Legal principle

Before rejecting the declared transaction value, the proper officer must under Rule 12 of the Customs Valuation Rules, 2007 furnish in writing the grounds for doubting its truth or accuracy and give the importer a reasonable opportunity of being heard, and breach of this natural justice requirement is a sufficient ground to invoke Article 226 despite the alternate remedy of appeal under Section 128(1).

Court decision

The Bombay High Court allowed the petition: it set aside the impugned order dated 19 March 2013, holding that the mandatory procedure of Rule 12 was not followed and that there was a clear breach of natural justice, and remanded the proceedings for fresh decision after complying with Rule 12 (furnishing written grounds and giving the Petitioners a reasonable opportunity to submit objections within two weeks). The Court also directed the Commissioner of Customs to assign the case to an officer other than the Deputy Commissioner who passed the impugned order, and made the rule absolute with no order as to costs.

Facts

The First Petitioner, a wholly owned Indian subsidiary of Forbo Finanz AG, Switzerland, imports raw material, semi-finished and finished goods from its foreign group companies, so its case was registered with the Special Valuation Branch under a CBEC Circular dated 23 February 2001 as a related-party import. The Deputy Commissioner of Customs, GATT Valuation Cell, Mumbai, by order dated 19 March 2013, assessed the bills of entry under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962, rejecting the disclosed transaction value and making an addition (loading) to the declared value. After an initial call for documents (complied with on 18 May 2012) and a personal hearing on 5 November 2012, the officer passed the loading order on 19 March 2013 without ever furnishing the importer written grounds for doubting the declared value.

Key provisions

• Rule 12, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Rejection of declared value
• Section 14, Customs Act, 1962 — Valuation of goods
• Section 128(1), Customs Act, 1962 — Appeal to Commissioner (Appeals)
• Rule 9, Customs Valuation (Determination of value of Imported goods) Rules, 2007 — Residual method