2008 (4) TMI 7 - SC - Customs

Appeal dismissed; transactional value rejection upheld despite unchanged contemporaneous lower-priced shipments from same supplier; costs awarded

Commissioner of Customs, Mumbai Versus M/s. JD Orgochem Limited

The SC dismissed the importer's appeal with costs, upholding the assessing authority's rejection of the transactional value declared by the importer. The ... Extent of jurisdiction of the assessing officer to discard the transactional value disclosed by the importer - HELD THAT:- By its letter dated 13th November, 1999 the respondent categorically informed the Assistant Collector Customs, Mumbai, that in the international market the raw material prices were declining every day. Before the said authority even instances were given in regard to the subsequent transactions to show that the 'shipper' had further reduced the prices and they have been offering the same material @ US$ 13.50 per kg. Value of the said goods, according to the respondent, was declining because of fact that there is more supply and demand is less in the international market. Yet again the respondent by term of its letter dated 4thJanuary, 2000 (wrongly typed as 4th January, 1999) assigned a large number of reasons how they have got the most competitive offer from the overseas principal as was explained during personal hearing. The assessing authority did not consider the said contentions. The Appellate Authority dismissed the appeal of the respondent. In this case the importer in fact relied on contemporaneous imports from the same supplier, which has not been denied or disputed. Thus, no merit in this appeal. It fails and is dismissed with costs. Issues:1. Extent of jurisdiction of assessing officer to discard transactional value disclosed by importer.Analysis:The case involves a dispute over the jurisdiction of the assessing officer to reject the transactional value declared by an importer. The importer filed a bill of entry for clearance of goods at a declared unit price, which was subsequently challenged by the Deputy Commissioner of Customs. The Commissioner of Customs (Appeals) affirmed the rejection of the declared value, stating that the importer should provide proof of a downward pricing pattern in the international market. However, the Tribunal allowed the importer's appeal, emphasizing that the importer had valid reasons for reduced prices and future imports at even lower prices, which were accepted by customers. The Tribunal held that in the absence of justifiable reasons to reject the declared value, it should not be enhanced.The appellant argued that the price fluctuation between transactions with the same parties was not plausible, placing the onus of proof on the importer. The legal principles governing the determination of transaction value under the Customs Act and Valuation Rules were examined. The Court highlighted the importance of contemporaneous evidence to challenge the declared value and emphasized that the burden of proof lies with the customs authorities. Rules governing the determination of transaction value in the absence of contemporaneous imports were discussed, emphasizing the need for reasonable means consistent with the statutory provisions.The Court criticized the authorities for placing the burden of proof on the importer without providing legal justification or presenting contrary evidence. It was noted that the appellant had provided valid reasons for the price decline, supported by contemporaneous imports from the same supplier. Legal precedents were cited to reinforce the principle that the invoice price should be accepted as the transaction value unless there is concrete evidence of under-valuation. The Court concluded that the appeal lacked merit and dismissed it, with costs awarded to the respondent.