TaxTMI 
TaxTMI 
2026 (8) TMI 340
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....dia) Ltd. did not clear the goods and also refused to honour the bank L.C. Thereafter the exporter of the goods located in China contacted the Respondents i.e. M/s Sun Tex for resale of their goods since it was incurring heavy detention and demurrage charges and also because the goods were getting deteriorated and the exporter from China was not getting any other buyer to buy the goods. The said exporter entered into an agreement in the month of December, 2008 with the Respondents and the Respondents agreed to buy the said goods @ USD 600/MT subject to the condition that payment of all detention and demurrage charges will be born by the Respondents. In this matter the detention and demurrage charges alone compute to USD 505/MT. After the finalisation of the agreement, the Respondents filed bill of entry in the month of January, 2009 declaring assessable value of the goods in question as Rs. 2,92,09,200. 3. Since the contemporaneous unit price of polyester chips was higher than declared unit price, therefore enquiry was raised to the Respondents to justify the declared value. Since the Department was not satisfied with the justification given by the Respondents therefore a person....
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....in question landed at Landmass of India on 23.8.2018 and therefore it became liable for tax of on that date itself. He further submitted that since the earlier importer did not take the delivery of the goods in question and thus the title was left with the overseas exporter/supplier itself. According to him the provision of section 14 of the Customs Act is not applicable in instant matter because the goods in question had landed on 23.8.2008 on Indian landmass and when the goods were not taken for delivery by the 1st importer it were not exported back to China, therefore it implies that while entering into fresh sale deal when the appellant, the goods in question were already in India. He further submitted that there is no clause or provision in the Custom Valuation Rules or Customs Act which prescribes that the value of the imported goods can be negotiated after arrival onto Indian landmass. He also submitted that the value was not enhanced based on contemporaneous value but there is value of import which was taken into account while passing the Order-In-Assessment. He also relied upon the decisions of the Tribunal in the matters of M/s. Steel Strips Ltd. vs. CC, Mumbai [1997(95) ....
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....lted. 7. In order to appreciate the issue involved in this Appeal, it is necessary to go through Section 14 of the Customs Act, 1962 relating to valuation of goods, which is extracted as under:- "Section 14. Valuation of goods. - For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importa....
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.... by notification in the official gazette, fix tariff values for any class of imported goods or export goods, for the reasons contained therein. In view of the above, duty on imported goods is to be charged on the transaction value of the goods and for determining the transaction value, the following ingredients are required:- (i) The price should actually be paid or payable when the imported goods are sold for export to India. (ii) The imported goods should be for delivery at the time and place of importation. (iii) The buyer and seller of the goods are not related. And (iv) The price should be the sole consideration for the sale. 8. It is admitted that in the instant matter earlier the importer was somebody else i.e. M/s. Filatex, although they agreed the price @ USD 1400/MT but did not take the delivery nor honour the bank L.C. They also did not pay any price to the exporter. Therefore neither the transfer of goods from the exporter to the then importer took place nor the goods were delivered to the earlier importer at that time and place of importation i.e. India nor any price was paid or payable by the earlier importer to the exporter. Alt....
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....the Hon'ble Supreme Court has laid down that Taxable event is reached when the goods reach the Customs barrier and Bill of Entry for home consumption is filed. Admittedly in the present case the Bills of Entry were filed by respondent only and that too on 2.1.2009. No Bill of Entry was filed by the earlier importer who neither took the delivery of the goods nor made any payments either to the exporter or to the Customs authorities. Another important aspect of the matter is that if the earlier importer i.e. M/s. Filatex did not take the delivery of the goods in the month of August 2008 when they were imported, the title was remained with the overseas exporter only and it was transferred only in the month December, 2008 or January, 2009 when the respondents entered into contract with the exporter and made the payment to the exporter as well as to the Customs authorities in India and released the goods for home consumption. We are also not ready to accept the contention of learned Authorised Representative that in view of the decision of this Tribunal in the matter of M/s. Steel Strips Ltd. (supra) the value of the goods is the price originally agreed by the original buyer. Because in....
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.... rules framed in this behalf. 7. The rules which have been framed are the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. The rules came into force on 16th August, 1988. Under Rule 3(i) "the value of imported goods shall be the transaction value". "Transaction value" has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4(1) in turn states: "The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules." 8. Reading Rule 3(i) and Rule 4(1) together, it is clear that a mandate has been cast on the authorities to accept the price actually paid or payable for the goods in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exceptions specified in Rule 4(2) namely: "(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - (i) are imposed or required by law or by the public authorities in India; or (ii) limi....
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....nsaction envisages a situation where payment of price may be deferred." 12. The Hon'ble Supreme Court in the matter of Chaudhary Ship Breakers Vs. Commissioner of Customs, Ahmedabad; 2010 (259) ELT 161(SC) while interpreting Section 14 of Customs Act and Rule 3 & 4 of Customs Valuation Rules, 1988 has laid down as under:- "15. According to Section 14(1) of the Act, assessment of customs duty under the Customs Tariff Act, 1975 is to be made on the value of the goods imported. Unless the value of the goods is fixed under the sub-section (2) of Section 14, the value has to be determined under sub-section (1) of the said Section. The value, as per Section 14(1), as it stood prior to its amendment with effect from 10th October 2007, shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation - in the course of international trade. The word "ordinarily" is clarified in the Section itself, which describes an "ordinary" sale as one "where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale...". According to Section ....
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....the Customs Act, 1962 the department can follow Customs Valuation Rules. In the present proceedings before us supplier of goods and importer are not related persons and there is no evidence on record that any amount in excess of what has been declared by the respondents has been repatriated by the respondents. Since the respondents had to incur additional expenses of Detention and Demurrage charges which compounds and computes to USD 505/MT, that was the reason that the price offered by them is only USD 600/MT for which Bill of Entry was filed and according to us that is well reasoned explanation for quoting the price in question. In these circumstances, there is no ground for rejecting the transaction value and we hereby upheld the impugned order of the learned Commission and the Appeal filed by the Revenue is rejected. (Pronounced in Court on 22.01.2019) (Sanjiv Srivastava) Member (Technical) (Ajay Sharma) Member (Judicial) 15.1 I have gone through the order prepared by learned Member (Judicial) but after lot of persuasion, I am not in a position to agree with the same. 15.2 The facts have been narrated by the learned brother. So am not repeating the same. ....
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....egarding the clearance of imported goods and export goods. Reading the provisions contained in the said chapters, it becomes apparent that all goods carried by vessel or aircraft entering from any place outside India has to land the goods at a customs port or customs airport and that too with the permission of the Customs Officer (Section 29). 11. The import manifest of the vessel is required to be delivered to the Customs Officer in terms of Section 30. Unloading of imported goods can take place only after the import manifest has been delivered and an order permitting entry inwards of the vessel has been given by the Customs Officer in terms of Section 31. Section 32 provides that unloading of only those goods is permitted as are mentioned in import manifest. The goods are to be unloaded as per Section 33 only at the place which is approved for that purpose and the same cannot be unloaded except under the supervision of the Customs Officer (Section 34). 12. All imported goods unloaded in a customs area are required to remain under the customs authorities until they are cleared for home consumption or are warehoused or are transhipped (Section 45). The goods can b....
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....on 14 clearly indicates that though the transaction value may be a relevant consideration, the value for the purpose of Customs duty will have to be determined by the Customs Authorities which value can be more, and at times even less, than what is indicated in the documents of purchase or sale. 15. The question as to whether the import is completed when the goods entered the territorial waters and it is the value at that point of time which is to be taken into consideration is no longer res integra. This contention was raised in Union of India v. Apar Industries Limited - 1999 (112) E.L.T. 3 (S.C.) = 1999 (5) J.T. 160. In that case the day when the goods entered the territorial waters, the rate of duty was nil but when they were removed from the warehouse, the duty had become leviable. The contention which was sought to be raised was that what is material is the day when the goods had entered the territorial waters because by virtue of Section 2(23) read with Section 2(27) the import into India had taken place when the goods entered the territorial waters. Following the decision of this Court in Bharat Surfactants (M/s) (Private) Ltd. and Another v. Union of India and Ano....
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....out at the preceding paragraphs from 2 to 4 in the Order No. I/1/2019 dated 22.01.2019 passed by the referral bench. Therefore, the facts are not been repeated here. While hearing the appeal, the learned Members in the Division Bench have raised the difference of opinion with regard to determination of the transaction value of the imported goods i.e., "Polyester Chips Semi Dull Raw White 'A' Grade". The issue for consideration by the referral bench was whether, the unit price of the subject imported goods @ USD 1400/MT as agreed upon by the initial importer M/s Filatex (India) Ltd. with the overseas supplier should be considered as the transaction value; or, at the renegotiated price of USD 600/MT, as per the agreement entered into between the respondent M/s. Sun Tex and the overseas supplier of the goods. 20.1 Learned Judicial (Member) in the said order dated 22.01.2019 has held that the negotiated price paid by the respondent M/s Sun Tex to the overseas supplier should be considered as the transaction value of the imported goods, for the purpose of payment of customs duty, in terms of sub-section (1) of Section 14 of the Customs Act, 1962. In support of such findings, the lear....
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....ia) Ltd., in August 2008 at the agreed upon price of USD 1400/MT; that the said importer, however, did not clear the goods and also refused to honour the bank Letter of Credit (L.C.); that under such circumstances, the overseas supper had contacted the respondent for resale of their goods, which was incurring heavy detention and demurrage charges at the port of import and accordingly, an agreement was entered into for buying the goods @ USD 600/MT. The respondent further canvassed that the detention and demurrage charges alone were computed at USD 505/MT and thus, it was pleaded that sale price agreed between the parties and the value declared @ USD 600/MT is justified for consideration as transaction value. 24. The provisions for valuation of imported goods and export goods are contained Section 14 of the Act of 1962, which reads as under: "Section 14. Valuation of goods" (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export....
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....en paid by the respondent for the benefit of the overseas supplier for sale of the subject goods. The factual matrix narrated above demonstrates that the criteria laid down at (a) to (d) above had been duly fulfilled by the respondent and as such, the price paid by them towards sale of goods by the overseas supplier should be considered as 'transaction value', for the purpose of payment of customs duty. 27. On reading of the findings recorded by the Learned Member (Judicial), I find that he has referred to various judgments delivered by the Hon'ble Supreme Court, in context with the valuation provision in respect of the imported goods and concluded that the price declared @ USD 600/MT in the bill of entry by the respondent had been satisfactorily explained and accordingly, rejected the appeal filed by the Revenue. The said judgments referred to at paragraph 9, 11, 12 and 13 by the Learned Member (Judicial) in the Interim Order dated 22.01.2019 relate to period prior to 11.05.2007, where a deeming provision with regard to the value of imported goods was made in Section 14 of the Act of 1962. As per the 'deemed value' concept, the words "ordinarily sold or offered for sale", used ....
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....hat the price is not sole consideration the transaction value can be rejected and taking the other evidences into consideration the assessable value can be arrived at. Such exercise has not been done in these cases on hand. Therefore, we reject the enhancement of assessable value in respect of the Bills of Entry which are involved in all the appeals being decided and we restore the assessable value as declared by the appellant in said Bills of Entry. 8. In result, we set aside all the impugned Orders-in-Appeal and allow all the appeals. The appellant shall be entitled for consequential relief, if any, in accordance with law." XXX XXX XXX XXX XXX XXX 7. This argument may seem to be attractive, but only when there is a cursory look at the aforesaid observations of the Tribunal that the Assessing Officer did not examine the evidence available with the Department which was necessitated for such a purpose. However, the observations of the Tribunal have to be understood in their entirety and in the context in which these are made. The Tribunal has categorically mentioned that as per the provisions of Section 14 of the Customs Act and the principles lai....
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.... 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 goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these Rules ....
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....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 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 trans....
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..... 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. 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 t....