Page 185 - ELT_15th June 2020_VOL 372_Part 6th

2020 ] S. MUTHUSAMY v. ADDL. DIRECTOR GENERAL (ADJ.), D.R.I., MUMBAI 863

existing then, that the overvaluation, referred to in amending Section 111(m) of
Customs Act, 1962, was contemplated by the sovereign legislative organ of the
Union for incorporation as justifying the detriment of confiscation. That this was
the interpretation of Revenue too is apparent in the adjudication of the dispute,
that was eventually set aside by the Tribunal in re Knowledge Infrastructure Sys-
tems Private Limited, by refusing to indulge in resort to the Rules though in the
oral submissions such a possibility was argued at length. The penalties under
Section 112 of Customs Act, 1962 in this dispute, a consequence of finding of
overvaluation that assigns a proximate value after resorting to Rule 12 of Cus-
toms Valuation (Determination of Value of Imported Goods) Rules, 2007 without
any record evincing that the importer was the beneficiary of any money flows
except by surmises, are deficient in legal sustenance.
32. In the present dispute, we find that the discharge of onus to estab-
lish misdeclaration is only peripheral as a presumed relationship between the
exporter and the importer was held to suffice for indulging in revaluation.
Though such has not been argued before us, we are of the opinion that even this
relationship between the two has not been tested against the touchstone of Rule
2(2) of Customs Valuation (Determination of Value of Imported Goods) Rules,
2007 and has, instead, relied upon certain presumptions derived from the enun-
ciation in the report of the investigation agency.
33. In these circumstances, it does not behove us to dwell at length on
the logic applied by the adjudicating authority. We, instead, reiterate that the
decision re Knowledge Infrastructure Systems Private Limited on lack of jurisdiction
to take recourse for revaluing of goods after clearance without any duty implica-
tion is one that binds. The argument of Revenue in defence of the order herein
was that detrimental consequence of overvaluation and creation of a purported
cross-border transaction could be visited upon importers with the penal provi-
sions in Section 112 of Customs Act, 1962 and Section 114AA of Customs Act,
1962. It was posited that Section 111(m) of Customs Act, 1962 was specifically
endowed with the provision pertaining to value in order to check overvaluation.
We have no doubt that this was so. However, the Tribunal did not find it justifi-
able for that provision to be invoked when the allegation of overvaluation flows
from a fictional assumption of incorrect declaration incorporated in the valuation
mechanism for the limited purpose of levy of duty. Undoubtedly, overvaluation,
when established with sufficient evidence of money flow to beneficiaries, other
than the seller, would justify the invoking of Section 111(m) of Customs Act, 1962
as enacted by the sovereign Legislature of the Union. Any other circumstantial
evidence which may justify the invoking of the Rules flowing from Section 14 of
Customs Act, 1962 will not suffice for the purpose.
34. In the present dispute, it is not necessary for us to examine the
question of jurisdiction and to assess the extent of conformity of the evidence
with the rigours prescribed in the statute, and of the principles of natural justice,
as has been argued, supported by judicial decisions, on behalf of the appellants.
In addition to the inexplicability of resort to the Customs Valuation (Determina-
tion of Value of Imported Goods) Rules, 2007 discussed supra, we find that the
penalties have been imposed under Section 114AA of Customs Act, 1962 with
reference to the value adopted for the purposes of redemption of the confiscated
goods and that penalty under Section 112 of Customs Act, 1962 has stemmed
from confiscation for alleged misdeclaration of value. It is only logical and ra-
tional to expect the equal application of value, assuming that adoption of such
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