2026 (1) TMI 437 - AT - Customs

Post-import charges in bullion consignment sales: whether they raise customs transaction value u/s14; duty demand set aside.

The dominant issue was whether post-import remittances/charges paid to an overseas consignor in 'consignment sales' required enhancement of transaction ... Transaction value - “consignment sales” constitute ‘sales’ meeting the requirements of section 14 - imported gold bars from foreign suppliers on consignment sale basis - modus-operandi - demand of differential duty on the basis of charges paid post importation to the overseas supplier - Whether there is any “sale” involved in the impugned imports made by the Appellant and if so, whether the event of “sale” happened after import, as held by the LAA - HELD THAT:- The proper course would have been to determine the value of the impugned goods by proceeding sequentially from rule 4 to 9 of CVR, 2007. Rules 4 and 5 of CVR, 2007 provide for determination of value based on the value of identical goods and similar goods respectively. The Appellant has stated that the value declared in the bills of entry is based on the prevailing London Metal Exchange price, which is the value of goods. In other words, the declared value is the value under Rule 5 of CVR, 2007. The Revenue has not disputed the same. Therefore, the value declared by the Appellant in the bills of entry is found to be the correct value in terms of Section 14 of Customs Act, 1962 read with CVR. Appellant has pleaded that the department should take one uniform stand and therefore, the appellant is eligible for refund in some other cases where the amount remitted subsequent to the import is lower than the value declared in the bills of entry. Though such other imports made by the appellant are not under dispute in this case, it is appropriate to deal with the above argument of the Appellant, especially given the fact that the LAA has accepted the above plea and held that the “appellants are free to file claim for refund in such cases and the same shall be considered as per law”. The correct legal position in such cases is that in those cases also, the value declared by the Appellant in the bills of entry is the correct value in terms of Section 14 of Customs Act, 1962 read with CVR, 2007 as the modus-operandi of the appellant in all such cases of import of gold bars on “consignment sale” basis is that the price declared at the time of import is determined based on the rate published by the London Bullion Market Association nearer to the date of import, which would be tantamount to price of similar goods in terms of Rule 5 of CVR, 2007. Thus, the impugned Order-in-Appeal is set aside and the appeal is allowed with consequential relief(s), if any, as per the law. Issues: (i) Whether there is any 'sale' involved in the impugned imports and, if so, whether the event of 'sale' occurred after importation; (ii) Whether the value declared in the bills of entry represents the correct value under Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007; (iii) If not, what is the correct value of the impugned goods under Section 14 read with the Customs Valuation Rules, 2007.Issue (i): Whether there is any 'sale' involved in the impugned imports and, if so, whether the event of 'sale' occurred after importation.Analysis: The DGOV FAQ Q42 and the Technical Committee guidance treat goods imported on consignment as not constituting a 'sale' meeting the requirements of the Agreement on Customs Valuation; such transactions require application of valuation methods other than the transaction value method. The facts establish import on consignment basis and the declared practice of price finalisation after importation.Conclusion: There was a consignment import and no sale at the time and place of importation; any sale or price finalisation occurred post-import. The conclusion is in favour of the assessee.Issue (ii): Whether the value declared in the bills of entry represents the correct value under Section 14 read with the Customs Valuation Rules, 2007.Analysis: For consignment imports the valuation rules must be applied sequentially from Rule 4 to Rule 9. Rule 5 contemplates valuation by reference to the value of similar goods. The declared values were based on the London Metal Exchange price prevailing near the date of import, which corresponds to the value of similar goods under Rule 5. The revenue did not dispute that the declared values reflect LME prices and thus correspond to Rule 5 valuation.Conclusion: The values declared in the bills of entry represent the correct value under Section 14 read with the Customs Valuation Rules, 2007. The conclusion is in favour of the assessee.Issue (iii): If the declared values are incorrect, what is the correct value under Section 14 read with the Customs Valuation Rules, 2007.Analysis: Having determined that consignment imports require sequential application of the Valuation Rules and that the declared values correspond to Rule 5 (value of similar goods), there is no necessity to adopt post-import remittances as transaction value under Rule 3(1). The alternative valuation methods were not shown to produce a different legally correct value.Conclusion: No re-determination to post-import remittances is required; the declared LME-based values are the correct values. The conclusion is in favour of the assessee.Final Conclusion: The appeal is allowed and the impugned order-in-appeal is set aside, resulting in consequential reliefs as per law.Ratio Decidendi: For consignment imports that do not constitute a 'sale' at the time and place of importation, Customs Valuation Rules must be applied sequentially (Rules 4–9), and valuation by reference to the value of similar goods (Rule 5) is appropriate where the declared price corresponds to prevailing market/similar-goods value; post-import remittances cannot be used as transaction value in such consignment cases.