Custom, Excise & Service Tax Tribunal
M/S. Tata Ceramics Ltd vs Commissioner Of Customs Cochin-Cus on 20 January, 2016
CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH BANGALORE Appeal(s) Involved: C/370/2006-DB [Arising out of Order-in-Appeal No. 148/2006 dated 22/05/2006 passed by the Commissioner of Customs (Appeals), Cochin.] For approval and signature: HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER 1 Whether Press Reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982? No 2 Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not? No 3 Whether Their Lordships wish to see the fair copy of the Order? Seen 4 Whether Order is to be circulated to the Departmental authorities? Yes M/s. TATA CERAMICS LTD SPECIAL ECONOMIC ZONE, KAKKANAD,COCHIN- 37. Appellant(s) Versus Commissioner of Customs COCHIN-CUS CUSTOM HOUSE COCHIN 682 009. KERALA Respondent(s)
Appearance:
Shri Sandeep Gopalakrishnan, Advocate MENON & PAI ADVOCATES P.B.NO.1911, I.S.PRESS ROAD, ERNAKULAM, COCHIN For the Appellant Mr. Mohd. Yousuf, Addl. Commissioner (AR) For the Respondent Date of Hearing: 20/01/2016 Date of Decision: 20/01/2016 CORAM:
HON'BLE SHRI M.V.RAVINDRAN, JUDICIAL MEMBER HON'BLE SHRI ASHOK K. ARYA, TECHNICAL MEMBER Final Order No. 20163 / 2016 Per : ASHOK K. ARYA Both the parties have been heard in detail.
2. The matter concerns with the valuation of subject goods viz., ceramic tableware which were damaged because of flash floods (65000 pieces). The appellant viz., Tata Ceramics Ltd., located in Special Economic Zone (SEZ), Cochin are engaged in the manufacture and export of high quality ceramic tableware. Their goods were said to have been damaged because of the flood affecting their factory premises on 22.5.2004. The said damaged tableware (assorted mugs) were sold in public auction/tender without informing or obtaining permission from the Department for a sum of Rs.2,11,111/-. The auction was conducted in the interest and on behalf of the Insurance Company with whom the appellants filed their compensation.
2.1 The appellant viz., M/s. Tata Ceramics Ltd. declared the value of goods as Rs.1,39,578/- in the Bill of Entry for clearance of the said 65,000 pieces of assorted chipped mugs into the Domestic Tariff Area (DTA) and on an average it works out to Rs.2.147 approximately per piece as against the earlier transaction value of similar mugs duly chipped, sold and cleared by them at Rs.7.758 per piece vide Bill of Entry No. 339 of 27.9.2004 and against the declared value of Rs.7.053 and Rs.10.579 vide other Bills of Entry No.501 (dated 20.10.2004), No.510 (dated 25.10.2004), etc., and Bill of Entry No.108 dated 31.2.2005 as mentioned in the Assessment Order dated 20.12.2005 issued by Dy. Commissioner of Customs, SEZ, Cochin. The Department consequently fixed the value under Rule 6 on the basis of similar transaction(s). The Department gave personal hearing before deciding the matter by the Assessment Order No.1/60/2004/CSEZ/Cus. dated 20.12.2005. The Deputy Commissioner of Customs, Cochin SEZ rejected the appellants declared value of Rs.1,39,578/- at Rs.2.147 (approx.) per piece and fixed the value of Rs.7.053 per piece whereby total assessment value worked out to Rs.4,58,445/- and the appellant was ordered to pay the duty as per the above value refixed under Valuation Rules, 1998.
3. The appellant went in appeal before Commissioner (A) who upheld the assessment order issued by Deputy Commissioner of Customs, Cochin SEZ. The appellant now is before this Tribunal against the said Order-in-Appeal No.148/2006 dated 25.5.2006 issued by Commissioner (A), Cochin. The appellant has mainly pleaded as follows:
(i) In their case their unit is located in SEZ (Special Economic Zone) and when the goods are cleared from the said unit to DTA (Domestic Tariff Area), local auction price is to be taken as the assessment value for payment of duties of Customs.
(ii) Here the sale was not to a related person and the buyer of the goods was the successful competitive bidder approved by the Insurance Company and there is no allegation by the Department that the invitation of offers and the subsequent sale was not properly conducted.
(iii) The Department has not given any reasons for disbelieving the price realized through the sale of said damaged goods by the appellant.
(iv) The Insurance Company had also approved the price realised by the appellant after finding the same to be a reasonable price for the said goods.
(v) In this case, the goods were sold on as is where is basis without permitting the offers to inspect the individual items kept in lots for sale. Therefore, a sale similar to those held in the past where smaller lots of damaged goods were offed for sale after permitting prospective bidders to inspect the lots cannot be compared with the present sale.
(vi) There is no justification for the Revenue to refix the assessable value while making recourse to Rule 6 of the Customs Valuation Rules, 1998.
(vii) Under the Customs Act, duty is levied on transaction value and not on a value which the Department thinks could have been realized on a sale of the said items. There is no dispute regarding the procedural safeguards taken by the appellant during the auction, hence the value realized through auction has to be taken as transaction value for the purpose of assessment.
(viii) The Revenues finding that the appellant has not conducted the auction under perfectly competitive condition is wholly unwarranted because Department does not dispute the fact that the auction was conducted after due publication of the notices inviting the applications and considering the quotations received from prospective bidders.
(ix) The appellant has also submitted the invoices for the said transaction whereby they sold the said goods at total value of Rs.2,11,111/-, where they have separately indicated the landing charges, duty charges as well as VAT (Sales Tax) element. The appellant herewith has pleaded that the value realized through auction included all tax element including the Customs duty before the goods were delivered to the final bidder, whose bid was accepted.
(x) The appellant has referred to Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and the Interpretative Notes which are Schedule to the said Rules saying that the value of the imported goods shall not include the duties and taxes in India when reference is made to the price actually paid or to be paid to the imported goods; here the appellant is referring to Interpretative Note(s) to Rule 4 of Customs Valuation Rules, 1998.
4. Revenue represented by learned AR Shri Mohd. Yousuf, Addl. Commissioner vehemently argued that the appellant sold the said goods not through perfect competitive bidding. When the receipts of the appellant are compared with reference to their earlier auctions for the same item(s) viz., chipped table ware, the present receipts are very low as mentioned in the Order-in-Original, therefore, the receipts (value) received by the appellant have to be discarded and value refixed by the Department by the order of Deputy Commissioner has to be sustained.
5. The facts on record and the submissions of both the sides have been carefully considered. It is not the normal situation; here the goods manufactured in SEZ meant for export were damaged by the floods which affected the appellants factory premises. The appellant approached the Insurance Company for claiming compensation for all the damages done to their factory including for these damaged tableware. In association with Insurance Company, the appellant conducted the auction for realizing the salvage value by issuing tender and inviting the bids. It has been admitted by the appellant that this auction was on a lot basis only and no individual inspection of tableware was possible. The appellant in the Bill of Entry described the goods initially as damaged tableware and valued at Rs.1,39,578/-. But the Customs later on described these goods as chipped mugs and revalued them at Rs.4,58,445/- as per the Assessment Order issued by Deputy Commissioner of Customs, Cochin SEZ. The said order is under challenge, after the appeal against it was rejected by the Commissioner (A), before this Tribunal. From the facts on record, it is clear that it was a distress situation where the appellant wanted salvage value and they did it by way of conducting auction, as pointed out earlier.
5.1 The Department argued that it was not done through prefect competitive bidding and right procedure was not adopted. The Department however has not been able to prove that how did the appellant not observe the right procedure, when the procedure adopted by the appellant was approved by the United Insurance Company Ltd., which was mentioned in the invoice also (Invoice No.MSIC/49/2005-06/ 29.11.2005). In the circumstances prevalent, there cannot be any fault found, more so when the goods were delivered to the final bidder at the price quoted by the said bidder and accepted by the auctioneer with the approval of the insurance company viz., United Insurance Company. It is not right to question this by the Customs and to say that there has to be value refixed when there is no reasonable basis for this refixation of the said value. The Customs contention that earlier similar goods were auctioned and that fetched different value cannot be accepted when the damage in the goods in question are of different degree when compared with the goods which were auctioned earlier, where the damage was not to this much extent. The appellants action in treating the value fetched during the auction as cum-value is definitely acceptable and cannot be questioned under the prevailing law of Customs. The appellant has paid duty accordingly as is mentioned in the relevant invoice produced by them.
6. Considering above discussion, the appeal is allowed with consequential benefits, if any.
(Order pronounced in open court) ASHOK K. ARYA TECHNICAL MEMBER M.V.RAVINDRAN JUDICIAL MEMBER rv 7