TaxTMI 
TaxTMI 
TaxTMI 
2026 (2) TMI 403
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..... For arriving at this value, the Department claimed that market survey was taken up. In the course of adjudication, the adjudicating authority has modified this value to Rs. 5,22,87,600/-. After this modification, the adjudicating authority has confiscated the goods, granting option to the exporter to redeem the same on payment of Redemption Fine of Rs. 50,00,000/-. He has also imposed penalty on the exporter and on Mr. Dhurv Agarwal. Being aggrieved, the exporter and Dhurv Agarwal have filed their appeals before the Commissioner (Appeals). Vide impugned order dated 07/4/2025, the Commissioner (Appeals) has set aside the Order-in-Original and allowed the appeals filed by the appellants. Being aggrieved, the Revenue has filed their appeals before the Tribunal. 2. The Learned AR appearing on behalf of the Revenue submits that the value adopted by the appellant for the wallets proposed to be exported by the appellant, were very high showing the total FOB value as 6,61,02,740/-. Market Survey was undertaken to gather the correct value of such leather wallets. At the time of market survey even the representative of the appellant exporter was also included in the team visiting the ma....
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....e the impugned Order-in-Original. He prays that the Revenue's appeal may be dismissed. 4. Heard both sides and perused the appeal papers and the documentary evidence brought in by both the sides. 5. 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. 6. As per Rule (3)(1) of CVR 2007, in the normal course, the value of export goods shall be taken as per Shipping Bill. As a matter of fact, Rule 3(2) states that the transaction value shall be accepted even where the buyer and seller are related so long as the relation has not influenced the price. Therefore, in order to invoke the other provisions of these Rules to determine the value, first and foremost, the Revenue is required to come out with plausible explanation as to why the transaction value is to be discarded. From the present proceedings, there is nothing to indicate that the Department has underta....
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.... I find that the adjudicating authority committed fundamental legal errors in rejecting the declared value. The approach adopted violates the basic statutory scheme of customs valuation laid down in Section 14 of the Customs Act, 1962. I place strong reliance on the landmark judgment of the Hon'ble Supreme Court in Eicher Tractors Ltd. vs. CC (2000 (122) ELT 321 (SC)), where Their Lordships laid down the cardinal principle: "The invoice value is presumed to be the transaction value under Section 14 of the Customs Act. The burden to prove otherwise lies entirely on the Revenue. This burden can only be discharged by showing that the transaction value was influenced by extraneous considerations or that the price was not the sole consideration for sale." The department has manifestly failed to discharge this burden. The entire case rests on a market survey that compared non-comparable goods and arithmetic assumptions about profitability, without any concrete evidence of underhand payments, circular trading, or other extraneous factors that would vitiate the transaction value. I further note that the authority disregarded the appellant's consistent business rel....
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....epartment based on evidence, to show that the declared price is not the price at which like goods are sold or offered for sale ordinarily, which words occur in Section 14(1). Lastly, it is important to note that in the above decision of this Court in Eicher Tractors (supra) this Court has held that the Department has to proceed sequentially under Rules 5, 6 onwards and it is not open to the Department to invoke Rule 8 without sequentially complying with Rules 5, 6 and 7 even in cases where the transaction value is to be rejected under Rule 4. In the present case, the show cause notice indicates that the Department had invoked Rule 8 without complying with the earlier rules." 7.4 Further, I find that the appellant has submitted copies of the shipping bills, details of which are tabulated below, evidencing consistent export values of comparable goods. Details of the export data is mentioned below in table-A: TABLE-A Sl. No. Name of the Exporter Shipping Bill No. Shipping Bill Date SI. No. of the item Description of the goods Unit price of the goods (USD) Name of the Buyer Country of Final Destination 1 Ankraj Developer Pvt. Ltd. 195870 ....
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....t SA DE, Mexico) "during proximate periods (November 2022 to June 2024). In this regard, I observe that the adjudicating authority mechanically invoked Rule 6 of the Customs Valuation Rules without first exhausting the primary methods under Rule 3 (transaction value of identical goods) or Rule 4 (transaction value of similar goods). This approach contravenes the mandatory sequential application principle laid down in Rule 12 and affirmed by the HonTale Supreme Court in Eicher Tractors Ltd. v. Commissioner of Customs (2000) 122 ELT 321 (SC), which held that the Customs Valuation Rules must be applied in a hierarchical manner. / further note that the authority failed to provide any cogent reasoning for disregarding the appellant's own export history, which constitutes the best evidence of transaction value under Section 14 of the Customs Act, 1962, as interpreted in Commissioner of Customs v. South India Television (2007) 214 ELT 3 (SC). Relevant portion of the said order is reproduced below: "6. We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual mea....
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....artment has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation 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 under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies o....
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....Dave submitted that in some cases, exporter may get much higher value of the goods than the market price prevailing in the country and therefore, merely because higher export value is mentioned, it cannot be inferred that it is not the true sale consideration......". In view the above discussion, I am of the opinion that the declared price of the impugned goods is fare in regular business parlance and the re-determination of the value of the impugned goods as determined by the lower authority is liable to be set aside and also the question of confiscation of the impugned goods under sections 113(i), 113(ia), and 113(ja) of the Customs Act, 1962 and imposition of redemption fine and penalty thereon does not arise. 7.6. Further I find that the lower adjudicating authority imposed redemption fine and penalty under section 125 and 114(iii) of the Customs Act, 1962 respectively. In this regard, I find on the basis of PARA 8 as discussed above, the goods are not liable for confiscation as the adjudicating authority has committed a fundamental error in rejecting the declared value without properly considering the contemporaneous export data of identical/similar goods exp....