2008 (8) TMI 310 - AT - Customs

Tribunal overturns value rejection, underscores adherence to legal provisions.

The Tribunal concluded that the rejection of the declared value and its enhancement was not in accordance with the law. The authorities did not provide ... Valuation of Imported Goods – Enhancement of Transaction Value – Customs Valuation Rules, 2007 - The AC had called upon the importer to substantiate the declared value in a letter purported to be issued under Rule 12 without furnishing details of contemporaneous imports for similar goods assessed at higher values. In those cases also values declared were in a range including the appellant’s value. As per Section 14, subject to valuation rules, assessable value of imported goods shall be the transaction value, namely the price paid or payable for the consignment for delivery at the time and place of importation, provided that the importer and the supplier are not related and no extraneous consideration had influenced the price – Held that transaction value declared in the instant case has been rejected without the sanction of law in view of the above provisions. We therefore order that the enhancement of value in the instant case was not legal and set aside the impugned order. The appeal is allowed. Issues Involved:1. Rejection of Declared Value2. Application of Rule 12 of Customs Valuation Rules 20073. Determination of Transaction Value under Section 14 of the Customs Act, 19624. Use of Contemporaneous Imports for Valuation5. Legal Precedents Supporting Transaction ValueIssue-wise Detailed Analysis:1. Rejection of Declared Value:The appellants, Pushpanjali Silk Private Ltd., imported Mulberry Raw Silk and declared a unit price of US$21.3 per Kg CIF. The declared value was rejected and enhanced to US$24.07 CIF by the Assistant Commissioner under Rule 5 of Customs Valuation Rules 2007, comparing it to contemporaneous imports. The Commissioner (A) upheld this decision. The appellant contended that the rejection was contrary to legal provisions, as the declared value should be the transaction value under Section 14 of the Customs Act, 1962, provided there was no extraneous consideration influencing the price.2. Application of Rule 12 of Customs Valuation Rules 2007:The appellant argued that Rule 12 was invoked without providing details of contemporaneous imports assessed at higher values. Rule 12 allows the proper officer to ask the importer to substantiate the declared value if there are doubts about its accuracy. However, the appellant maintained that the authorities did not follow the proper procedure, as the declared value was within the range of previous imports by the same importer. The Assistant Commissioner doubted the declared value solely because of higher contemporaneous imports, which is not a valid ground for rejection under Rule 12.3. Determination of Transaction Value under Section 14 of the Customs Act, 1962:Section 14 stipulates that the assessable value of imported goods shall be the transaction value, i.e., the price paid or payable for the consignment at the time and place of importation, provided the importer and supplier are not related. The appellant argued that the transaction value should be accepted unless there is evidence of under-declaration or extraneous influence on the price. The authorities did not provide any such evidence, and the payment was made through banking channels with all relevant documents submitted.4. Use of Contemporaneous Imports for Valuation:The appellant contended that the authorities improperly relied on contemporaneous imports with enhanced values for valuation. The declared value should not be enhanced based on such imports, especially when those values are under dispute or accepted under protest. The proper officer should not reject the transaction value without establishing that it was not genuine. The Tribunal noted that the contemporaneous imports used for comparison were not final transaction values, making it improper to enhance the declared value.5. Legal Precedents Supporting Transaction Value:The appellant cited several legal precedents, including:- CC, Mumbai v. J.D. Orgochem Ltd. - 2008 (226) E.L.T. 9 (S.C.)- CC, Hyderabad v. SPK Electricals - 2008 (224) E.L.T. 563 (Tri.-Bang.)- Oswal Fats & Oils v. CC, Amritsar - 2007 (220) E.L.T. 795 (Tri.-Del.)- Rashesh & Co. v. CC, Mumbai - 2008 (227) E.L.T. 573 (Tri.-Mum)These cases supported the principle that transaction value should be accepted unless there is evidence of under-declaration or non-genuine transactions. The Tribunal agreed with these precedents, emphasizing that the transaction value cannot be rejected solely based on higher contemporaneous imports without establishing that the declared value is not genuine.Conclusion:The Tribunal concluded that the rejection of the declared value and its enhancement was not in accordance with the law. The authorities did not provide sufficient grounds to doubt the genuineness of the declared value. The appeal was allowed, and the impugned order was set aside, reaffirming the importance of adhering to the legal provisions governing the acceptance of transaction value.