2026 (2) TMI 403 - AT - Customs

Transaction value and customs export valuation: tribunal upholds invoice value, rejects market survey, and orders release of goods.

Transaction value governs export valuation under Section 14(1); where declared invoice value is questioned the Customs Valuation Rules (CVR, 2007) must be ... Transaction value - Section 14 valuation principles - sequential application of the Customs Valuation Rules - burden on Revenue to displace declared invoice value - market survey as basis for export valuation - confiscation for valuation dispute - redemption fine and penalty - HELD THAT:- In respect of valuation of goods as per Section 14(1) of the Customs Act, 1962, in the normal course, the value of exported goods shall be the ‘transaction value’. In case this value is not found to be correct, the procedure specified under Customs Valuation (Determination of value of Export goods, 2007) (CVR, 2007 in short) Rules, is required to be followed, sequentially. Admittedly, there is no dispute that the goods were to be exported and the overseas importer was required to pay the amount to the appellants banker and then get hold of the documents like export invoice, Bill of lading etc to release the goods. Therefore, the goods were being cleared through proper banking channels only. In case, the transaction value is not acceptable to the Revenue, the Rule 4 to 8 of CVR, 2007 are to be applied in a sequential manner. In the present proceedings, we do not see that this method was adopted by the Revenue. There is no data brought in as evidence towards export of such goods about the same time in respect of the other exporters to the same destination country. The department has directly adopted the market survey method. Even in this survey, they have compared the value of the goods of the manufacturers whereas the appellant was buying from the traders, wherein the cost of procurement would be higher. Therefore, even this comparison is erroneous. Further, we find that the Adjudicating Authority has gone on a different tangent altogether by partly holding that there was error in computing the value under the market survey and has re-determined the per unit value of the goods and added notional profit margin of 10%. We do not find that any provision of this kind is available in the Customs Act, 1962 or CVR, 2007. In the course of hearing, the Learned Counsel has submitted that the goods were not released for export in February 2023 and they are still under custody of the Customs Department. Therefore, the export order got cancelled. Hence, he prays for immediate release of the goods if the Revenue’s appeals are dismissed. He further submits that these goods would not be exported. Thus, we find that Revenue has not made out any case in support of their appeal. We do not find any reason to interfere with the considered decision arrived by the Commissioner (Appeals). Therefore, we dismiss the appeals filed by the Revenue. Considering the request of the appellant, which we find to be reasonable since about 3 years have elapsed from the date of seizure, we direct the concerned authorities to release the goods as soon as the present order is uploaded at the official website of the Tribunal. Issues: Whether the adjudicating authority validly rejected the declared FOB transaction value and consequentially ordered confiscation, redemption fine and penalties, instead of applying the sequential valuation procedure under the Customs Valuation Rules (CVR, 2007), and whether the confiscation and penalties were justified.Analysis: The Court examined whether the Revenue discharged the initial burden to discard the transaction value and whether the valuation rules were applied sequentially. The tribunal observed that Section 14(1) presumes the invoice/declared value as the transaction value and that the Revenue must produce plausible evidence to reject it. The record showed no investigation or contemporaneous export data analysis by the department before relying on a local retail market survey. The market survey compared non-comparable products and manufacturers' prices while the exporter procured from traders; the adjudicating authority also re-determined unit value and added a notional profit margin without statutory basis. The Commissioner (Appeals) had relied on contemporaneous export records (NIDB) showing similar declared values and held that the department bypassed mandatory sequential application of Rules 3-8 and 12 of CVR, 2007, and failed to prove any extraneous considerations vitiating the transaction value. Given absence of evidence of mis-declaration, the confiscation, redemption fine and penalties were treated as consequences improperly imposed for a valuation dispute.Conclusion: The rejection of the declared FOB transaction value, the confiscation order, and imposition of redemption fine and penalties are quashed; the Revenue's appeals are dismissed and the goods are to be released.