The Chennai bench of Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that FOB (free on board) value can be rejected when the Assessing Officer (AO)has reason to doubt the truth or accuracy of value declared about export of goods.
Shri S. Murugappan, Advocate appeared for the Appellant and Smt. Ananda Lakshmi Ganeshram appeared for the Respondent.
M/s. Sri Velavan Logistics Services Private Limited, the Customs Broker challenged the imposition of penalty under Section 114 of the Customs Act, 1962 by the Adjudicating Authority, as sustained by the First Appellate Authority vide impugned Order-in-Appeal Seaport C.Cus. II No. 250/2022 dated 10.05.2022.
There was an attempt to export goods which were undervalued; the market survey carried out on a single day, i.e. on 15.02.2019, revealed that an exactly similar looking product to the one which was attempted to be exported costed Rs.59/- (M.R.P.) per piece including G.S.T.
The value of the goods in question was computed at Rs.115/- per piece in terms of Rule 6 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 and the same was accepted by the authorized representative of the importer.
The Customs Broker was alleged to have rendered themselves liable for action under the Customs Broker Licensing Regulations (CBLR), 2013 for contravening the provisions of Regulations 11(n) and 11(d) ibid. and thereafter, it was proposed in the Show Cause Notice as to the imposition of penalty under Section 114 of the Customs Act, 1962.
None of the co-notices having replied, except this appellant, to the Show Cause Notice, the Adjudicating Authority v rejected the FOB in terms of Rule 8(1) of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 read with Rule 7 the act. and imposed a penalty of Rs.10,00,000/- (Rupees Ten Lakh only) on this appellant under Section 114of the act.
On appeal, the First Appellate Authority accepted the violation of Regulation 10(n) of the CBLR andrejected the appeal.
It was observed that in the guise of redetermination of the value of goods, the Adjudicating Authority has not given any justifiable reasons except adopting the valuation in terms of Rule 6 of the act after rejecting the FOB value in terms of Rule 8(1) ibid.
Mr P. Dinesha, Member (Judicial) while allowing the appeal of the appellantheld that the imposition of penalty on the appellant / Customs Broker is bad in law and the impugned order was set aside.
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