2025 (2) TMI 381 - AT - Customs

Valuation Rule 12 rejection upheld; transaction value replaced by sequential Rules 4-9 valuation using contemporaneous import values

M/s Mittal Appliances Limited Versus The Commissioner of Customs, Indore (M.P.)

CESTAT upheld the adjudicating authorities' rejection of the declared transaction value under Valuation Rule 12 and dismissed the appellant's appeal. The ... Valuation of imported goods - Copper Scrap Birch/Cliff - rejection of declared value - appellant’s contention is that the transaction value in the invoice should have been accepted and assessment should have been finalized accordingly - HELD THAT:- It is found that transaction value is not the only basis for assessment of the duty. The Valuation Rules as well as Section 14 of the Act provide for rejection of transaction value. When rejecting the transactionvalue, the customs officer does not modify the transaction value but only rejects it as the assessable value for determination of the duty. As per Valuation Rule 3, assessment must be done as per the transaction value subject to Valuation Rule 12. In other words, if the transaction value is rejected under Valuation Rule 12, then assessment cannot be done as per transaction value. If it is not rejected under Valuation Rule 12, then assessment must be done as per the transaction value. If the transaction value is rejected under Valuation Rule 12, valuation must be done as per Valuation Rules 4 to 9 sequentially - Rule 4 provides for valuation as per the value of identical goods. If value cannot be determined as per Rule 4 because there are no contemporaneous imports of identical goods then the valuation must be done as per contemporaneous goods of similar case under rule 5. The appellant’s contention is that there cannot be similar goods in scrap. This contention cannot be accepted. In fact, scrap is classified as per ISRI standards and different types of copper scrap have been given different names. In this case the imported copper scrap is birch/cliff. Copper scrap is globally traded and it was also imported by the appellant as per ISRI classification. Therefore, copper scrap birch/ cliff as is known in the market is similar to other imported birch/cliff. The Deputy Commissioner has correctly considered only the value of birch/cliff imported during the relevant period. It is also the contention that there was no evidence that the transaction value was fake or fabricated. We find that as per the Valuation Rules,it is not necessary to establish the invoice was fake or fabricated in order to reject the transaction value. It is also not necessary to establish that the buyer and seller were related. It is sufficient if the proper officer has reasonable doubt for the transaction value to be rejected under Valuation Rule 12. Conclusion - i) The rejection of transaction value under Rule 12 of the Customs Valuation Rules can be based on reasonable doubt about the accuracy of the declared value, without the need to prove fake invoices or relationships between parties. ii) The Deputy Commissioner was correct in rejecting the transaction value and re-assessing the duty as per the values of similar goods and the Commissioner (Appeals) was correct in upholding order of the Deputy Commissioner. The impugned order is upheld and the appeal is dismissed. The appellate tribunal considered an appeal filed by M/s Mittal Appliances Ltd. Pithampur against an order dated 17.06.2021 passed by the Commissioner (Appeals) upholding the order dated 05.02.2021 by the Deputy Commissioner, which rejected the appellant's appeal regarding the self-assessment of duty on imported 'Copper Scrap Birch/Cliff' from the United Arab Emirates. The appellant self-assessed duty based on the declared value but failed to provide evidence to justify the value declared in the Bill of Entry. The proper officer re-assessed the duty based on contemporaneous values of similar imports, leading to the rejection of the declared value under Rule 12 of the Customs Valuation Rules, 2007.The appellant contended that the transaction value in the invoice should have been accepted for assessment, arguing that there was no evidence of fake invoices or relationships between the parties. However, the tribunal found that the rejection of the transaction value under Rule 12 is permissible if there is doubt about the accuracy of the declared value, regardless of the authenticity of the invoice or the relationship between the parties.The tribunal analyzed the Valuation Rules and determined that if the transaction value is rejected under Rule 12, assessment must be done based on the value of similar goods under Valuation Rule 5. In this case, since there were no imports of identical goods, the Deputy Commissioner correctly determined the value based on the value of similar goods, specifically 'Copper Scrap Birch/Cliff' imported during the relevant period.The appellant's argument that there cannot be similar goods in scrap was rejected by the tribunal, as scrap is classified according to industry standards, and different types of copper scrap have distinct names. The tribunal emphasized that the Valuation Rules do not require evidence of fake invoices or relationships between parties to reject the transaction value; reasonable doubt is sufficient for rejection under Rule 12.In conclusion, the tribunal upheld the impugned order and dismissed the appeal, affirming the correctness of the Deputy Commissioner's decision to reject the transaction value and re-assess the duty based on the values of similar goods. The tribunal found that the Deputy Commissioner and the Commissioner (Appeals) correctly applied the Valuation Rules in determining the duty on the imported 'Copper Scrap Birch/Cliff.'This judgment establishes the principle that rejection of transaction value under Rule 12 of the Customs Valuation Rules can be based on reasonable doubt about the accuracy of the declared value, without the need to prove fake invoices or relationships between parties. The determination of duty must be in accordance with the Valuation Rules, with assessment based on the value of similar goods when the transaction value is rejected.