M/S. GLOBAL TECHNOLOGIES AND RESEARCH VS. PRINCIPAL COMMISSIONER OF CUSTOMS, NEW DELHI (IMPORT)

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CITATION	2024 LiveLaw (SC) 239
DATE OF JUDGMENT	15^th March 2024
COURT	Supreme Court of India
APPELLANT	M/s Global Technologies and Research
RESPONDENT	Principal Commissioner of Customs, New Delhi (Import)
BENCH	Hon. Mr. Justice Abhay S. Oka, Mr Justice Pankaj Mithal

INTRODUCTION

The case of M/S. Global Technologies And Research Vs. Principal Commissioner Of Customs, New Delhi (Import), involves an appeal concerning the valuation of imported goods and the imposition of penalties under the Customs Act, 1962. The core of the dispute is the allegation of undervaluation in the importation of camera stabilizer devices. Legal principles addressed include the interpretation of Sections 14(1) and 14(1-A) of the Customs Act, emphasizing the obligation to accept transaction value unless specific exceptions apply under Rule 4(2) of the Customs Valuation Rules. The court relies on established precedent, Commissioner of Central Excise and Service Tax v. Sanjivani Non-ferrous Trading Pvt. Ltd., highlighting the importance of adhering to statutory provisions and providing reasoned justifications for departures from the transaction value.

FACTS OF THE CASE

In this case the appellant challenged the judgment and order dated 29^th September 2022 which was passed by the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) concerning an appeal filed under Section 129(A) of the Customs Act, 1962. The appellant has been a regular importer of camera stabilizer devices for several years.
On 16^th February 2018, the appellant imported a consignment of camera stabilizer devices which was valued at USD 20,353(CF) under a Bill of Entry, along with an invoice dated 30^th January 2018, which was issued by M/s.Guilin Zhishen Information Technology Co. Ltd. in China.
The dispute revolves around three categories of goods out of four, specifically described as: Camera Stand (3 Axis StabilizerCRA02, Unpopular Brand), Camera Stand (3 Axis StabilizerCRA01, Unpopular Brand), Dual Handle (Unpopular Brand, Parts of Camera Stand). The goods underwent 100% examination by SIIB officers based on intelligence indicating potential undervaluation. Representative samples were taken, and further investigation was initiated.
The goods underwent 100% examination by SIIB officers based on intelligence indicating potential undervaluation. Representative samples were taken, and further investigation was initiated.
On 21st February 2018, the goods were seized on grounds of misdeclaration and undervaluation following the examination.
On 23^rd February, statements under Section 108 of the Customs Act were recorded from the respondent and the customs broker. The past import details of the appellant were retrieved, revealing imports of identical/similar items with the same model numbers at higher and different unit prices.
On 7^th March 2018, the letter submitted by the appellant to the Commissioner of Customs (Import), New Delhi, contended that the goods were imported from the manufacturer and were valued based on listings on well-known online trading and B2B websites. Additionally, they relied on a letter from the manufacturer dated 16th January 2018 stating that the goods were of a lower version. On 26th March 2018, the Department claims to have conducted a market survey.
The adjudicating authority passed an order-in-original dated 31st March 2018, rejecting the declared assessable value of Rs. 12,87,742/- and assessing the value of the imported goods at Rs. 66,18,575/- under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, read with Section 14 of the Customs Act.
The adjudicating authority ordered the recovery of differential customs duty amounting to Rs. 16,22,228/- and imposed penalties of Rs. 2,00,000/- and Rs. 3,31,000/- under Sections 112(a) and 114AA respectively of the Customs Act. Additionally, an order of confiscation under Section 111 of the Customs Act was passed, offering the appellant an option to redeem the goods upon payment of a redemption fine of Rs. 9,93,000/-.
The appellant appealed before the Commissioner of Customs (Appeals), who allowed the appeal through a judgment dated 17th December 2020. On 2nd November 2021, the Committee of Commissioners directed the Department to file an appeal against the Commissioner’s order. Consequently, an appeal was lodged before CESTAT on 17th November 2021. The CESTAT allowed the appeal and restored the order-in-original passed by the adjudicating authority through the impugned judgment dated 29th September 2022.

ISSUES RAISED

Whether the review order passed by the Committee of Commissioners under sub-section (2) of Section 129A was valid despite being issued over 10 months after the Commissioner (Appeals) issued their order?
Whether CESTAT correctly interpreted the definitions of ‘identical’ and ‘similar’ goods under the Valuation Rules?
Whether the goods imported by the appellants in this case are different from those imported earlier.
Whether the penalties imposed by the adjudicating authority under Sections 112(a) and Section 144 of the Customs Act, are justified?
Whether the timing of orders and the impact of the COVID-19 pandemic affect the time validity of the actions taken by both parties?

CONTENTIONS OF APPELLANTS

The appellant contends that the declared assessable value of the imported goods, amounting to Rs. 12,87,742/-, is accurate and supported by valid documentation, which includes the manufacturer’s invoice and online trading listings. It is argued that the valuation of the goods by the adjudicating authority at Rs. 66,18,575/- is unjustified, because it does not shows the actual value of the goods.
The appellant submits that they had previously imported similar items from the same manufacturer at different prices, which indicated the market price variations and subsequently supported the validity of the declared value of the goods.
The appellant asserts that the penalties imposed by the adjudicating authority under Sections 112(a) and 114AA of the Customs Act are excessive and not warranted under the circumstances of the case.
Additionally, the appellant contests the confiscation order under Section 111 of the Customs Act, arguing that the option to redeem the goods upon payment of a fine is unjustified, considering the validity of the declared value.

CONTENTIONS OF REPONDENT

The respondent contends that the imported goods were grossly undervalued, as shown by the evidence from a market survey conducted by the Department. The appellant’s past import details reveal instances of importing identical/similar items at higher and different unit prices, which indicates that there has been undervaluation in many instances.
The respondent highlighted discrepancies between the declared value and the actual market value of the imported goods, pointing to the misdeclaration by the appellant.
The respondent asserts that the penalties imposed by the adjudicating authority are justified under the provisions of the Customs Act, considering the gravity of the alleged undervaluation and misdeclaration.
In regards to the confiscation, the respondent supports the confiscation order under Section 111 of the Customs Act, contending that it is a lawful measure to address the alleged customs violations.

JUDGEMENT

In the judgment of this case, the court upheld the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) in a case concerning the alleged undervaluation of imported goods. It referred to legal precedent emphasizing the primacy of transaction value unless specific exceptions apply. Despite minor differences, the goods were deemed identical or similar to previous imports. The court found no error in CESTAT’s findings and upheld the imposed penalties. The appeal was dismissed.

ANALYSIS

This case is about the allegation of undervaluation of imported goods by the appellant. The court referred to the precedent set in Commissioner of Central Excise and Service Tax v. Sanjivani Non-ferrous Trading Pvt. Ltd. to reinforce the principle that transaction value should be accepted unless specific exceptions apply. The court examined a comparative table of the goods imported by the appellant in the present case and those imported earlier. Despite the appellant’s contention of minor differences in hardware and software functions, the court concurred with the adjudicating authority and CESTAT that the goods were either identical or similar. Further the court emphasized that the assessing officer is bound to accept the price actually paid or payable for goods as the transaction value, except in specific circumstances as given in Rule 4(2) of the Customs Valuation Rules and penalties imposed on the appellants were deemed justified.

CONCLUSION

After analysis of the issues raised, which include the allegation of undervaluation, the court upheld the decision of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT). The court referred to established legal precedents, Commissioner of Central Excise and Service Tax v. Sanjivani Non-ferrous Trading Pvt. Ltd., to highlight the principle that transaction value should generally be accepted unless specific exceptions apply. In this case, the court examined a comparative table of the imported goods, finding that despite the appellant’s claims of minor differences in hardware and software functions, the goods were either identical or similar to those imported earlier. This comparison was crucial in determining the applicability of Customs Valuation Rules and the validity of the penalties imposed. The court emphasized that the assessing officer is bound to accept the price paid or payable for goods as the transaction value, as per Rule 4(1) of the Customs Valuation Rules. However, exceptions outlined in Rule 4(2) allow for the rejection of transaction value in certain circumstances, such as the import of identical or similar goods at higher prices or when buyers and sellers are related, which happens in this case.

Detailed reasons were provided for discarding the transaction value of the imported goods and the affirmation of these findings by both the adjudicating authority and CESTAT, the court concluded that the penalties imposed were justified. Therefore, the appeal was dismissed, with no costs awarded to either party.

REFERENCES

This Article is written by Purbasha Parui, student of BMS College of Law, Bangalore, 1^st Sem B.A. LL.B ; Intern at Legal Vidhiya.

Disclaimer: The materials provided herein are intended solely for informational purposes. Accessing or using the site or the materials does not establish an attorney-client relationship. The information presented on this site is not to be construed as legal or professional advice, and it should not be relied upon for such purposes or used as a substitute for advice from a licensed attorney in your state. Additionally, the viewpoint presented by the author is of a personal nature.

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