2025 (5) TMI 847 - AT - Customs

Valuation of imported Christmas light - enhancement of value based on NIDB data - HELD THAT - The similar issue has been dealt by this Tribunal in the case of Commissioner of Customs (Port) Kolkata Vs. M/s Bajaj Writing Aid 2023 (10) TMI 1522 - CESTAT KOLKATA wherein this Tribunal has held that the Department has not made any attempt to follow the procedure given under the Valuation (Determination of Value of Importers Goods) Rules 2007 and has simply adopted the NIDB data and selectively enhanced value. As discussed above the Commissioner (Appeals) has given a detailed finding along with reasons while setting aside the Order-in-Original. We do not find any reason to interfere with the same. Accordingly we dismiss the Appeal filed by the Revenue. The enhancement of values in the present case is not sustainable in the eyes of law - the appeal filed by the Revenue is dismissed.

Summary

1. ISSUES PRESENTED and CONSIDERED

The core legal questions considered by the Tribunal in this appeal are:

- Whether the enhancement of customs assessable value based on NIDB data without following the prescribed statutory procedure under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, is legally sustainable.

- Whether the assessing officer was justified in rejecting the declared transaction value of imported goods without valid reasons or a speaking order as mandated under Section 14 of the Customs Act and relevant valuation rules.

- Whether the Revenue's selective adoption of comparative data (NIDB data) to enhance the value constitutes a lawful and fair method of valuation.

- Whether the appellant (Revenue) discharged the burden of proving that the declared transaction value did not represent the full price actually paid or payable for the imported goods.

- The applicability and binding nature of precedents regarding valuation disputes, particularly the principle that transaction value should be the primary basis for customs valuation unless rebutted with cogent reasons.

2. ISSUE-WISE DETAILED ANALYSIS

Issue 1: Legality of Enhancement of Customs Value Based on NIDB Data Without Following Valuation Rules

Relevant Legal Framework and Precedents: The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, prescribe a detailed procedure under Section 14 of the Customs Act for determining the assessable value of imported goods. The transaction value declared by the importer is to be accepted unless there are valid reasons to reject it. Precedents from this Tribunal and the Hon'ble Supreme Court emphasize that the transaction value is the primary basis for valuation and cannot be lightly discarded without following statutory procedure.

Court's Interpretation and Reasoning: The Tribunal noted that the assessing officer did not follow the due procedure under Section 14 and the Valuation Rules before enhancing the value. Instead, the officer adopted NIDB data selectively to enhance the value. The Tribunal relied on earlier decisions where similar approaches were struck down for lack of valid reasons and procedural lapses.

Key Evidence and Findings: The Department relied on NIDB data showing higher values for similar goods but failed to provide complete data to the appellant, only furnishing data for 88 out of 1341 cases. This selective presentation was criticized as a "pick and choose" approach, which is not permissible.

Application of Law to Facts: The Tribunal applied the principle that the transaction value declared by the importer is to be accepted unless the Revenue can prove that it is not the price actually paid or payable. Since the Department failed to follow the statutory procedure and did not produce evidence to rebut the declared value, the enhancement was held to be illegal.

Treatment of Competing Arguments: The Revenue argued that the NIDB data justified enhancement. However, the Tribunal rejected this on the ground that the data was incomplete, selectively used, and the statutory procedure was not complied with. The Respondent's argument that the declared value was correct was accepted due to lack of contrary evidence.

Conclusion: Enhancement of value based solely on selective NIDB data without following statutory procedure is unsustainable.

Issue 2: Validity of Rejecting Transaction Value Without a Speaking Order or Valid Reasons

Relevant Legal Framework and Precedents: Section 14 of the Customs Act requires that if the transaction value is rejected, the assessing officer must record valid reasons and follow the valuation rules. The Tribunal cited precedents holding that rejection without valid reasons or a speaking order is illegal.

Court's Interpretation and Reasoning: The Tribunal found that the assessing officer rejected the declared transaction value without any valid reasons or a speaking order explaining the rationale behind the rejection. The Tribunal emphasized that such rejection is contrary to law.

Key Evidence and Findings: There was no evidence on record indicating that the buyer and seller were related or that the declared price was not the sole consideration for sale. No evidence was produced to show any additional payments beyond the invoice value.

Application of Law to Facts: The Tribunal applied the established legal principle that the transaction value is to be accepted unless valid reasons are recorded. The absence of such reasons or evidence led to the conclusion that the rejection was unlawful.

Treatment of Competing Arguments: The Revenue's failure to produce evidence or reasons was fatal to its case. The Respondent's reliance on the declared invoice value was upheld.

Conclusion: The rejection of transaction value without valid reasons or a speaking order is illegal and liable to be set aside.

Issue 3: Legitimacy of the "Pick and Choose" Approach by Revenue in Valuation

Relevant Legal Framework and Precedents: The Tribunal referred to a decision of the Principal Bench of CESTAT, New Delhi, which condemned the Revenue's approach of accepting higher prices and rejecting lower prices for the same goods as illegal and contrary to valuation rules. The Hon'ble Supreme Court has endorsed this view.

Court's Interpretation and Reasoning: The Tribunal observed that the Revenue's selective use of data to enhance value amounted to a "pick and choose" approach, which is impermissible. The valuation must be based on consistent and fair application of rules without bias.

Key Evidence and Findings: The Department failed to provide complete data and instead relied on selective cases to justify enhancement. This undermined the credibility of the valuation exercise.

Application of Law to Facts: The Tribunal held that such selective adoption of data violates the principle of fair valuation and the statutory scheme.

Treatment of Competing Arguments: The Revenue's argument that the NIDB data justified enhancement was rejected due to incomplete and selective use of data.

Conclusion: The "pick and choose" approach by the Revenue in valuation is illegal and cannot sustain enhancement of customs value.

3. SIGNIFICANT HOLDINGS

- "The assessing officer has rejected the transaction value without any valid reasons and without new procedure as per Section 14 and valuation rules especially, there is nothing on record that the appellant has imported the secondary items but the value was considered for the fresh items. No speaking order was passed for enhancement of value."

- "The enhancement of the value is likely to be struck down and rightly struck down by the Commissioner (Appeals)."

- "The lower authority has adopted a pick and choose approach in the present case which is not the right way to adjudication."

- "Rule 4 of Custom Valuation Rules specifically provides that transaction value should be the basis for the valuation of the consignment under assessment, unless the transaction value is not representing the full price for the reasons mentioned in the Rule itself. Law does not allow a pick and choose approach."

- "There is nothing on record to suggest that the buyer and seller of the goods were related persons or that the price was not for the sole consideration for sale. Therefore, in these circumstances, the enhancement of assessable value is liable to be struck down and set aside."

- "The enhancement of values done in this case is without having any sanction of law and is thus liable to be set aside outrightly."

- The Tribunal upheld the order of the Commissioner (Appeals) setting aside the enhancement of customs value and dismissed the Revenue's appeal.