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2024 (4) TMI 47 - AT - CustomsValuation of the export goods on which duty has to be paid - case of the Department is that the contract price entered into by the appellant and its overseas buyer should be determined as per the test report of the Chemical Examiner of CRCL - inclusion of additional consideration for sale or not. Can the transaction value between the buyer and seller be modified by the Customs based on the test report of the chemical examiner of CRCL when the price should be finalised as per the test report of CIQ as per the agreement between the buyer and seller? - HELD THAT:- In this case, the transaction value as per the agreement has an adjustment clause which provided that the value shall be re-determined as per the test report of CIQ. The Customs officers cannot change this transaction value or the stipulation of the test report of CIQ being the determinant of the transaction value. The report of Chemical examiner, CRCL is irrelevant to the transaction value. It will be a different matter if the testing has to be done for some Customs purpose, say, to determine the nature of the goods or if the availability of the exemption notification depended on the Fe content of the export goods, etc. Then, the customs officers can rely on the CRCL’s test report. Thus, the impugned order re-determining the transaction value based on the CRCL test report is not correct and cannot be sustained. The decision of this tribunal in KIMMI STEELS PVT. LTD. VERSUS COMMISSIONER [2019 (11) TMI 741 - SC ORDER] upheld by the Supreme Court has been relied on by the Revenue. That case was completely different although the goods were iron ore fines in that case as well. During the relevant period in that case, export duty was chargeable on weight with a partial exemption notification if the Fe content was below a certain threshold. There were conflicting test reports regarding the Fe content and in the absence of clarity regarding the entitlement to the exemption notification, it was denied. This question is answered in favour of the exporter and against the Revenue. Can the US$ 10 per MT be added as additional consideration for sale in the case? - HELD THAT:- As is evident from the proviso to sub-section (1) of Section 14 and the Export Valuation Rules, unlike in case of import valuation, Commissions paid cannot be added for the purpose of determining the value in case of exports even if it was paid by the exporter - The case of the Revenue, however, is that the amount paid by the buyer to M/s. Reliance, Hong Kong, the agent, is an additional consideration for sale as this amount which was to be paid by the exporter was, instead paid by the importer and thereby the transaction value was reduced. Therefore, according to the Revenue, price was not the sole consideration for sale in this case. If, indeed, the price was not the sole consideration for sale, the transaction value can be rejected under Rule 8 of the Export Valuation Rules and then, it must be redetermined sequentially through Rules 4 to 6. Rule 4 provides for determining the value based on the transaction value of goods of like kind and quality exported at or about the same time. Rule 5 provides for valuation based on a computed value, including cost of production, manufacture or processing of export goods, charges, if any, for the design or brand and an amount towards profit. Rule 6 is a residual Rule to be applied if Rules 4 and 5 do not apply. None of these Rules provide for addition of an amount as additional consideration for sale - this amount of US$ 10 per MT cannot be added as additional consideration for sale to the export price. If there was additional consideration for sale, the proper course would have been to the officer to reject the transaction value and re-determine the value under Rule 4 or Rule 5 or Rule 6 sequentially. Both the questions are answered in favour of the appellants and against the Revenue - appeal allowed.
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