Customs Act | Importer's Subsequent Import Bill Be Discarded If Undervalued To Previously Imported Identical Or Similar Goods: Supreme Court

Recently, the Supreme Court held that under the Customs Act, the Importer's Bill of Entry of subsequent imported goods can be discarded if the subsequent imported goods are undervalued to the previously imported identical or similar goods.

Affirming the findings of the Central Customs, Excise & Service Tax Appellate Tribunal (“CESTAT”), the Bench comprising Justices Abhay S. Oka and Pankaj Mithal observed that the transaction value in the bills of entry of the subsequent goods can be discarded if it is found that the importer has earlier brought/imported an identical goods or similar goods at a higher price from the same seller/exporter.

“As per that provision, the transaction value mentioned in the bills of entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other.”, the Supreme Court observed in Commissioner of Central Excise and Service Tax, Noida v. Sanjivani Non-ferrous Trading Pvt. Ltd. as referred to in the Judgment authored by Justice Abhay S. Oka.

The gist of the dispute was that the importer/assessee had been a regular importer of camera stabilizer devices for the last several years. He had imported a consignment of camera stabilizer devices under a Bill of Entry. However, after an investigation, it was alleged that the goods were grossly undervalued. The goods were seized on the ground that the same were found to be mis-declared and undervalued. The appellant's/importer's past import details were retrieved from the system, and it was found that the importer had imported identical/similar items with the same model numbers at higher and different unit prices.

Based on the abovementioned infirmities by the importer, the adjudicating authority under the Customs Act ordered the recovery of differential customs duty of Rs.16,22,228/-. An order of confiscation under Section 111 of the Customs Act was passed, giving the appellant an option to redeem the goods on payment of a redemption fine of Rs.9,93,000/. The adjudicating authority imposed penalties of Rs.2,00,000/- and Rs.3,31,000/- on the importer under Sections 112(a) and 114AA respectively of the Customs Act.

The decision of the Adjudicating Authority was subsequently upheld by the CESTAT, following which the appellant/importer preferred an appeal before the Supreme Court.

Before the Supreme Court, it was contended by the appellant/importer that the previously imported goods could not be held to be identical or similar to the subsequently imported goods. The appellant stated that the hardware and software for both Items were different which indicates the difference in the version of the camera stabilizer as the subsequent imported goods were found to be 'unpopular'.

Rejecting the contention of the appellant/importer, the Supreme Court while endorsing the findings of the CESTAT found the goods identical to/similar to the ones imported earlier.

“We have perused the said table. We find that except for the description as an “unpopular brand,” the products appear to be identical/similar. In any case, the factual finding rendered by CESTAT is after a detailed consideration of the material on record.”, the court said.

Further, the court disbelieved the statement made by the appellant that the two goods aren't identical/similar to each other due to a little difference in the hardware and software functions in the disputed goods as compared to the earlier versions.

“At this stage, we may also make a note of the statement made by an officer of the appellant during the inquiry before the adjudicating authority. In paragraph 11, he stated that there is a little difference in the hardware and software functions in the disputed goods as compared to the earlier versions. In the order-in-original and in the impugned judgment of CESTAT on facts, it was found that Item nos. 1 and 3 were identical goods, and Item no. 2 was of similar goods. Detailed reasons have been recorded in the order-in original as to why the transaction value of the imported goods has been discarded. Cogent reasons have been assigned to arrive at the assessable value.”, the court stated.

Based on the above premise, after noting that the assessing officer has sufficiently established why the transaction value declared in the bills of entry was being declared undervalued, the Supreme Court while relying on Sanjivani Non-ferrous Trading Pvt. Ltd. observed that no error was committed by the CESTAT in upholding the imposition of the penalties, and the recovery of differential custom duty from the appellant/importer by the Adjudicating authority.

Accordingly, the appeal was dismissed.

Counsels For Appellant(s) Mr. Sanjay R. Hegde, Sr. Adv. Mr. Manoj K. Mishra, AOR Mr. Shahrukh Ali, Adv. Mr. Ankit Tiwari, Adv. Ms. Stuti srivastava, Adv. Mr. Umesh Dubey, Adv. Mr. A. Baskar, Adv. Mr. D. N. Dubey, Adv. Mr. Vishal, Adv. Mr. Piyush Singh, Adv.

Counsels For Respondent(s) Mr. N. Venkatraman, A.S.G. Mr. Mukesh Kumar Maroria, AOR Mr. B.K. Satija, Adv. Mr. H.R. Rao, Adv. Mr. A.K. Kaul, Adv. Mr. Shantnu Sharma, Adv.

Case Title: M/s Global Technologies and Research versus Principal Commissioner of Customs, New Delhi (Import)

Citation : 2024 LiveLaw (SC) 239

Click Here To Read/Download The Judgment