Commissioner Of Customs(Prev), Mumbai vs M/S. Swastik Optical Co. Pvt. Ltd

[Arising out of Order-in- Appeal No. 13/2004 AP TS dtd. 1/4/2004 passed by the Commissioner(Appeals), Airport, Mumbai-99]

For approval and signature:

Honble Mr. P.S. Pruthi, Member(Technical) Honble Mr Ramesh Nair, Member(Judicial)

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1. Whether Press Reporters may be allowed to see : No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : seen of the Order?

4. Whether Order is to be circulated to the Departmental: Yes authorities? =======================================================

Commissioner of Customs(Prev), Mumbai : Appellants

VS

M/s. Swastik Optical Co. Pvt. Ltd. : Respondent

Appearance

Shri. S.J. Sahu, Asst. Commissioner(A.R.) for the Appellants Shri. J.S. Sanghvi, Consultant for the Respondent

CORAM:

Honble Mr. P.S. Pruthi, Member (Technical) Honble Mr. Ramesh Nair, Member (Judicial)

Date of hearing: 20/8/2015 Date of decision: 20/8/2015

ORDER NO.

Per : P.S. Pruthi

This case has already gone through two round of litigation at the lower level. In the first round the Commissioner(Appeals) remanded the case to the adjudicating authority with specific observations that lower authority has not declared the source of market inquiry to the appellant resulting in violation of principles of natural justice. In the second round matter stands decided by Commissioner (Appeals) vide his order dated 1/4/2004.

2. The case is built by the Custom department on the import of spectacle parts under three Bills of Entry. Allegation of the Revenue is that the brand of spectacle (parts of which were imported) was not declared deliberately and that the parts make a complete spectacle frame. Revenue made some market inquiry and found that the spectacles made out of such spectacle parts as sold at the retail level at value of Rs. 2000/- per piece. In his statement before the Customs, the importer also admitted that he is selling spectacles at Rs. 2000/- per piece in the retail sale. Working backward from the price of Rs. 2000/- after allowing margin of profit of 50% for the retailer and the mark up of 25% at the level of wholesaler/importer, revenue worked out assessable value of Rs. 560/- per piece of spectacle frame instead of price declared for the individual parts which sum up to Rs. 2162/-. It is also the allegation of the Revenue that the importer not being actual user was not entitled for the benefit of Notification No. 149/95 for payment of CVD. Adjudicating authority confirmed the demand of duty and imposed penalty. Commissioner (Appeals) set aside the Order-in-Original except to the extent of denying the benefit of Notification No. 149/95. Revenue is in appeal against this order of Commissioner (Appeals).

3. Both, Counsel and Ld. A.R. reiterated the submissions made earlier as well as in the grounds of appeal by the Revenue.

4. We have considered the facts and submissions made by both sides.

5. We find that adjudicating authority demanded duty on the basis of value enhanced as mentioned above. Except for the non declaration of brand in the Bills of Entry the other misdeclaration alleged by the Revenue is lower value declared in the Bills of Entry. To arrive at the correct value, a market inquiry was done. In spite of clear directions by the Commissioner(Appeals) in the first stage, we find that principles of natural justice still remained violated. In the impugned order, the Commissioner(Appeals) has clearly recorded that the Department is duty bound to convey to the respondent the name of the market, name of the address of the person from whom market inquiry was made, name of the product including brand name for which inquiry were made and retail sale price of the product item-wise of brand-wise. Further the method of arriving at the assessable value from the retail sale price needs to be supported with evidence. The department merely considered margin of profit of 50% and 25% at the retail and wholesale stage respectively without giving any supportive evidence as to how this percentage was arrived at. Another flaw in arriving at the assessable value is that although spectacles are said to be of various brands, when it came to the market inquiry the same retail price was considered in respect all spectacles. This itself makes the market enquiry questionable and unreliable.

5.1 We also note that department is not able to sustain its case under the Customs Valuations Rules. It is not able to say why the transaction value cannot be accepted in terms of Rule 4, when the invoices gave complete description of the parts. It has not been established as to how the assembly of this parts into complete spectacles frame will not result in higher value at the retail level. Revenue has not also explained why Rule 5 and 6 which relate to similar or identical goods should not have been considered when the appellant have given the price of contemporaneous goods as observed by the Commissioner(Appeals) and especially when such goods are available in the market as revealed in the market enquiry. Even if the contemporaneous goods do not indicate the brand, it was duty of Revenue to examine documents relating to contemporaneous imports but it failed to do so.

5.2 In view of above, we find that impugned order is not sustainable from both points of view i.e failure to observe principles of natural justice as well as no following appropriate procedure for arriving at assessable value. However, we do agree with order of the Commissioner(Appeals) in denying benefit of the Notification No. 149/95 as the importer admitted that they are not an Actual User.

6. In view of the above, appeal is dismissed.

(Dictated in court)

Ramesh Nair Member (Judicial) P.S. Pruthi Member (Technical)

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5 C/689/04