2025 (11) TMI 1372 - AT - Customs

Customs value enhancement based only on NIDB data held invalid under Section 14 and Valuation Rules, 2007

M/s. Dayan Enterprises Versus Commissioner of Customs (Port), Kolkata

CESTAT Kolkata held that the customs authorities wrongly rejected the declared transaction value of imported goods and enhanced the value solely on the ... Valuation of imported goods - rejection of transaction value without any valid basis/reasons and without following the due procedure as per Section 14 and Valuation Rules - enhancement of value based on NIDB data - HELD THAT:- There is nothing on record to suggest that the transaction value declared by the appellant was not the price actually paid for the goods when sold for export to India. Moreover, no evidence has been adduced by the Revenue to indicate that any amount, over and above the invoice value, was paid by the appellant to the supplier of the goods. There is also nothing on record to suggest that the buyer and seller of the goods were related or price was not for the sole consideration for sale. It is observed that the Ld. Commissioner (Appeals), though has appreciated the above facts, has remanded the matter to the original adjudicating authority without passing an order on merits. It is found that identical issues pertaining to similar goods imported by various importers have already been decided by this Tribunal in a catena of decisions and thus, the issue is no more res integra, as rightly pointed out by the appellant. In the case of Commissioner of Customs (Port), Kolkata v. Bajaj Writing Aid [2023 (10) TMI 1522 - CESTAT KOLKATA], this Tribunal has observed that 'the Department has not made any attempt to follow the procedure given under the Valuation (Determination of Value of Importers Goods) Rules 2007 and has simply adopted the NIDB data and selectively enhanced value.' Thus, the enhancement of value of the impugned goods in the present case is not sustainable in the eyes of law. Consequently, the impugned order to the extent it has remanded the matter to the original adjudicating authority also set aside - appeal allowed. ISSUES PRESENTED AND CONSIDERED 1. Whether the Assessing Officer lawfully rejected the declared transaction value without adhering to Section 14 and the Valuation (Determination of Value of Imported Goods) Rules, 2007, where there was no evidence that the declared price was not the price actually paid or payable. 2. Whether enhancement of assessable value based on NIDB data is sustainable where the Department relied on aggregated/selected contemporaneous import data but did not produce the complete dataset or follow the procedural safeguards under the Valuation Rules. 3. Whether the Appellate authority was obligated to decide the appeal on merits instead of remanding to the original adjudicating authority where the issue was narrow, recurring, and susceptible of final disposal by the Tribunal. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Lawfulness of rejection of transaction value under Section 14 and Valuation Rules Legal framework: Customs Act valuation regime requires adoption of transaction value as the primary basis; Section 14 and the Valuation Rules prescribe the procedure and grounds for rejecting transaction value (e.g., related parties, payment of additional amounts, non-arm's length transactions). Precedent treatment: The Tribunal has consistently held that mere administrative adoption of higher contemporaneous values without showing statutory grounds to disregard transaction value is impermissible. Prior Tribunal decisions emphasize requirement of speaking reasons and compliance with Rule provisions. Interpretation and reasoning: The record contained no material indicating that the invoice price was not the price actually paid or payable, no evidence of payments over and above invoice value, and no indication of buyer-seller relatedness or lack of sole consideration. The Assessing Officer failed to articulate valid reasons or follow the prescribed procedure under Section 14 and the Valuation Rules before rejecting transaction value. Ratio vs. Obiter: Ratio - Where no material exists to invoke exceptions in Section 14/Valuation Rules, rejection of transaction value is unsustainable. Obiter - Observations on general impropriety of 'pick and choose' acceptance of higher values reinforce the ratio. Conclusion: Rejection of the declared transaction value was without valid basis or due procedure and the enhancement of value on that ground is liable to be set aside. Issue 2 - Use and sufficiency of NIDB/contemporaneous import data to enhance value Legal framework: Enhancement of value by reference to contemporaneous imports or databases (e.g., NIDB) must comply with Valuation Rules and principles of comparison - data must be relevant, comparable, and disclosed; the process must not be selective or arbitrary. Precedent treatment: The Tribunal followed earlier authorities holding selective reliance on higher import prices, without supplying the complete contemporaneous data or demonstrating comparability, is impermissible. The Principal Bench and subsequent Tribunal rulings criticized 'pick and choose' approaches and stressed that Rule 4 prohibits substituting transaction value without statutory justification. Interpretation and reasoning: Department claimed reliance on 1,341 similar imports but furnished only 88 datasets to the importer; no explanation for non-production was given. Selective disclosure and lack of comparability analysis defeat the ability of the importer to rebut the impugned data. The appellate forum's finding that the Department adopted NIDB data without following Valuation Rules was accepted as a valid ground to set aside enhancement. Ratio vs. Obiter: Ratio - Enhancement based on undeclared, incomplete or selectively produced contemporaneous data is unsustainable. Obiter - Emphasis that quality/price variation must be accounted for in comparisons. Conclusion: Enhancement of value using NIDB/contemporaneous import data was unsustainable where the Department failed to produce and rely upon complete, comparable data and follow valuation procedures; benefit of doubt goes to the importer. Issue 3 - Competence of Appellate Authority to decide on merits versus remand Legal framework: Appellate authorities possess quasi-judicial powers to decide appeals on merits where issues are cogent and capable of final adjudication; remand is discretionary and not mandated where records permit final decision. Precedent treatment: The Tribunal has entertained appeals and decided recurring, narrow valuation issues on merits, particularly where a settled line of precedents exists and material on record permits adjudication. Interpretation and reasoning: The lower Appellate authority acknowledged that the Assessing Officer did not follow Section 14/Valuation Rules and recorded factual findings favoring the importer, yet remanded the matter. Given the narrow compass of the issue, the existence of consistent Tribunal precedent, and parties' consent, the Tribunal exercised jurisdiction to decide the appeal finally rather than remit for fresh adjudication. Ratio vs. Obiter: Ratio - Where the issue is narrow, recurring, and record/precedent enable conclusive adjudication, appellate remand is unnecessary and the appeal may be decided on merits. Obiter - Procedural discretion of remand should not be used to perpetuate avoidable litigation delays. Conclusion: Remand by the lower Appellate authority was inappropriate in the circumstances; the matter was amenable to final disposal on merits by the Tribunal. Overall Conclusion / Disposition The enhancement of assessable value was set aside because (a) the Assessing Officer rejected transaction value without valid reasons or adherence to Section 14 and the Valuation Rules; (b) the Department's reliance on NIDB/contemporaneous import data was selective and unsupported by complete comparable data; and (c) the appeal could be finally disposed of on merits rather than remanded. Consequential reliefs were directed as per law.