Revenue cannot reject declared transaction value without evidence of contemporaneous higher-priced imports; duty, interest, confiscation, penalties quashed

CESTAT, Bangalore held that Revenue could not reject the declared transaction value absent evidence of contemporaneous imports of comparable goods at higher prices; without such details the Commissioner's rejection was invalid. Relying on the SC precedent, the tribunal found revision of price, demand for differential duty and interest, confiscation of the imported machine and penalties unsustainable. Decision entered in favor of the importer.

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Issues: Whether the Commissioner rightly rejected the declared transaction value of the imported Computer-to-Plate (CTP) machine and, on that basis, determined assessable value, demanded differential duty and interest, confiscated the machine and imposed penalties.

Analysis: Valuation is governed by Section 14 of the Customs Act and, for the material period, by the Customs Valuation Rules, 1988, under which transaction value determined under Rule 4 is to be accepted unless one of the exceptions in Rule 4(2) is established. Revenue must show cogent reasons, supported by evidence such as contemporaneous imports of identical or similar goods at higher prices, before rejecting the invoice price. In this case, the Commissioner did not establish any exception under Rule 4(2) or produce contemporaneous comparable import evidence; relied on unsigned draft agreement, invoice timing irregularities, price lists and non-comparable imports and altered invoice endorsements without adequate probative findings; and ignored supplier confirmation of amounts received and the appellants' explanation of configuration differences. The collected material did not justify rejection of the declared transaction value and the methods adopted to re-determine value were legally unreliable.

Conclusion: The declared transaction value is to be accepted; the re-determination of price, demand of differential duty and interest, confiscation and penalties are unsustainable and the appeals are allowed in favour of the assessee.

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