2024 (9) TMI 543 - AT - Customs

Revenue appeals dismissed on motor controller classification and transaction value enhancement without proper Section 14 basis

Commissioner of Customs (Port) Versus M/s. Aahana Commerce Private Limited

CESTAT Kolkata dismissed Revenue's appeals regarding imported motor controllers and electric tricycle spare parts. The tribunal upheld the declared ... Valuation of imported goods - Motor Controller and different types of Electric Tricycle Spare Parts - enhancement of value - rejection of declared value - change in classification of the item imported. Valuation of imported goods - enhancement of value - HELD THAT:- The NIDB data, which the Revenue has relied upon for enhancing the value, is showing the assessed value and not the declared value. In these circumstances, the value declared in the NIDB data is not acceptable in the absence of NIDB data with regard to the ‘declared’ value. Therefore, the enhancement made by the ld. adjudicating authority is contrary to law and we find that the Ld. Commissioner (Appeals) has rightly struck down the enhancement in price. Rejection of declared value - HELD THAT:- It is observed that the assessing officer has rejected the transaction values without any valid basis/reasons and without following the due procedure as laid down under Section 14 and Valuation Rules, especially when there is nothing on record to suggest that the transaction values declared by the appellant were not the price actually paid for the goods when sold for export to India. There is also nothing on record to suggest that the buyer and seller of the goods were related or price was not the sole consideration for sale - the Ld. Commissioner (Appeals) has given categorical findings to reject the enhancement of value by the assessing officer and there are no reason to interfere with the same - the impugned order passed by the Commissioner (Appeals) upheld, accepting the transaction value declared by the Respondent in the respective Bills of Entry. Classification of the goods imported - HELD THAT:- The Respondent has classified the goods under the Tariff Heading 8503 0090. Customs Tariff Heading 8503 covers “parts suitable for use solely or principally with the machines of heading 8501 or 8502” and Custom Tariff Item 8503 0090 covers “parts of electric motor (other than DC motor)”. The electric motor is classified under the chapter heading 8501.In the Assessment Order, the Ld. Adjudicating authority has observed that the 'Controller' is used for starting and stopping the motor, selecting forward or reverse rotation, selecting and regulating the speed etc. - all these functions are connected to motor and the 'controller' is principally used with the motor to perform these functions. Thus, the 'controller' imported by the Respondent is rightly classifiable under the chapter 8503 - it is also found that the controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry. The correct classification of the goods in question is CTH 8503 0090 - the Ld. Commissioner (Appeals) has rightly held the classification of the impugned goods under CTH 8503 0090 - there are no infirmity in the impugned orders and the same are upheld. The appeals filed by the Revenue are dismissed. Issues Involved:1. Valuation of the imported goods.2. Classification of the imported goods.Detailed Analysis:1. Valuation of the Imported Goods:The Respondent imported Motor Controller and Electric Tricycle Spare Parts. The Assessing Officer reassessed the importation by enhancing the CIF value and rejecting the declared value of the goods. The Respondent cleared the goods under protest and requested an assessment order under Section 17(5) of the Customs Act, 1962. The adjudicating authority passed orders under Section 17(5), which the Respondent appealed against, leading the Commissioner (Appeals) to set aside the assessment orders and accept the declared value.The Revenue argued that the Commissioner (Appeals) failed to appreciate Rule 12(2)(iii) of the Custom Valuation Rules, 2007, which allows the proper officer to raise doubts on the declared value based on higher values of identical or similar goods imported around the same time. The Revenue contended that the transaction value could not be determined under Rule 3(1) of the CVR, 2007, and should be determined sequentially from Rule 4 to Rule 9. The Revenue also argued that the Respondent did not provide substantive documents to support their declared value.The Tribunal found that the NIDB data relied upon by the Revenue showed the assessed value and not the declared value, making it unacceptable for enhancing the value. The Commissioner (Appeals) correctly struck down the enhancement in price, citing that the valuation of similar goods depends on factors like country of origin, quantity, and quality, which were not considered by the lower authority. The Tribunal upheld the Commissioner (Appeals)'s decision, noting that the transaction value declared by the Respondent was genuine and there was no evidence of any additional payment over the invoice value.2. Classification of the Imported Goods:The Respondent classified the goods under Tariff Heading 8503 0090, which covers parts suitable for use solely or principally with the machines of heading 8501 or 8502. The Assessing Officer reclassified the Motor Controller under CTH 8708 9900, arguing that it was a separate device used for controlling various activities in an e-rickshaw, not just the motor.The Tribunal observed that the Controller is used for functions connected to the motor, such as starting, stopping, and regulating speed, making it principally used with the motor. The Tribunal noted that the Controller could be employed in e-rickshaws only when attached to a motor, which has various usages beyond e-rickshaws. The Tribunal found no specific entry for the Controller in the Customs Tariff Act, 1975, and noted that the lower authority did not provide evidence that the goods were parts and accessories of e-rickshaws.The Tribunal held that the goods imported by the Respondent were rightly classifiable under Chapter Heading 8503 0090, as they are parts suitable for use with electric motors. The Tribunal found no infirmity in the Commissioner (Appeals)'s decision and upheld the classification of the goods under CTH 8503 0090.Conclusion:The Tribunal upheld the Commissioner (Appeals)'s orders, rejecting the Revenue's appeals. The declared value of the imported goods was accepted, and the goods were classified under CTH 8503 0090. The appeals filed by the Revenue were dismissed.