Customs Fails to Disclose Method Adopted to Redetermine Confiscated Goods Value: CESTAT Remands Matter for Revaluation [Read Order]

The Customs, Excise and Services Tax Appellate Tribunal (“CESTAT”) notes that the customs department has failed to disclose the method adopted to redetermine the value of confiscated imported goods. When appeal against the order dated 04.01.2022 of the Commissioner of Customs, the Tribunal remanded the matter for re-valuation.

The appellant, M/s. Gyanguru Enterprises had mis-declared quantity and price to conceal prohibited imported goods. The department had demanded differential duty along with interest and had imposed penalties under Section 112(a) and Section 114AA of the Customs Act (“the Act”).

The facts of the case were that the appellant had imported goods such as birthday candles, chocolate gift bags, badminton rackets, photo frames, etc. in 985 cartons from an exporter company in China. They filed a Bill of Entry (BoE) dated 04.04.2019 for clearance and declared the value as USD 16798.

On examination it was found that some goods needed an appropriate drug licence under the Drugs and Cosmetics Act. The appellant sought the re-export of goods as they had been wrongly dispatched to them. The department confiscated 203 cartons and allowed re-export after the payment of redemption fine of INR 4 lakh.

The other goods were confiscated with an option to redeem after payment of fine. Goods were confiscated as per the provisions in Section 111(d) of the Act.

The appellant side mainly argued that the department lacked proper evidence to accuse them of undervaluation and that re-exporting goods cannot be conducted alongside a redemption fine. The intention to evade tax has not been made clear with supporting evidence.

On the other hand, the department argued that the power to impose a redemption fine as well as penalty when re-exporting confiscated goods is derived from Hemant Bhai R. Patel v. Commissioner of Customs, Ahmedabad [2003 (153) ELT 226 (Tri - LB)].

The tribunal observed that due to the huge number of goods, the re-valuation method was not disclosed. The bench, consisting of M. Ajit Kumar (Technical) and Ajayan T.V. (Judicial), relied heavily on M/s. Scania Commercial Vehicles India Pvt. Ltd. v. Commissioner of Customs, Hirday Narain v. Income-Tax Officer, Bareilly and Zunjarrao Bhikaji Nagarkar v. Union of India.

It finally decided that the matter should be remanded back for proper re-valuation of duty, interest and penalty. It noted that principles of natural justice should be followed and reasonable opportunity is to be given to the appellant to state their case, both orally and in writing.

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