TMI Blog2006 (3) TMI 393X X X X Extracts X X X X X X X X Extracts X X X X ..... the original authority determined the value on the basis of the Chartered Engineer s valuation. He stated that the Chartered Engineer s valuation is fair enough to be adopted for the purpose of calculation of duty. He has further stated that hence there is no reason for re-determination of correct assessable value in terms of the CEGAT order. The original authority confiscated the impugned goods under Section 111(m) of the Customs Act, 1962. He gave an option to the respondent to redeem the said goods on payment of a fine of Rs. 3 lakhs under Section 125 of the Customs Act, 1962. He imposed a penalty of Rs. 1,50,000/- under Section 112 of the Customs Act, 1962. The respondent approached the Commissioner (Appeals), who set aside the order of the original authority and allowed the appeal of the respondent. The order of the Commissioner (Appeals) is under challenge by the Revenue on the following grounds:- (i) The finding of the Commissioner (Appeals) that no Show Cause Notice was issued is not acceptable for the reason that the Show Cause Notice was dispensed with as per importer s request letter dated 19-10-2001, which has already been brought out at para 7 in the OIO. The do ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The grounds for rejecting the transaction value were thoroughly discussed in the order-in-original after hearing the party during the personal hearing dt. 29-10-2001. The valuation was arrived at by referring the matter to the Chartered Engineer in terms of Para 39 of Chapter IV of Appraising Manual (Vol-I). The importer has already responded to the said certificate. (vi) The finding of the Commissioner (Appeals) that the original authority has not given any finding in terms of the Customs Act for rejecting the Transaction Value is not acceptable as the Adjudicating Authority, in para 27 of his order, discussed the reasons for rejecting the value under Rule 4 and the inapplicability of subsequent Rules 5 to 7A. Further, the order adduced the grounds for adopting the Chartered Engineer s Value, in terms of para 39 of Chapter IV of Appraiser s Manual Vol-I. When the Transaction Value is rejected on the detailed grounds, the onus shifts on to the importer, to substantiate the declared value with documentary evidence. In the instant case, the importer has not discharged this burden cast on him. Therefore, the order of the Adjudicating Authority merits acceptance. 3. The learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 6, 6(a), 7, 7(a) are not applicable to the facts of the case and whether the valuation has been arrived in all these rules or under Rule 8 thereof. It has also been observed that the order is silent about the reasons for discarding Rule 4 itself. The above infirmities in the Commissioner s order were pointed out by the CEGAT. In spite of that, the Original Authority, in the de novo order, says that there is no reason for re-determination of correct assessable value in terms of CEGAT order. This is a very clear example where the de novo order disregards the direction of the CEGAT and confirms the first order, which was set aside by the CEGAT. Further, this indicates the scant respect with which CEGAT s orders are treated by the Revenue authorities. The Commissioner (Appeals), by following the Apex Court s ruling in Eicher Tractor case, held that there is no ground for rejection of Transaction Value, as no infringement of any of the special circumstances particularised in Rule 4(2) has been alleged in the Show Cause Notice. Further he has observed that Rule 10A has also not been invoked in the Show Cause Notice. In view of the above points, he has allowed the respondent s appeal. Aga ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 9-2-1998. A careful reading of Rule 10A indicates that the proper officer should have reason to doubt the truth or accuracy or the value declared by the importer. He may ask the importer to furnish information including documents or other evidence. After receiving such information or in the absence of response from the importer, if the proper officer still has reasonable doubt, then, it shall be deemed that the value of such imported goods cannot be determined under the provisions of sub-rule (1) of Rule 4. To put it differently, Rule 10A enables the proper officer to reject the Transaction Value on reasonable grounds. It is not an arbitrary decision. Revenue has to do thorough investigation before rejecting the Transaction Value. Once the Transaction Value is rejected, the Customs Authorities have to necessarily go through sequentially Rules 5 to 8. It would be very instructive to go through WTO case study on the application of decision 6.1 (equivalent to Rule 10A) for rejection of Transaction Value. Case Study 13.1. Application of Decision 6.1 of the Committee on Customs Valuation Facts of transaction: 1. Company ICO, in country I, imported 2,000 (two thousand) units of c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Customs administration searched for suppliers on the Internet and found many offers for the sale of identical goods, whose retail sale prices for export were between 123.99 c.u. and 148.00 c.u. 7. The Customs administration notified ICO, in writing, that it had reasons to doubt the truth of the declared transaction value based on the facts set out above, but primarily based on the low value. The administration asked the importer to present any further evidence, i.e., commercial correspondence and/or any other document confirming that the invoice price was the total price actually paid or payable for the imported goods. 8. ICO replied that: (i) all the particulars of the transaction had been detailed in the commercial invoice supplied; (ii) there was no special trade condition such as those referred to in Article 1 of the Agreement applying to the transaction; (iii) the transaction was based upon an ordinary offer by XCO; (iv) there was no written contract of sale and no commercial correspondence; (v) the sale was settled by telephone. 9. The Customs administration decided to carry out an audit on the premises of Company ICO. At its first visit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... invoice could constitute sufficient proof of the truth or accuracy of the declared value subject, of course, to Article 17 of the Agreement. 16. In accordance with Decision 6.1 of the Committee on Customs Valuation, where the Customs administration has reason to doubt the truth or accuracy of a declared value, it may ask the importer to provide further explanation, including documents or other evidence, that the declared value represents the total amount actually paid or payable for the imported goods, adjusted in accordance with the provisions of Article 8. 17. In this case, due to the fact that the declared value was substantially lower than the declared values of identical goods imported by nine other buyers at or about the same time, the Customs administration had reason to doubt the truth or accuracy of the declared value as reflected in the commercial invoice. Therefore, in accordance with Decision 6.1, the Customs administration properly asked the importer to provide further evidence to confirm that the declared value was the total price actually paid or payable for the imported goods, adjusted in accordance with the provisions of Article 8. 18. In such cases, both p ..... X X X X Extracts X X X X X X X X Extracts X X X X
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