TaxTMI 
TaxTMI 
2025 (7) TMI 724
X X X X Extracts X X X X
X X X X Extracts X X X X
....lly owned subsidiary of the appellants and therefore, are related in terms of Rule 2(2) (i) and (iv) of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. Out of the 31 shipments of iron ore exported under 52 S/Bs by the appellants, their overseas related company M/s BBSPL had arranged for vessels in respect of 25 shipments vide 45 S/Bs and for the remaining shipments, the vessels were arranged by other shipping lines. 2.2 In view of the fact that the appellants and M/s BBSPL are related, having some of the common directors, the department had alleged that the freight invoices had reflected the inflated value, and that upon deduction of such freight element from the CFR price of iron ore cargo, it had resulted in reduced Free On Board (FOB) value and accordingly, they had short paid proportionate export customs duty. On the basis of such understanding, the department had issued the Show Cause Notice (SCN) dated 19.10.2016, seeking for recovery of customs duty amount to Rs.79,46,753/- along with interest for the exports taken place beyond the extended period of limitation of five years, on the ground that the appellants had voluntarily deposited such amou....
X X X X Extracts X X X X
X X X X Extracts X X X X
....y, such payment made during the course of investigation should be construed as 'provisional payment' and as such, the appellants should be entitled for refund, if the case is ultimately decided in their favour. He further submitted that the department's stand that such amount was paid voluntarily and not under protest, would not be sustainable, in view of the fact that the impugned order confirming the adjudged demands and acknowledging payment of such amount by the appellants, were not accepted and accordingly the said impugned order was assailed against, by way of filing the present appeal before the Tribunal. Hence, learned Advocate submitted that the payments made during the course of the investigation should be considered as 'payment under protest'. Learned Advocate had stated that the S/Bs in question were finalized and in absence of challenging such final assessment under Section 128 of the Customs Act, 1962, proceedings cannot be initiated under Section 28 ibid for recovery of the demands confirmed in the impugned order. 4. Learned AR appearing for the revenue reiterated the findings recorded in the impugned order. 5. Heard both sides and examined the case records. ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....he has proceeded to decide the case entirely based on the cost sheets for the relevant period, submitted by Shri Mahesh Aggarwal, Executive Director of the shipping line M/s BBSPL to the investigation wing of the department. We find that neither the SCN, nor the impugned order has discussed the aspects with regard to the circumstances, under which such cost sheets were prepared by them and whether the same captured the correct freight element or the inflated cost, as alleged by the department. Since, the statements recorded by the department under summons from various persons have not specifically brought out any evidence of inflated freight charges, in order to reduce the CFR price, in our considered opinion, the charges of undervaluation, with intent to evade payment of customs duty cannot be sustained. 6.4 Valuation of export goods for the purpose of levy of customs duty is contained in Section 14 ibid. It has been mandated that the price actually paid or payable for the goods, when sold for export from India for delivery at the time and place of exportation, shall be the transaction value. It has further been mandated that the buyer and seller should not be related to each o....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d that payment of vessel/freight was considered reasonable to use the book values of international transactions as representative of arm's length price of all such transactions. With regard to the vessel freight (chartering) and vessel freight (trading), it has also been reported that the transactions are at arm's length. We find that such report was submitted by M/s PWC, based on the books of accounts duly audited by the statutory auditors. Thus, the allegation levelled in the impugned order that M/s PWC had not examined the cost-sheets prepared by M/s BBSPL and had only examined the records/documents, which were submitted by the appellants, cannot be appreciated inasmuch as, furnishing of report under the Income Tax statute on the basis of audited books of accounts is a statutory requirement and not an empty formality. Further, the payment made as per the cost sheets submitted by M/s BBSPL, is also forming a part of books of accounts and the report prepared by M/s PWC. Since, the said accounting firm has reported that the transactions are at arm's length, the said report, in our considered view, cannot be discarded without any independent evidence to the contrary. 6.6 The conc....