel for the petitioner deserves to be noticed to be rejected, as along with the show cause notice, the copy of the letter dated 11.06.2007 of M/s. Lakshmi Trading Company, Delhi, requesting to finalize the Bills of Entry for the Poppy Seeds imported during June 2007 at USD 2700 PMT(CIF) was enclosed.
14. It was also made clear, that other necessary documents will be shown at the time of personal hearing. The petitioner chose not to demand any document nor filed any reply, rather, made a request for adjournment of the case, on the plea, that certain order was awaited from this Court.
15. Admittedly, no stay was granted by this Court, and the order passed by this Court, directing the respondents, to adjudicate the matter within four weeks was in operation. The request made by the petitioner, therefore, was prima facie misconceived and rightly ignored by the Department to proceed with the proceedings. The stand of the petitioner only shows that a deliberate attempt was made to delay the proceedings. It is not in dispute, that the petitioner was issued the show cause notice as well as dates were given for personal hearing. It was the petitioner, who chose not to appear before the competent authority.
16. The impugned order, therefore, cannot be said to be in violation of principle of natural justice. It is well settled law, that violation of natural justice has to be determined on the facts of each case, and no straight jacket formula can be laid. The facts stated herein above clearly shows, that there is no violation of principle of natural justice, as it was the petitioner, who failed to avail the opportunity given.
17. The learned counsel for the petitioner, thereafter, contended that the determination of valuation has to be as per Rule 6 of the Customs Valuation Rules 1988, which lays down, that the value of imported goods shall be the transaction value of similar goods sold for export to India, and imported at or about the same time as the goods being valued.
18. This contention, again, is misconceived, as the reading of the impugned order shows, that in order to assess the value of the goods imported by the petitioner, the value of the same goods at the same time imported by M/s. Lakshmi Trading Company, Delhi was taken into consideration.
19. The contention that it was not sure whether the quantity was same or different is not of any importance, as the petitioner, in spite of supply of the copies of letter of M/s. Lakshmi Trading Company, Delhi, chose not to appear, nor placed it on record, to show any material difference in quantity or quality.
20. The learned counsel for the petitioner also referred to the Judgment of the Hon'ble Supreme Court in the case of COMMISSIONER OF CUSTOMS, CALCUTTA ..VS.. SOUTH INDIA TELEVISION (P) LTD., (2007 (6) S.C.C. 373) to contend, that the impugned order cannot be sustained. Paragraphs 10 to 13 of the said Judgment, reads as under:-
"10. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), "value" is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the Department has charged the respondent importer alleging misdeclaration regarding the price. There is no allegation of misdeclaration in the context of the description of the goods. In the present case, the allegation is of underinvoicing. The charge of underinvoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word "value" is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the bill of entry is the value referred to above and not merely the invoice price.
11. On a plain reading of Section 14(1) and Section 14(1-A), it envisages that the value of any goods chargeable to ad valorem duty has to be the deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1-A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation i.e. at the time when the goods reach the customs barrier. Therefore, the invoice price is not sacrosanct.
12. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1-A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Undervaluation has to be proved. If the charge of undervaluation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege undervaluation, it must make detailed inquiries, collect material and also adequate evidence. When undervaluation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving undervaluation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of undervaluation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of underinvoicing has to be supported by evidence of prices of contemporaneous imports of like goods.
13. Section 14(1) speaks of "deemed value". Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determining the price at which goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion."
21. This judgment is of no help to the petitioner. The adjudicating authority has given cogent reasons, for rejection of the invoice of the petitioner by placing reliance on the documentary evidence showing import of same goods by M/s. Lakshmi Trading Company, Delhi. The impugned order is in consonance with Rule 6 of the Rules as well as the provisions of the Customs Act. The Judgment relied upon by the petitioner goes against the petitioner, as the valuation has been done on the positive unrebutted evidence.
22. The writ petition deserves to be dismissed, also on the ground that the petitioner had chosen not to appear before the second respondent, in spite of opportunity given. The petitioner cannot be permitted to raise the pleas for the first time, in this Court, which were not raised before the Authorities, whose order is under challenge.
23. For the reasons stated above, finding no merit, this writ petition is dismissed. No costs.
Dpn/-
To:
1. The Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin - 628 004.
2. The Assistant Commissioner of Customs (Imports), Office of the Commissioner of Customs, Custom House, New Harbour Estate, Tuticorin - 628 004.