CENTURY METAL RECYCLING PVT. LTD. AND versus UNION OF INDIA AND OTHERS

Citation: [2019] 8 S.C.R. 639 · Decided: 17-05-2019 · Supreme Court of India · Bench: RANJAN GOGOI · Disposal: Appeal(s) allowed

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Judgment (excerpt)

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CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER
v.
UNION OF INDIA AND OTHERS
(Civil Appeal No. 5011 of 2019)
MAY 17, 2019
[RANJAN GOGOI, CJI, DEEPAK GUPTA AND
SANJIV KHANNA, JJ.]
Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007: rr.3, 12 – Appellants had been regularly
importing aluminium waste as a raw material for manufacturing
alluminium alloy – Case of appellants was that respondents-
authorities discarded the declared transactional value and
recomputed the consignment value – Held: As per s.14(1) of the
Customs Act, value of the imported goods shall be the transactional
value of such goods, which means the price actually paid or payable
for the goods when sold for export to India where the buyers and
sellers are not related and the price fixed is the sole consideration
for sale – r.3(1) states that value of the imported goods shall be the
transaction value adjusted in accordance with the provisions of
r.10 of the 2007 Rules – Sub-rule (2) to r.3 states that value of the
imported goods under sub-rule (1) shall be accepted i.e. accepted
by the customs authorities – Where the proper officer is not satisfied
and has reasonable doubt about the truth or accuracy of the value
so declared, it is deemed that the transactional value of such
imported goods cannot be determined under the provision of sub-
rule (1) of r.3 of the 2007 Rules – As per sub Rule (2) of r.12, the
proper officer when required must intimate to the importer in writing
the grounds for doubting the truth or accuracy of the value declared
–  The said mandate of sub-Rule (2) of r.12 cannot be ignored or
waived – In the instant case, the findings in the order-in-original
was that the appellants had declared value of the aluminium scrap
as Rs.81.31 per kg, albeit the contemporaneous import data in the
form of different bills of entry had indicated aluminium scrap values
between Rs. 83.26 to Rs. 120.897 per kg – The order-in-original
also recorded that the imported goods being aluminium scrap was
not a homogeneous commodity and therefore, cannot be evaluated
   [2019] 8 S.C.R. 639
639
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SUPREME COURT REPORTS
[2019] 8 S.C.R.
on the basis of the samples or lab testing and that it was very difficult
to find any identical/similar goods imported in India having same
chemical and physical composition – Therefore, the order-in-original
was flawed and contrary to law for it did not give cogent reason in
terms of s.14(1) and r.12 for rejection of the transaction value as
declared in the bill of entry – Customs Act, 1962 – s.14 – Customs
Valuation (Determination of Value of Imported Goods) Rules, 2007
– rr.3 to 12.
Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007: r.12 – Rejection of declared value – Essential
requirement – Reasonable doubt of proper officer as to transactional
value – The proper officer should have reasonable doubt as to the
transactional value on account of truth or accuracy of the value
declared in relation to the imported goods – Proper officer must
ask the importer of such goods, further information which may
include documents or evidence – On receiving such information or
in the absence of response from the importer, the proper officer has
to apply his mind and decide whether or not reasonable doubt as to
the truth or accuracy of the value so declared persists  – When the
proper officer does not have reasonable doubt, the goods are cleared
on the declared value – When the doubt persists, sub-rule (1) to r.3
is not applicable and transaction value is determined in terms of
rr.4 to 9 of the 2007 Rules – The importer has to be given opportunity
of hearing before the proper officer finally decides the transactional
value in terms of rr.4 to 9 of the 2007 Rules.
Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 – r.12 – Interpretation of – Held: The choice of
words deployed in r.12 of the 2007 Rules are significant and of
much consequence – The Legislature did not use the expression
“reason to believe” or “satisfaction” or such other positive terms
as a pre-condition on the part of the proper officer – The expression
“reason to believe” which would have required the proper officer
to refer to facts and figures to show existence of positive belief on
the undervaluation or lower declaration of the transaction value –
The expression “reason to doubt” as a sequitur would require a
different threshold and examination – It cannot be equated with the

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