Case law

Supreme Court of India · 17 May 2019

Century Metal Recycling Pvt. Ltd. vs Union Of India

Legal principle

The declared transaction value in a bill of entry cannot be rejected unless the proper officer has reasonable doubt as to its truth or accuracy supported by 'certain reasons' and contemporaneous corroborative material, records those reasons and, when required, communicates them to the importer; valuation alerts are guidance only and cannot substitute for this statutory process under Section 14 and Rule 12.

Court decision

The Supreme Court granted leave, entertained the appeal despite the alternative remedy (as the impugned order could not be sustained in view of its decision in Sanjivini Non-Ferrous Trading), allowed the appeal, and by a writ of certiorari quashed and set aside the assessment order dated 7th April, 2017, holding it flawed and contrary to law for failing to give cogent and good reasons under Section 14(1) and Rule 12 for rejecting the declared transaction value. It held that formation of belief and recording of reasons for reasonable doubt, and communication of those reasons when required, is mandatory under Rule 12 before proceeding under Rules 4 to 9, applying this mandate prospectively with past cases to be decided case to case. It clarified that Valuation Alerts provide guidance but must not interfere with the assessment authority's discretion, and that no general or omnibus direction was issued that declared transaction value must invariably be accepted. There was no order as to costs.

Facts

M/s Century Metal Recycling Pvt. Ltd. and Gauri Shankar Agarwala imported aluminium scrap/waste as raw material for manufacturing aluminium alloys. The Principal Commissioner of Customs, Noida and his officers almost uniformly refused to clear consignments at the declared transaction value in the bill of entry, and instead compelled the appellants, through coercion and the threat of demurrage, ground rent and container detention charges, to sign letters agreeing to assessment/valuation by the customs authorities, foregoing provisional assessment under Section 18 of the Customs Act, 1962. The respondents acted on a Valuation Alert dated 1st December, 2016 issued by the Central Board of Excise and Customs, discarding declared transactional value contrary to Section 14. By adjudication order dated 7th April, 2017 the declared value of Rs. 81.31 per kg was rejected on the basis of contemporaneous import data showing values between Rs. 83.26 and Rs. 120.897 per kg, while the same order recorded that aluminium scrap is not a homogeneous commodity and values of identical or similar goods were not available. The Allahabad High Court dismissed the appellants' writ petition, holding that valuation matters should be assailed in a statutory appeal.

Key provisions