2023 (5) TMI 616 - AT - Customs

Valuation 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.