Case law

Custom, Excise & Service Tax Tribunal · 27 Mar 2012

) M/S. A.N. Impex vs Commr. Of Customs (Port), Kolkata

Legal principle

Rule 12 of the Customs Valuation Rules, 2007 does not by itself provide a method for determination of value; it only permits rejection of the declared transaction value where reasonable doubt is established with evidence, and undervaluation must be proved by cogent material — mere suspicion of the invoice cannot justify enhancement.

Court decision

The Tribunal allowed the importers' appeals by way of remand: it held that Rule 12 of the CVR 2007 provides only a mechanism and procedure for rejection of declared value and does not empower the proper officer to reject the transaction value without establishing it was not genuine; since there were no specific findings as to how many articles were other than old and used clothing, the classification and valuation issues were remanded to the Commissioner for fresh decision, preferably within three months, with all issues kept open and both sides at liberty to produce documents; the Department's appeal was also disposed of accordingly.

Facts

M/s. A.N. Impex imported 873 bales of old and used garments from M/s. Al Liberty International Rags, Houston, USA under Bill of Entry No. 414051 dated 10.06.2008, declared as worn clothing under CTH 6309 at US$ 0.417/kg (later referenced as US$ 0.45/kg), which Customs enhanced to US$ 0.60/kg; the CHA was M/s. Gee Pee International. DRI re-examination revealed that bales bore code words identifying specific articles (jackets, shirts, ladies cotton pants, etc.), most without any sign of appreciable wear, suggesting the goods were misdeclared new articles rather than worn clothing, and that 78 bales of ladies cotton pants were soaked and unfit for use. Statements were recorded under Section 108 from the importer's proprietor (Md. Umar Khan), the CHA's partner (Shri Prabhat Manna) and Shri Deepak Das of M/s. Ma Vabatarini Enterprises, whose bale-wise purchase prices DRI treated as the wholesale market price. A show cause notice for misdeclaration and undervaluation was issued to the importer, CHA and several individuals, and the Commissioner by Order-in-Original KOL/CUS/PORT/06/2010 rejected the 6309 classification claim and reclassified/enhanced value, leading to cross-appeals before the Tribunal.

Key provisions