2026 (2) TMI 345 - AT - Customs

Customs valuation and antidumping duty on declared import value ruled unsustainable where transaction value not properly established.

Rejection of declared import value and imposition of antidumping duty were contested on the ground that transaction value must reflect the actual price ... Rejection of transaction value under Rule 12 - Redetermination of assessable value and imposition of Anti Dumping Duty on differential amount as specified in Notification No. 10/2010-Cus. - Customs valuation based on transaction value and GATT Article VII principle - Admissibility of electronic evidence and statements recorded under Section 108 in light of Sections 138B/138C - HELD THAT:- As we have noticed, in the instant scenario, the allegation is just the opposite, in the sense that the declared value at which Appellant imported is much higher than the value at which similar or identical products are imported, as claimed by the Respondent-Department, and the purpose of such enhancement of value is attributed to avoidance of payment of ADD, since on no other parameters including Country of Origin, description of goods, etc. there was any allegation of mis-declaration. Further, through the investigation, Respondent-Department had tried to establish that proof of negotiated price was available in the form of electronic evidence and there was a request made for ‘sharing of commission’ from the overseas allegedly dummy Exporter company namely M/s. Sure Horizon of Hongkong, whose company’s seal in the form of a rubber stamp was allegedly seized during the investigation, coupled with statement of witness, namely Mahendra Bhanmal Jain (also Appellant in this case) who was associated with both the Importer Companies as its Director, to the effect that there was difference in declared value and prevalent international market price and landing cost being higher than the sale price would clearly show the modus operandi of the Appellants in enhancing the value of melamine for the purpose of evading ADD. It appears that Appellant-Importer had adequately explained those allegations concerning unusual inflating of value of goods imported but it is not noticeable from the order as to on which grounds, the defence then offered by the Appellants-Importers were not accepted by learned Commissioner of Customs particularly on the points noted above and more particularly on the point of invocation of extended period which Appellant had demonstratively established through cogent documentary evidence that it was well within the knowledge of the Respondent-Department as at the time of release of goods namely melamine, queries were raised at the first check point of assessment of Bills of Entry which were adequately replied back, as revealed from the written submission and also acceptance of Customs duties with CVD and SAD by the Department on the basis of assessable value which was allegedly at higher rate, as revealed from para 22.36 of the Order-in-Original. On close scrutiny of the allegations and submissions referred by the adversaries it can very well be said that certain efforts have been initiated by the Department to establish over-valuation of the goods imported but that can’t itself give rise to a finding that inflating of price was made for the purpose of evading ADD except Section 108 statements, which are not verified by tendering the same before the Adjudicating Authority with right of cross examination available to the Appellant-Importers that was being retracted and communicated to the Higher Authorities and even to the Judicial Authorities before whom prosecution was launched at the earliest possible occasion, no other cogent evidence is available on record to substantiate the allegations of overvaluation to escape ADD. Levy and collection of duty on imported goods for generation of revenue for the country was never the criteria for imposition of ADD, though it might increase the revenue, its sole purpose is to establish a level playing field for domestic producers who would otherwise be unable to compete with the artificially low priced dumped imports. In this contest, it would be worthwhile also to refer to Article 7 of the GATT (General Agreement on Tariffs and Trade) that establishes the fundamental principle for Customs Valuation on the basis of actual transaction value (price paid in a competitive market) and not arbitrary figures or national origin values though, its Article 6 empowers the members to impose ADD on imported goods sold below their normal value (usually home market price value) and therefore, in the instant case when no lower price of dump imports is referred as transaction value in substitution of usual home market price, one price range published by a periodic journal/weekly bulletin i.e. ICIS can’t be taken as transaction value only for the purpose of levy of ADD which would be contrary to the procedure referred in Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and therefore, such an order confirming duty, interest, penalty, redemption fine on any of these Appellants is unsustainable both in law and facts. Hence the order. Issues: (i) Whether rejection of the declared transaction value and downward redetermination of value under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and consequent imposition of Anti-Dumping Duty (ADD) was sustainable; (ii) Whether the electronic evidence and statements recorded under Section 108 justify departure from the transaction value, invocation of extended period and imposition of penalties.Issue (i): Legality of rejection of declared transaction value under Rule 12 and imposition of ADD by relying on alternative price data.Analysis: Rule 12 permits raising doubt as to truth or accuracy of declared value only upon specified conditions (e.g., significantly higher value of identical/similar goods, abnormal discounts, mis-declaration of quality/quantity/description). The rules do not provide a method for downward redetermination of a bona fide transaction value merely because alternative published price data exists. The record showed payment of duties including CVD and SAD on the higher declared value accepted by the department and absence of cogent evidence that the declared higher value was adopted specifically to evade ADD. Reliance solely on a periodic price bulletin (ICIS) to substitute transaction value for ADD imposition was not supported by the valuation rules or the factual record.Conclusion: In favour of Assessee.Issue (ii): Admissibility and weight of electronic evidence, Section 108 statements and effect on limitation/extended period and penalties.Analysis: Electronic records and Section 108 statements were examined but the proceedings lacked satisfactory proof of provenance, proper seizure procedure compliance and opportunity for cross-examination; several statements were retracted and other corroborative evidence was not available to establish overvaluation for purpose of evading ADD. The materials on record therefore did not constitute cogent independent evidence to justify downwards redetermination, invocation of extended limitation or confirmation of penalties.Conclusion: In favour of Assessee.Final Conclusion: The impugned order confirming rejection of declared value, levying ADD, interest, redemption fine and penalties is unsustainable in law and on facts and is set aside with consequential relief.Ratio Decidendi: Absent specified and substantiated grounds under Rule 12, a proper officer cannot disregard a bona fide transaction value and redetermine it downward for the purpose of levying Anti-Dumping Duty; alternative published price data alone does not justify substitution of transaction value or confirmation of associated penalties without cogent corroborative evidence and lawful seizure/admissibility of electronic records.