Page 183 - ELT_15th June 2020_VOL 372_Part 6th

2020 ] S. MUTHUSAMY v. ADDL. DIRECTOR GENERAL (ADJ.), D.R.I., MUMBAI 861

one that is erected on the foundation of jurisdictional competence which was,
itself, contested and argued upon by the rival sides.
26. As the decision in re Knowledge Infrastructure Systems Private Limited
appears to be of consequence to both sides, it is necessary for us to devote some
space to an elaboration of its applicability. In the normal course, it would be con-
sidered proper for us to extract the relevant portions of the cited decision but we
may, instead, be permitted the privilege of summing those for our benefit here as
one of us was a constituent of the bench which rendered that decision.
27. In that dispute, the adjudicating authority had substituted the de-
clared transaction value, with what, according to his finding, was the original
transaction value. It was not rendered in the context of rejection of declared val-
ue under Rule 12 (or Rule 10A in the predecessor Rules of 1988) of Customs Val-
uation (Determination of Value of Imported Goods) Rules, 2007 with attendant
redetermination under one of the sequentially applicable methods prescribed in
the Rules. The controversy pertained to the alleged attempt by the importer
therein to pass off allegedly sub-standard goods as that of prime quality with
alleged intent to deceive the ultimate consumer and to whisk away the unearned
consideration out of the country. Therein lies the nub in the structured exposition
of the scheme of valuation in re Knowledge Infrastructure Systems Private Limited.
28. The Tribunal, in re Knowledge Infrastructure Systems Private Limited
placed emphasis on nexus as the vitalitas in the enforcement of tax laws. Draw-
ing upon the dissenting judgment in the Tata Iron & Steel Co. Ltd. v. The State of
Bihar [1958 AIR 452] on nexus that was adopted as the correct constitutional in-
tent of levy of sales tax by the Sixth Amendment, the statutory limitation on ju-
risdiction was superimposed with the scheme of Customs Act, 1962 as intended
to deal with ‘imported’ and ‘export’ goods having the especial meaning assigned
to them in Section 2 of Customs Act, 1962. On reading of Section 47 of Customs
Act, 1962 with the restricted window for describing goods as ‘imported’, it was
held that, as the cross-over from being ‘imported’ on clearance for home con-
sumption could be deprived only upon one of two conditions - failure to dis-
charge of duty liability prescribed by law or goods being prohibited - such clear-
ance erases the ‘imported goods’ out of existence except on proving that duty
was short-paid or that the prohibition on the import of goods escaped the atten-
tion of the ‘proper officer’; Section 28 of Customs Act, 1962, for a limited time,
and Section 111 of Customs Act, 1962, without limit, permit restoration of the
tentative clearance for home consumption of goods to that of ‘imported.’ Accord-
ingly, it is not open to re-visit an assessment unless short-paid duty was to be
recovered or prohibition was to be enforced as the nexus with ‘imported goods’
is restricted to these two aspects of clearance.
29. It was further held, in re Knowledge Infrastructure Systems Private
Limited, that the submission of Revenue of Section 111 of Customs Act, 1962 be-
ing a means and an end, all on its own, could not only draw upon the definition
of ‘value’ in Section 2(41) of Customs Act, 1962 for resort to Section 14(1) of Cus-
toms Act, 1962 and Customs Valuation (Determination of Value of Imported
Goods) Rules, 2007 for quantification was not tenable as the ‘valuation’ intended
by the amendment, effected in 1973 to Section 111(m) of Customs Act, 1962 was
not with reference to ‘overvaluation’ alone, as held by the Hon’ble Supreme
Court in Rib Tapes (India) Pvt. Ltd. v. Union of India & others [1986 AIR 2014 = 1986
(26) E.L.T. 193 (S.C.)] and, therefore, not a special law conferring limitless powers
EXCISE LAW TIMES  15th June 2020  183