Case Note & Summary
The petitioners, Forbo Siegling Movement Systems India Pvt. Ltd. and another, challenged an order dated 19 March 2013 passed by the Deputy Commissioner of Customs, GATT Valuation Cell, Mumbai, which assessed bills of entry under Rule 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14 of the Customs Act, 1962, by adding to the declared value. The first petitioner, a wholly owned subsidiary of Forbo Finanz AG, Switzerland, imports goods from related group companies and was registered with the Special Valuation Branch. After a series of document submissions and a personal hearing, the Deputy Commissioner passed the impugned order rejecting the transaction value and loading the value. The petitioners contended that the order violated principles of natural justice and mandatory procedural requirements under Rule 12 of the Customs Valuation Rules, 2007, which requires the proper officer to disclose in writing the grounds for doubting the declared value upon the importer's request and to provide a reasonable opportunity of being heard. The court found that the Deputy Commissioner did not disclose the grounds for doubt, and the mere holding of a personal hearing did not cure this defect. The court held that Rule 12 imposes a mandatory procedural requirement, and its non-compliance vitiates the order. Consequently, the court quashed the impugned order and remanded the matter to the Deputy Commissioner for fresh consideration after complying with Rule 12 and principles of natural justice.
Headnote
A) Customs Law - Valuation of Imported Goods - Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Mandatory Disclosure of Grounds for Doubt - The proper officer, upon having reason to doubt the truth or accuracy of the declared value, must, upon request of the importer, disclose in writing the grounds for such doubt and provide a reasonable opportunity of being heard before taking a final decision. In the present case, the Deputy Commissioner failed to disclose the grounds for doubting the declared value, rendering the order violative of natural justice. (Paras 4-6)
B) Customs Law - Valuation of Imported Goods - Section 14 of the Customs Act, 1962 - Transaction Value - Related Party Transactions - The rejection of transaction value and loading of value under Rule 9 must be preceded by strict adherence to the procedure under Rule 12. The order was set aside and the matter remanded for fresh consideration after complying with Rule 12. (Paras 7-8)
Issue of Consideration
Whether the impugned order assessing bills of entry under Rule 9 of the Customs Valuation Rules, 2007 is vitiated for non-compliance with the mandatory procedural requirements under Rule 12 of the said Rules and principles of natural justice.
Final Decision
The court allowed the writ petition, quashed the impugned order dated 19 March 2013, and remanded the matter to the Deputy Commissioner of Customs for fresh consideration after complying with Rule 12 of the Customs Valuation Rules, 2007 and principles of natural justice.
Law Points
- Principles of natural justice
- mandatory procedural requirement
- Rule 12 Customs Valuation (Determination of Value of Imported Goods) Rules 2007
- disclosure of grounds for doubting declared value
- reasonable opportunity of being heard
Case Details
2013 LawText (BOM) (05) 25
WRIT PETITION NO.1101 OF 2013
DR.D.Y.CHANDRACHUD, A.A.SAYED
Mr.J.J.Bhat, Senior Advocate with Mr.Kishan Kumar and Mr.P.K.Shetty i/b. Mr.Rajeev Ravi for the Petitioners; Mr.R.Ashokan for the Respondents
Forbo Siegling Movement Systems India Pvt. Ltd. & Anr.
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Nature of Litigation
Writ petition challenging an order of the Deputy Commissioner of Customs assessing bills of entry under Rule 9 of the Customs Valuation Rules, 2007.
Remedy Sought
Quashing of the impugned order dated 19 March 2013 and direction to reassess the bills of entry in accordance with law.
Filing Reason
The impugned order was passed in violation of principles of natural justice and mandatory procedural requirements under Rule 12 of the Customs Valuation Rules, 2007.
Previous Decisions
The Deputy Commissioner of Customs passed the impugned order on 19 March 2013 after a personal hearing and document submissions.
Issues
Whether the impugned order is vitiated for non-compliance with Rule 12 of the Customs Valuation Rules, 2007?
Whether the principles of natural justice were violated by not disclosing the grounds for doubting the declared value?
Submissions/Arguments
Petitioners argued that Rule 12 mandates disclosure of grounds for doubting the declared value upon request, and the Deputy Commissioner failed to do so, violating natural justice.
Respondents argued that a personal hearing was held and documents were submitted, which complied with the requirements.
Ratio Decidendi
Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 imposes a mandatory procedural requirement that upon the importer's request, the proper officer must disclose in writing the grounds for doubting the truth or accuracy of the declared value and provide a reasonable opportunity of being heard. Non-compliance with this requirement vitiates the assessment order.
Judgment Excerpts
Rule 12 mandates that when the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, the importer can be called upon to furnish further information. However, on the request of the importer, the proper officer is required to intimate to him in writing the grounds for doubting the truth or accuracy of the value declared in relation to the goods imported and provide a reasonable opportunity of being heard before taking a final decision.
In the present case, there was a patent violation of the principles of natural justice because the mandatory requirement of disclosing the grounds for doubting the truth or accuracy of the value declared was not fulfilled and hence, the mere holding of a personal hearing would not comply with the requirements of Rule 12.
Procedural History
The first petitioner's case was registered with the Special Valuation Branch. On 19 April 2012, the Deputy Commissioner called for documents. Petitioners submitted documents on 18 May 2012. A personal hearing was held on 5 November 2012, after which further documents were submitted. The Deputy Commissioner passed the impugned order on 19 March 2013. The petitioners then filed the present writ petition.
Acts & Sections
- Customs Act, 1962: Section 14, Section 128(1)
- Customs Valuation (Determination of Value of Imported Goods) Rules, 2007: Rule 9, Rule 12
