TaxTMI 
TaxTMI 
TaxTMI 
2020 (5) TMI 154
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.... 7601, since 1993. The appellant uses Aluminium scrap as raw material which is imported as well as procured locally. The appellant, on a regular basis, imports aluminium scrap through various ports like ICD Dadri, ICD Palwal, ICD Piyala and ICD ACTL Ballabhgarh. 3. The appellant purchases aluminium scrap of different grade/ specification from suppliers all over the world. The appellant enquires about the availability and price of aluminium scrap of a particular grade/ specification from suppliers all over the world. By way of reference reliance is placed upon a chat (email) between Mr. Nitin Tyagi of the appellant and a prospective supplier Mr. Jatin Ahuja, which culminated into a contract. After various rounds of negotiations, the appellant enters into a contract with the supplier offering aluminium scrap, as per the requirements of the appellant at the lowest price, amongst the suppliers approached by the appellant, considering the quality aspects. 4. The appellant filed various bills of entry declaring therein the self assessed value, which was the invoice value (transaction value), at which the aluminium scrap was imported. The Assessing officer re-assessed all the impugned b....
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....he Commissioner (Appeals) have erred in relying upon the order of the Adjudicating Authority, which was in respect of earlier imports. The Adjudicating Authority in the earlier order had held - the value of the goods cannot be lower than the constituent materials. That there was reason to doubt the truth or accuracy of the value declared by the appellant. He further urges that such logic adopted by the Court, that value of goods cannot be lower than constituent materials, holds goods for the manufactured article, the cost of which in normal circumstances would not be lower than the cost of material (inputs) of which it is made. 8. The counsel urges, aforementioned logic cannot apply in the facts of the appellant's case, as appellant has imported scrap and not prime metal. The value of scrap is always lower than the value of prime metal. Scrap is after all, obtained from unserviceable, defective or worn out prime metal or on processing of prime metal. 9. Ld. Counsel further urges that the declared transaction value in the bill of entry is the basis for levy of duty, as provided in Section 14 of the Customs Act, which provides that for the purpose of the Customs Tariff Act or any o....
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....ed value' of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4(1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by ....
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....ufficient to reject it as evidence of value of imported goods. Undervaluation has to be proved. 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 must make detailed inquiries, collect material and also adequate evidence. When undervaluation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving undervaluation, if the Department relies on declaration made in the exporting country, it has to show how such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the Courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of undervaluation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is val....