2019 (12) TMI 1627 - AT - Customs

Appellate tribunal upholds decision on imported urea value dispute, revenue's appeal dismissed

Commissioner of Customs, Tuticorin Versus M/s. KrishakBharati Co-operative Ltd.

The appellate tribunal upheld the adjudicating authority's decision, dismissing the revenue's appeal regarding the rejection of the declared value of ... Valuation of imported goods - rejection of declared value - redetermination of value in terms of Section 14 of the Customs Act, 1962 read with Rule 4 of the Valuation Rules, 2007 - demand of differential duty alongwith interest and penalty - extended period of limitation - HELD THAT:- Revenue before us has not brought anything on record as evidence to support its contentions that there has been no valuation or that the value of the imported goods declared did not represent the true and correct price. On a perusal of the SCN also do not reveal any justification for invoking the larger period. It is well settled that the valuation, if doubted by the revenue, like here, the valuation Rules prescribes guidelines that are to be followed whereby the officer could reject the declared value as not representing the transaction value and proceed to determine the value sequentially in accordance with Rule 4 to 9 of Valuation Rules 2007. Revenue cannot jump at its convenience and propose a demand alleging under valuation. Further, the SCN had only proposed rejection of declared value, but however, while adjudication, Ld. Commissioner has found that there was no suppression of the transactional value in the first place and has proceeded to accept the declared value. Thus, the under-valuation of the imported goods in the case on hand has not at all been established with the support data/evidences, in the first place. Appeal of Revenue dismissed. Issues Involved:1. Rejection of Declared Value of Imported Urea2. Relationship Between GOI and OMIFCO3. Transaction Value and Valuation Rules4. Limitation of Time for DemandDetailed Analysis:1. Rejection of Declared Value of Imported Urea:The Department of Revenue Intelligence (DRI) issued a Show Cause Notice (SCN) proposing to reject the declared value of imported urea and re-determine it under Section 14 of the Customs Act, 1962 read with Rule 4 of the Valuation Rules, 2007. It was alleged that the imported urea should be liable for confiscation under Section 111 (m) and that differential customs duty should be demanded under Section 28 (1), along with interest under Section 28 AA and penalty under Section 112 (a). A corrigendum was later issued to include penalties under Sections 114 A and 112 (a).2. Relationship Between GOI and OMIFCO:The assessee-respondent contended that the Government of India (GOI) and OMIFCO were not related entities for the purposes of Section 14 of the Customs Act, 1962. They argued that the GOI was not a business entity and merely acted as a buyer under a long-term urea off-take agreement (UOTA). The GOI had no equity stake in OMIFCO at the time of the transaction, and the relationship did not influence the transaction value. The adjudicating authority found that although GOI and OMIFCO were related under Rule 2 (2) (i) (ii) and (vi) of the Valuation Rules 2007, there was no evidence that the relationship influenced the value of the imported goods.3. Transaction Value and Valuation Rules:The assessee-respondent argued that the transaction value was based on a long-term price agreement (LTP) between OMIFCO and the GOI, and there was no discrepancy between the price declared and the price paid. The adjudicating authority concluded that the declared value represented the transaction value and that the SCN failed to provide sufficient evidence to justify rejecting the declared value. The adjudicating authority emphasized that the valuation rules require a sequential process to determine value, which the revenue failed to follow.4. Limitation of Time for Demand:The adjudicating authority also found that the demand for differential duty was hit by the limitation of time under Section 28 of the Customs Act, 1962. The SCN did not provide adequate justification for invoking the extended period for demand. The revenue failed to establish any suppression of facts or misrepresentation by the assessee-respondent that would warrant invoking the extended period.Conclusion:The appellate tribunal upheld the findings of the adjudicating authority, concluding that the revenue did not provide sufficient evidence to support its contentions of under-valuation or that the declared value did not represent the true transaction value. The appeal filed by the revenue was dismissed, and the tribunal accepted the declared value of the imported urea. The tribunal also noted that the procedures prescribed under the valuation rules were not followed by the revenue, and there was no justification for invoking the extended period for demand. The appeal was dismissed for lack of merit.