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Custom, Excise & Service Tax Tribunal · 15 Mar 2012
M/S. M.S. Enterprises vs The Commissioner Of Customs
Legal principle
A document seized from a third party cannot be relied upon to reject an importer's declared value unless the seizure Panchnama/Mahazar and the related statements are furnished to the importer, and failure to do so violates natural justice and vitiates the valuation order, warranting remand.
Court decision
The Tribunal set aside the impugned orders and remanded the matter to the original authority for fresh consideration, in favour of the appellants. It held there was a clear violation of principles of natural justice in not furnishing the Mahazar relating to seizure of documents at M/s Integral Traders' premises and the statement, if any, of that firm's representative, and that the Commissioner had not (adequately) dealt with the importers' submissions on rejection and enhancement of values. However, it ruled against the appellants on one point, holding that the First Secretary (Commerce) stationed in Singapore is a competent authority to furnish authentic trade information from ASEAN countries. The original authority was directed to supply the documents with the Mahazar and statements, allow written submissions within 45 days, grant a hearing, permit the importers to justify the near-uniform prices with supporting evidence, and pass a speaking order expeditiously, preferably before 31 August 2012.
Facts
Five importers (M/s. M.S. Enterprises, Mohammed Fariz & Co., Shabeer Enterprises, P.K. Traders and Haripriya Traders) imported 17, 17, 14, 14 and 4 consignments of betel nuts respectively from Indonesia/Thailand through Cochin port during March 2007 to May 2008, declaring varied descriptions at prices of USD 225-250 per MT. The Commissioner rejected the declared values relying on (i) a fax document seized from M/s Integral Traders from an Indonesian supplier, (ii) imports by M/s Nageshwari Match Works where an enhanced value was accepted, (iii) a report of the First Secretary (Commerce), High Commission of India, Singapore, and (iv) Sri Lankan import prices of USD 850-1500 per MT. He held the values under-declared, demanded differential duty ranging from about Rs. 34.75 lakhs to Rs. 2.76 crores, confiscated the goods with redemption fines of Rs. 10.5 lakhs to Rs. 70 lakhs, and imposed penalties of Rs. 5 lakhs to Rs. 35 lakhs. The port-restriction issue under DGFT Notification No. 49 (RE-2006)/2004-2009 (imports only through Mangalore) stood resolved by the Kerala High Court and was not before the Tribunal. The importers appealed to CESTAT, Bangalore.