TaxTMI 
TaxTMI 
2023 (7) TMI 269
X X X X Extracts X X X X
X X X X Extracts X X X X
....hes were conducted in the premises of the appellants and also in the premises of M/s. Ajit Traders on 10.08.2017. At all these premises drums / containers of different weight and size were found with "Aroma Chemical K-100". When those stickers of description were removed another sticker underneath was found, wherein the contents of the container were described as "safranal". Prima Facie, believing the said act as an act of misdeclaration that the chemical was seized: • Nine Drums of 25 Kg. each containing 222.5 Kg. of 'Aroma Chemical K-100' alongwith 450 grams of "safranal" valued at INR. 81,05,586/- were seized from the factory of M/s. Veera Fragrances, Parpad Ganj, New Delhi. • From both the premises of Ajit Traders were found 34 Tin Containers mentioning to contain "Aroma Chemical K-100" valuing at INR.3,09,65,500/- . • From another premises of M/s. Veera Fragrances in Noida 50 tin containers of the impugned Aroma Chemical valuing at INR 4,55,37,000/- were seized alleging the seized chemical as liable for confiscation vide seizer memo dated 10.08.2017. 3. Though the appellants in their defense, mentioned that in the year 201....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rted aroma chemical is the transaction value arrived at after negotiation between the exporter and the importer. The prices got negotiated based on the fact that the contracted quantity ordered was in bulk. It is impressed upon that since bulk orders were placed, the prices got revised by the seller / exporter and the negotiation stands duly confirmed by the exchanged emails between the exporter M/s. Givaudan, Switzerland and the appellant. It is impressed upon that the appellant is also distributor of Givaudan, hence, is a bulk buyer. Thus, the reduction in price was merely a commercial consideration which has wrongly been alleged as an intentional mis-declaration with an intent to undervalue the import. 7. It is further impressed upon that price reduced from 428 USD per Kg. to 408 USD per Kg. even when the goods were imported as "safranal". This price of 408 USD per Kg. remained the same when the Aroma Chemical was imported as "Aroma Chemical K-100". Above all, the Director Mr. Vaibhav Jain has nowhere admitted the undervaluation of the goods. The genuine reason submitted was the maintenance of secrecy in the trade. There is no evidence for any malafide intent on the part....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... The impugned demand was raised and confirmed by rejecting the transaction value of the import on 2 counts:- (1) That when the Aroma Chemical is imported as "safranal" its value has reduced within a very short time alleging the same as an act of under-valuation. (2) The same Aroma Chemical "safranal" has subsequently been imported as "Aroma Chemical K-100" and at still lower prices. Hence, alleging misdeclaration as a cause for under-valuation. 10. The Adjudicating Authority below while confirming both these allegations has rejected the transaction value reassessed it and has confirmed the differential amount to be recovered from the appellants and has also ordered the confiscation of the recovered Aroma Chemical from four of the premises of the appellants. In addition, has imposed penalty on both the appellants. To adjudicate the reasonableness of these findings, we foremost need to look into the definition of transaction value and the procedure for arriving at transaction value. We observe that Duties of customs are levied on goods imported into and exported from India at the rates specified in the Schedules to the Customs Tariff Act, 1975. On some goods, ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ms duty shall be the transaction value subject to five conditions: a) The buyer and seller are not related. b) Price is for delivery at the time and place of importation, i.e., all costs up to the point of import are to be included. For instance, if the sale is on Free on Board (FOB) basis, the costs of transportation to the place of import, transit insurance, etc. will have to be added. c) Price is the sole consideration for sale. d) Some amounts indicated in the first proviso to sub-section 1 of section 14 must be included. e) Valuation will be as per any other conditions as may be specified in the Rules. 12. Thus, the default position is that the valuation has to be done on the basis of the transaction value and not based on any fixed value. The second proviso to sub-section (1) of Section 14 provides for Rules to be made in this behalf to provide for: a) the circumstances in which the buyer and the seller shall be deemed to be related; b) the manner of determination of value in respect of goods when there is no sale, c) the manner of determination of value in respect of goods if the buyer and the se....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ch they supplied the same to the appellants. There are 3 purchase orders:- (1) Purchase order dated 09.12.2015 has two transaction values for the Aroma Chemical imported i.e. @ 428 and 408 USD per Kg. (2) The purchase order dated 27.06.2016 the value mentioned is at the rate of 400 USD per Kg. (3) The purchase order dated 13.12.2016 is at the rate of 380 USD per Kg. 17. We also observe from the extract of Emails placed on record that after receiving the first consignment in February, 2016 there is a common order confirmation for purchase of 5000 Kg. "safranal". However, prior to the said order was completely dispatched there have been exchange of emails for modifying the agreed price at the rate of 428 USD per Kg. to 408 USD per Kg. and based on said communication that the order confirmation got modified with respect to undispatched quantity of "safranal". These observations to our understanding are sufficient to hold that though the time period has been short but there is a reasonable genesis for reduction in price while importing Aroma chemical as "safranal". We also observe a certificate being issued by M/s.Givaudan, the importer, acknowledging the ....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... exceptions, the Customs Authorities are bound to assess the duty on the transaction value. xxx xxx xxx 12. Rule 4(1) speaks of the transaction value. Utilisation of the definite article indicates that what should be accepted as the value for the purpose of assessment to Customs duty is the price actually paid for the particular transaction, unless of course the price is unacceptable for the reasons set out in Rule 4(2). "Payable" in the context of the language of Rule 4(1) must, therefore, be read as referring to "the particular transaction" and payability in respect of the transaction envisages a situation where payment of price may be deferred. xxx xxx xxx 13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar go....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9. In another decision in the case of Commissioner of Customs, Visakhapatnam vs. Aggarwal Industries Ltd. reported as (2012) 1 SCC 186 = 2011 (272) E.L.T. 641 (S.C.) Hon'ble Supreme Court has held as follows:- "10. The law, thus, is clear. As per Sections 14(1) and 14(1A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of 'deemed 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 ....