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2023 (5) TMI 616 - AT - CustomsValuation of imported goods - Chips of Sodium Isethionate /Chips of Sodium Isethionate HEBE - appellant related to the overseas suppliers in terms of Rule 2(2) of the Customs Valuation (Determination of Price of Import Goods) Rules 1988 or not - price of goods affected by such relation or not - mis-declaration of imported items found to be soap noodles - rejection of declared value - enhancement of unit price - redetermination of value - HELD THAT - First of all SLI 80 is neither used nor is usable in manufacture of Dove Bathing Bar/ Soap. It is all together a different product than Chips of Sodium Isethionate (CSI) which was imported by Appellant. The Appellant has produced the list of ingredients used for manufacture of CSI/ Dove Noodles which are Sodium Isethionate Zinc oxide Dove Cocount Fatty Acid Vegetable Stearic acid Vegetable Soap base CAPS Triglyceride Route Sodium Chloride Coated Titanium Dioxide EHDP 60% Solution Tetra Sodium EDTA Low Formadehyde and in support of same the appellant had produced the specimen copies of Bills of material of Unilever Manneheim Bill of material pertaining to PT - thus it is very clear that SLI 80 is not usable for manufacture of CSI. Further from the Flow Chart submitted by M/s Galaxy it also appeared that M/s Galaxy were manufacturing SLI 80 as a final product and not intermediary product for manufacture of some other product in continuous process. SLI 80 is altogether different product having different use. Hence being not at all comparable/similar or identical goods there is no ground to make the export value of SLI- 80 as basis to reject the declared value of CSI. The appellant since very long was declaring the goods on the basis of transfer pricing and such method is accepted valuation method under all financial and taxation laws in case where the goods are bought from related person only in a particular case where there is any doubt that such transfer pricing can be rejected. The procedure adopted for arriving at assessable value is nowhere to be found in Customs Valuation Rules. The Appellant has been consistently since last 15 years declaring the value of imported material bases upon cost of raw material manufacturing cost and margin of profit/ mark up. These prices were revised every quarter depending on the change in cost of raw materials or cost of manufacture/mark up and the value was always found to be correct. The description in Bills of Entry was based upon the export invoices Bill of Lading Country of origin certificate transfer pricing certificates and none of them was found to be doubtful. No new evidence was unearthed by the revenue which can doubt or dispel the genuineness of above documents. No comparable goods quantity same country for contemporaneous imports were brought on record. Even as per explanation to Rule 9 of the Customs Valuation Rules itself discards the price of the goods exported to a country other than India hence any arbitrary value adopted by the revenue in this case is absolutely illegal. In such case transaction value mentioned in Bill of Entry cannot be discarded as held by the Hon ble Apex Court in case of CENTURY METAL RECYCLING PVT. LTD. AND ANOTHER VERSUS UNION OF INDIA AND OTHERS 2019 (5) TMI 1152 - SUPREME COURT COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX NOIDA VERSUS M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD. 2018 (12) TMI 738 - SUPREME COURT and COMMISSIONER OF CUSTOMS CALCUTTA VERSUS SOUTH INDIA TELEVISION (P) LTD. 2007 (7) TMI 9 - SUPREME COURT - the method of valuation to enhance the value of the product in question i.e Chips of Sodium Isethionate (CSI) is wholly erroneous and has no basis and hence is not sustainable. The Appellant has rightly declared the goods and undervaluation is not sustainable the duty demand is not sustainable - Appeal allowed.
Issues Involved:
1. Mis-declaration of imported goods. 2. Valuation of imported goods. 3. Rejection of declared value. 4. Confiscation and penalties. 5. Cross-examination request. 6. Applicability of Customs Valuation Rules. 7. Limitation period for duty demand. Summary: Mis-declaration of Imported Goods: The appellant contended that the term "Chips of Sodium Isethionate (CSI)" used interchangeably with "Dove Noodles" was known to Customs Authorities for over 15 years. They argued there was no mis-declaration or suppression as the valuation method based on transfer pricing was scrutinized and accepted previously. The department's claim that SLI-80 exported by Galaxy to Unilever-Buxtehude was used in manufacturing CSI was factually incorrect as evidenced by bills of materials and transfer pricing certificates. Valuation of Imported Goods: The revenue rejected the declared value on the grounds that the appellant was related to the supplier, influencing the value. They adopted the export price of SLI-80 from Galaxy Surfactants to Unilever-Buxtehude for valuation, which the appellant argued was incorrect as SLI-80 is not used in manufacturing CSI. The appellant provided detailed charts and expert opinions to show the significant differences between SLI-80 and CSI. Rejection of Declared Value: The tribunal found that the revenue's method of valuation was erroneous. The declared value based on transfer pricing was consistently accepted for over 15 years. The revenue's approach of using SLI-80's export price to determine CSI's value was not supported by evidence and did not follow Customs Valuation Rules. The tribunal emphasized that no comparable goods or contemporaneous imports were considered by the revenue. Confiscation and Penalties: The tribunal held that the goods were not liable for confiscation under Section 111(m) of the Customs Act as there was no mis-declaration or undervaluation. The duty demand for the period 26.11.2013 to 04.08.2015 was barred by limitation. Consequently, the penalties imposed on the appellant and its Chief Financial Officer were set aside. Cross-examination Request: The appellant's request for cross-examination of persons was not considered by the department, which the tribunal noted as a procedural lapse. Applicability of Customs Valuation Rules: The tribunal found that the revenue did not follow the prescribed Customs Valuation Rules (Rules 4 to 9) while rejecting the declared value. The arbitrary method adopted by the revenue was deemed illegal, and the transaction value mentioned in the Bill of Entry was upheld. Limitation Period for Duty Demand: The tribunal concluded that the demand for the period covered under 106 Bills of Entry out of 886 was barred by limitation and considered to be assessed finally. The remaining Bills of Entry were cleared after verification, and hence, the provisions of Section 111(m) were not applicable. Conclusion: The tribunal set aside the impugned order, allowing the appeals with consequential reliefs, and pronounced the judgment on 02.05.2023.
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