Custom Matters Lawyer: demand of differential custom duty from the importer on the basis of best judgement assessment was set aside as it was found to be contrary to rules; SC.

Supreme Court of India

Justice Sanjay Kishan Kaul

In the case titled as "Anil Kumar Anand Versus Commissioner of Customs (preventive)", the issue falling for consideration before the court was the method adopted by the custom authorities in doing the assessment of the imported goods; in cases of alleged undervaluation of import consignments.

In the said case the appellant who was regular importer, the enquiry was conducted for the consignment imported by the importer/ appellant, and it was held that the goods are undervalued, therefore, the competent authority started the process of valuation of current import consignments and as well as past consignments. On the said valuation, the appellant importer was directed to deposit the differential duty of rupees 9.53 lacs for current consignment and rupees 1.23 crores for pass consignment; the said order was upheld by the CESAT.

The Supreme Court of India while setting aside the said order of the CESAT and of the Commissioner Custom remanded matter for fresh consideration by Commissioner Customs. The SC further held that scheme of valuation,  in case of undervaluation, as per rule 3 & 4 provides that it has to be applied sequentially, that is, first rule 3 to 5 have to be applied, in case determination cannot be made under the said provision, then, only resort to rule 7 and 8 can be made. Needless to mention here that rule 3 to 5 deal with valuation, on the basis of transaction value of identical or similar goods; and rule 7 and 8 deal with best judgement assessment, therefore, it was held by the Supreme Court that first it has to be seen in present case whether valuation can be done on the basis of transactional value of identical/ similar goods, which is as per rule 3 to 5. It was held that neither the Commissioner nor CESAT has followed the said procedure. The order of the CESAT and commissioner cannot be sustained in the eyes of law, accordingly they were set aside and the matter was remanded back as aforesaid.