2026 (2) TMI 1286 - AT - Customs

Transaction value principle: use final invoice and BRC as assessable value; do not replace with reference prices or lab moisture tests.

Where a bona fide transaction value is evidenced by final invoices and Bank Realisation Certificates and no additional consideration or infirmity is ... Determination of transaction value - reliance on Bank Realisation Certificate for assessable value - inadmissibility of Chemical Examiner/CRCL moisture test for fixing exported quantity in ad valorem regime - classification and application of uniform duty rate to iron ore fines versus lumps - remand for redetermination of assessable value and duty - HELD THAT:- We find that the appellants are exporter who have entered into contract for supply of iron ore of certain specific grade and quality and have mutually agreed to certain terms and conditions including testing of Fe content, moisture etc., based on test reports at Discharge Port. Therefore, once the mutually agreed terms and conditions are applied to the consignment and a final invoice is being issued, the payments are made by the foreign importer to the appellant and the amount was realized as reflected in the BRC. All the issues, covered in these appeals have been discussed extensively in the case of Daksh Minerals [2024 (5) TMI 1155 - CESTAT HYDERABAD], Atha Mines [2025 (7) TMI 1725 - CESTAT HYDERABAD], CC Vs Sesa Goa [2014 (8) TMI 213 - CESTAT KOLKATA]. We also find that there is no valid reason for rejecting the transaction value in the first place as the said price was provisional in nature and which got firmed up once the final invoice was issued duly supported by the BRC. We also find that there is a force in the submission that no grounds have been adduced to reject the transaction value, which is required before determining value in accordance with Customs Valuation Rules. Therefore, we do not find any merit in the order passed by the Commissioner (Appeals) upholding the orders of the Adjudicating Authority for either demanding differential export duty or rejecting part of the refund claimed by appellant by adopting the methodology, which is not correct, for finalization of provisionally assessed Shipping Bills. The matters are remanded back to the Original Authority to redetermine the assessable value, based on BRC and final invoice submitted by the appellant in respect of the impugned shipping bills and also to apply only the rate applicable to iron ore fine to the entire consignment. As a consequence, if there is any increase in the refund amount, the sum shall be payable by the Department, as per law. Issues: (i) Whether the assessable value of export consignments determined by rejecting the declared transaction value and relying on contemporaneous prices (Metal Bulletin) is correct; (ii) Whether moisture content as determined by the Chemical Laboratory (CRCL) can be adopted to re-determine export quantity for computing ad valorem duty; (iii) Whether part of the consignment can be treated as iron ore lumps attracting higher basic customs duty under Notification No.56/2010-Cus.Issue (i): Whether the transaction value declared in the final invoice and reflected in the Bank Realisation Certificate (BRC) can be discarded in favour of contemporaneous export prices for determining assessable value.Analysis: The appeals concern exporters who entered into contracts with specified grades and testing at discharge port, with final invoices and BRCs reflecting the realized price. The Tribunal examined authorities and found that absent evidence of additional consideration or infirmity in the transaction, the provisional export price that became firm on final invoice and BRC should not be rejected. Contemporaneous or Metal Bulletin prices are reference points and cannot supplant a bona fide transaction value without first rejecting the transaction value in accordance with the valuation framework.Conclusion: The transaction value as evidenced by the final invoice and BRC must be used for redetermination of assessable value; rejection in favour of contemporaneous prices was not justified. This conclusion is in favour of the appellant.Issue (ii): Whether the moisture content determined by the Chemical Laboratory (CRCL) can be used to re-determine exported quantity for computing ad valorem duty.Analysis: The Tribunal reviewed precedents which hold that CRCL determinations of moisture content are not appropriate for fixing export quantity for ad valorem duty assessment where contractual testing and final invoicing govern quantity and value. The methodology of adjusting gross quantity based on CRCL reports, applied by the authority, was found inconsistent with settled law and the contractual framework between parties.Conclusion: Adoption of CRCL moisture determinations to re-determine export quantity for ad valorem duty was incorrect. This conclusion is in favour of the appellant.Issue (iii): Whether part of the consignment can be treated as iron ore lumps attracting a higher rate of basic customs duty under Notification No.56/2010-Cus.Analysis: On facts, the whole consignment was of the grade contracted and invoiced as iron ore fines. Reliance on treating a portion as lumps to attract a higher BCD rate was contrary to authorities cited which disallow such recharacterisation absent substantiation. The Tribunal followed precedent holding that differential classification and higher duty on part shipments in similar circumstances is not justified.Conclusion: Treating part of the consignment as iron ore lumps for higher BCD under Notification No.56/2010-Cus was not justified. This conclusion is in favour of the appellant.Final Conclusion: The appeals are allowed by remanding the matters to the Original Authority with directions to re-determine assessable value based on the final invoices and Bank Realisation Certificates and to apply the rate applicable to iron ore fines to the entire consignment; consequential adjustments (refund or demand) shall follow as per law.Ratio Decidendi: Where a genuine transaction value is evidenced by final invoice and Bank Realisation Certificate and there is no proof of additional consideration or infirmity, customs authorities must not substitute contemporaneous reference prices or laboratory moisture determinations to re-fix assessable value or quantity for ad valorem duty; such matters require rejection of transaction value first and, failing that, the transaction value governs assessment.