2025 (12) TMI 836 - AT - Customs

Tribunal Upholds Gold Import Transaction Value, Quashes Customs Duty Demand Based on Later Remittance and Consignment Allegations

CESTAT (AT), Chennai allowed the appeal, setting aside the impugned Order-in-Appeal and quashing the demand for alleged short-payment of duty. The ... Justification of addition under the guise of short--payment of duty which related to the actual remittances made by the Appellant to its foreign suppliers as compared to the declared/transaction value at the time of import - Correctness of rejection by the Revenue of the declared transaction value by the Appellant on which duty stood paid at the time of import - HELD THAT:- The Appellant cannot have multiple choices, one to suit its claim about ‘sale’ and another to suit its claim of ‘transaction value’ being the one paid when Bills of Entry came to be filed - the claim of the Appellant as to ‘no sale’ at the time of filing Bills of Entry does not carry any merit and therefore the same cannot be entertained. It is an undisputed fact that the duty was paid on the declared value which was the internationally prevailing gold price as on the date of import. The same is also apparently based on the suppliers’ invoices. If there was any doubt on the above prevailing price, then ideally there should have been attempts to find out the transaction value of identical goods sold for export at or about the same time, which is not done, it is not as though there was no such import of gold at or about the same time. Correctness of rejection by the Revenue of the declared transaction value by the Appellant on which duty stood paid at the time of import - HELD THAT:- Any postponement of duty payment cannot have any impact on transaction value since the same is the one admittedly paid at the time of import. When the Appellant claimed that there was no sale at the time of import, but was only on consignment basis, then why no duty was paid when sale took place actually and the supplier was paid the consideration? Therefore, the so--called sale at a later date only determined the actual value which created the liability to the supplier whereas for the purpose of Customs duty, the duty remitted based on the invoice of foreign supplier tantamount to ‘import’ which is the key stage to determine transaction value. The rejection of transaction value was uncalled for; the demand of alleged short--payment made by the Revenue is unjustified and hence, the impugned Order--in--Appeal which has sustained the above demand cannot sustain - Appeal allowed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in the case of gold imported on consignment basis, the subsequent higher remittances made to the foreign supplier (post-import sale proceeds) can be treated as the 'transaction value' for assessment, warranting rejection of the value declared in the Bills of Entry and demand of differential duty. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1: Basis for valuation and justification for rejection of declared transaction value in consignment imports of gold (a) Legal framework discussed 2.1 The Court referred to Section 14(1) of the Customs Act, 1962, defining value of imported goods as the 'transaction value', i.e., the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, subject to prescribed conditions. 2.2 The Court noted Rule 2 and Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, under which the 'transaction value' is the value under Section 14(1), and where requirements of Section 14 are not met, recourse must be taken to the sequential methods under Rules 4 to 9, through Rule 3(4), after rejection of declared value under Rule 12. 2.3 The Court also noticed the RBI 'Master Circular on Import of Goods and Services' (Clause C.12.1) dealing with import of gold on consignment basis, under which ownership remains with the supplier; the importer acts as agent; remittances are made as and when sales take place. (b) Interpretation and reasoning 2.4 The appellant's principal contention was that: (i) the gold was imported on consignment basis; (ii) no 'sale' took place at the time of import; (iii) therefore, there was no 'transaction value' at the time of filing Bills of Entry; and (iv) the subsequent remittances, being linked to later domestic sales, should not be treated as the transaction value for customs purposes. 2.5 The Court held that the appellant's stand was self-contradictory: on one hand asserting absence of 'sale' at import to resist enhancement of value, and on the other hand insisting that the transaction value for duty must be the price declared at the time of filing the Bills of Entry. The Court found that such mutually inconsistent positions could not be accepted. 2.6 It was undisputed that: (i) duty was paid on the value declared in the Bills of Entry; (ii) this value reflected the internationally prevailing price of gold on the date of import; (iii) the value was based on the foreign suppliers' invoices; and (iv) there were no contemporaneous efforts by the Department to find transaction value of identical goods imported at or about the same time to dispute that price. 2.7 The Court reasoned that for customs purposes, the critical event is import, and the value for assessment is the price at the time of import based on the suppliers' invoices. Any postponement of duty payment or later determination of commercial liability between the importer and supplier, by reference to subsequent sale price, does not alter the transaction value relevant for customs assessment. 2.8 The Court observed that if the appellant's own theory of 'no sale at import' were taken at face value, the logical corollary would have been that duty became payable only when the sale actually took place and consideration was paid. However, in practice, duty had already been paid at the time of filing the Bills of Entry, on the invoice value. This supported the view that the invoice value at import constituted the relevant transaction value for customs, and not the later remittances. 2.9 The Court held that the 'so-called sale at a later date' merely fixed the actual commercial liability of the appellant to the supplier; it did not fix or redefine the customs transaction value, which was already crystallised at the time of import on the basis of the suppliers' invoices. 2.10 On this reasoning, the Court concluded that the Department's rejection of the declared transaction value, and substitution of the later higher remittances as the assessable value, was not warranted. The proper officer had not demonstrated grounds to discard the invoice-based value at import, nor sequentially applied the valuation rules 4 to 9 after any valid rejection under Rule 12. (c) Conclusions 2.11 The Court rejected the appellant's plea that there was no 'sale' at the time of import so as to displace the invoice value as the transaction value, but simultaneously held that: 2.11.1 The transaction value for customs purposes remained the value declared in the Bills of Entry based on the suppliers' invoices and prevailing international price at the time of import. 2.11.2 Subsequent higher remittances to the foreign supplier, linked to later domestic sales of consignment imports, could not form the basis for enhancement of assessable value or for demanding differential duty. 2.11.3 The rejection of the declared transaction value by the Revenue was uncalled for; accordingly, the alleged short-payment of duty and the consequent demand were unjustified in law. 2.12 The impugned appellate order upholding the demand was set aside, and the appeal was allowed with consequential benefits as per law.