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of <h1>Undervaluation of imported electronic components-insufficient evidence to reject invoice value u/s 14; appeal allowed</h1> Dominant issue: whether imported electronic components were deliberately undervalued such that declared invoice price could be rejected under Section 14 ... Transaction value - undervaluation - Customs Valuation Rules - examination report - burden of proof - intelligence reports - contemporaneous higher-priced imports or other specific incriminating material - Benefit of doubt to importer - statements recorded u/s 108 - Whether the electronic components imported by the appellant from M/s Hopeen Trading Pte Ltd, Singapore was of Phillips brand and had been deliberately undervalued in order to evade customs duty. - HELD THAT:- In the instant case, the allegation is that the imported electronic components were of Phillips brand and therefore, the price at which the same was sold to their supplier should be the price for customs assessment when imported into India. From the perusal of the relevant Section 14 and Customs Valuation Rules, we note that the Department, before rejecting the invoice price, has to give cogent reasons for such rejection, as the invoice price forms the basis of the transaction value. Consequently, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. In the absence of such evidence, invoice price has to be accepted as the transaction value. If the charge of undervaluation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege undervaluation, it would have to undertake detailed inquiries, collect material and also adequate evidence. In this context, we find that the impugned order has merely relied on the transaction price of the sale of goods between M/s Phillips and the supplier M/s Hopeen Trading in order to substantiate their allegation of undervaluation. In the absence of any evidence led by the department that the goods imported were of Phillips brand, as also lack of evidence of contemporaneous imports to establish such undervaluation, the findings of the impugned order cannot be sustained. Thus, we set aside the impugned order and allow the appeal. Issues: Whether the electronic components imported by the appellant were of Phillips brand and, if not proved, whether the departmental re-determination of customs value on the basis of Phillips' invoices can be sustained (i.e., whether the declared transaction value could be rejected for undervaluation).Analysis: The impugned order confirmed duty by correlating invoices between Phillips and the Singapore supplier, but did not produce the contemporaneous examination report recording make/brand at the time of clearance. Examination reports are primary evidence of the nature, brand and other factual attributes affecting value; their absence weakens the evidentiary foundation for concluding deliberate suppression of brand and undervaluation. The statutory scheme (Section 14 and the Customs Valuation Rules) accords primacy to the transaction value declared by the importer and permits rejection only on grounds and with evidence prescribed by the Valuation Rules, including proof of related-party influence or contemporaneous higher-priced identical/similar imports. Absent cogent, corroborative evidence of brand identity or comparable imports, and given the department's failure to produce the examination report or other contemporaneous corroboration, the departmental finding of undervaluation is not sustainable and the benefit of doubt must be extended to the importer.Conclusion: The departmental re-determination of value and the confirmed demand for duty, interest and penalty cannot be sustained; the appeal is allowed and the impugned order is set aside in favour of the appellant.Ratio Decidendi: Where the department seeks to reject a declared transaction value for undervaluation, it must lead cogent contemporaneous evidence (including examination reports or evidence of comparable higher-priced imports) to prove brand, identity or influence on price; in the absence of such evidence the declared transaction value must be accepted and benefit of doubt given to the importer.
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