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M/s S.M. Niryat Pvt Ltd. Versus CC, Visakhapatnam

2016 (9) TMI 930 - CESTAT HYDERABAD

Enhancement of assessable value of export - Fe percentage content in the ore - Fe content as per invoice - Fe content as per Customs Laboratory Report - rule 6 of CVR - CBEC Board issued Circular no. 12/2014 Cus-dated 17.11.2014 in respect of valuation of Iron Ore - Held that: - the test reports of Custom House laboratory have been issued around a month after filing of the shipping bills. It is been consistently held that time factor is important in testing such samples, since there would result .....

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d values since the invoice amount in each case was realized as per the BRCs - the loading of assessable value found to be arbitrary and without any basis. - Appeal allowed - decided in favor of appellant. - C/3499-3501/2012, C/20714/2014 & C/20820-20822/2014 - FINAL ORDER No. A/30704 TO 30710/2016 - Dated:- 5-8-2016 - Ms. Sulekha Beevi, C.S. Member (Judicial) and Sh. Madhu Mohan Damodhar, Member (Technical) Sh. Pradyumna G.H, Advocate for the Appellant Sh. P.S. Reddy, Assistant Commissioner .....

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d percentage of moisture; At the time of provisional assessment itself the value was enhanced to USD 120 PDMT and the appellant was required to furnish Provisional Duty (P.D) Bond and Revenue Deposit towards the differential customs duty computed on the enhanced value; As per the final invoice submitted by the appellant, the Fe content was 57.12% and the unit rate @ USD 114 PDMT; The Bank Realization Certificate is also per the final Invoice i.e @ USD 114 PDMT; Fe content as per Customs Laborato .....

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determined as per Rule 4 to 6 of CVR sequentially; However, Rule 4 of CVR was discarded on the ground that it was not technically feasible to find value of comparable goods/contemporaneous exports; Rule 5 of CVR was discarded on the ground that it is not possible to arrive at computed price of the goods; The price has value of the subject goods has ultimately determined under rule 6 of CVR considering Fe content of 58.8% as per the Custom House Lab report as also taking into consideration one of .....

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cate is also per the final invoice. However, according to the department the Fe content as per Customs Laboratory Report was found to be 61.8%. According to the order passed by the Deputy Commissioner, value of USD 150 PDMT being the contemporaneous export value of iron ore fines having Fe content of 62 is liable to be taken for determination of value. (iii) Appeal No. C/3501/2012 The appellant filed a Shipping bill for export of iron ore fines declaring it to be 61% Fe content and unit rate of .....

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opted at the time of provisional assessment has to be taken for the purpose of final assessment taking on the basis of certain contemporaneous exports; (iv) Appeal No C/20714/2014 The appellant filed a Shipping Bill for export of iron ore fines declaring it to be 56% Fe content and unit rate of USD 80 PDMT; The Shipping Bills were assessed provisionally subject to the outcome of the final test report; The transaction value was not accepted by revenue and the shipping bill was assessed at USD 90 .....

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lant filed a Shipping Bill for export of iron ore fines declaring it to be 53% Fe content and unit rate of USD 70 PDMT; The Shipping Bill filed by the appellant was assessed provisionally subject to the outcome of the final test report; The Bank Realization Certificate was also per the final invoice; The Fe content as per the customs Laboratory report was found to be 52%; Declared unit price accepted after holding that there was no documentary evidence to prove that the appellant had received ex .....

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Certificate was also per the final invoice; The Fe content as per the Customs Laboratory Report was found to be 54.20%; Assessment of the shipping was finalized as per the initial declared price but rejecting the penalty imposed by the buyer considering the lesser Fe content; (vii) Appeal No C/20822/2014 The appellant filed a Shipping Bill for export of iron ore fines declaring it to be 54% Fe content and unit PRICE of USD 75 PDMT; The Shipping Bill filed by the appellant was assessed provision .....

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ting authorities in these cases have inter alia arrived at the assessable value based upon the Fe percentage content in the ore. In appeal, the Commissioner (Appeals) upheld the orders passed by lower authority and dismissed the appeals of the appellant. The appellant is thus before the Tribunal. 3. The Learned Counsel for the appellant Sri. Pradyumna G.H. reiterated the grounds of appeal and in particular put forward the following submissions: a) As per Section 14 of the Customs Act, 1962 " .....

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pect of the goods exported was not the actual price paid by the buyer and that the appellant had received consideration over and above the price declared in the final invoice and/or the proceeds shown in the Bank Realization Certificates (BRC). c) Further as per Rule 3 of Customs Valuation (determination of Value of Export goods) Rules, 2007 subject to the provisions of Rule 8 of the said rules the value shall be 'transaction value'. In other words, to reject the transaction value, the r .....

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parable commercial transaction were assessed was noticed or significantly higher value compared to the market value of goods of like kind and quality at the time of export was noticed or there was misdeclaration of goods in parameters such as description, quality, quantity, year of manufacture or production. e) The CBEC Board has also issued Circular no. 12/2014 Cus-dated 17.11.2014 in respect of valuation of Iron Ore, however, the instruction thereof have not been followed in the impugned order .....

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s as under: The Board has received references relating to the valuation of iron ore entered for export. The matter has been examined. 2. It has been reported that Iron ore, by its nature, undergoes a change in moisture and Fe content with the passage of time including during transport. The iron ore is tested both at the load port and at the port of discharge for ascertaining its quality and price. The commercial contracts governing its sale, often, contain provisions to adjust the amount payable .....

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of iron ore, fines or pellets, samples shall be drawn in the presence of Customs by following the procedure laid down by the Bureau of Indian Standards for drawal of samples of Iron ore, fines and Iron ore pellets and sent for testing. (b) The declared value of the export goods, shall be scrutinized in relation to the provisional invoice, contract, weight, price, etc., by the proper officer in terms of the provisions of Section 14 and the Customs Valuation (Determination of Value of Export Good .....

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the declared price, the proper officer may proceed to finalize the provisionally assessed shipping bill in terms of the provisions of Section 14 and the Customs Valuation (Determination of Value of Export Goods) Rules, 2007. (d) In cases where the load port test report and discharge port test report show a variation, so as to impinge upon the price, the proper officer shall proceed to re-determine the value of the goods in terms of Customs Valuation (Determination of Value of Export Goods) Rule .....

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ed within 30 days of the receipt of all documents. However, this time limit shall not apply to cases under investigation for related party transactions, which shall be governed by the circular relating to investigations by SVBs. 4. The Custom Houses shall monitor receipt of Bank Realisation Certificates for the purposes of comparison with the final invoices submitted by the exporter to satisfy the accuracy of assessed values. 7. It is evident that Board have issued the Circular on account of var .....

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. Viewed in this light, the enhancement of assessable value in these cases are not tenable for the following reasons: (i) In all these cases, the difference in Fe content values found at the load port and that found at the port of discharge by Custom house Laboratory, are definitely within acceptable tolerance limits, the highest percentage difference being just -% as is evident from the following table. Sl.No Appeal No. Fe Declared (%) As per Dept 1. 3499/2012 57.12 58.8 2. 3500/2012 61-62 61.8 .....

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oner of Cus (Exp) Goa vs V.G.M. Exports reported in 2013(291) ELT 572(Tri-Mum), the relevant portion of which is reproduced below: 3. The contention of the Revenue is that value has to be arrived at on the basis of load Port analysis and not the discharge Port analysis. The learned Dy. Commissioner (AR) appearing for the Revenue reiterates the grounds of appeal stated in the appeal memorandum. 4. The learned Counsel for the respondent submits that they have discharged the export duty liability o .....

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ms Tariff Act, "the value of the exported goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale." 6.2 1t is not the case of the department that the buyer and seller are related. It is also not a case of the department that the respondent h .....

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isposed of. (iv) In the instant appeals, it is uniformly seen that the test reports of Custom House laboratory have been issued around a month after filing of the shipping bills. It is been consistently held that time factor is important in testing such samples, since there would result increase in Iron content due to evaporation of moisture. For example in the case of Steer Overseas Pvt. Ltd Vs Commissioner Cus & CE, Vizag [2010 (250) ELT 308 (Tri-bang)] the Tribunal has held as follows: 5. .....

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of Natural Justice. Moreover, in testing samples of these types, time factor is important. If there is a long delay in testing the sample, due to evaporation of moisture, the test results would show increase in iron content, which will be unfavorable to the party. In these circumstances, we have to hold that the percentage declared by the appellant and confirmed at the destination port has to be taken as valid. Hence, we allow the appeal with consequential relief. (v) Similar view has been take .....

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r's test result was received. In terms of the said test report, the Fe content in the iron ore was 62.6%. It was 0.6% more than the stipulated percentage of 62% for the concessional rate of duty. Consequently, revenue proceeded against the appellant and demanded differential duty. The appellants are highly aggrieved over the impugned order. The point urged was that the appellant requested for retest of the sample and the same was denied, hence, the Principles of Natural Justice were violated .....

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onth. The percentage of Fe content in the iron ore will not be constant consequent to evaporation. In such circumstances, we are of the view that the certificate produced by the reputed laboratory should be accepted. This issue is also covered in favour of the assessee vide this Bench judgment in the case of Alpine International v. CC, Mangalore - 2008 (224) E.L.T. 331 (Tri,-Bang.). In these circumstances, we allow the appeal with consequential relief. 8. In the impugned orders relating to appea .....

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The quantity involved if comparable would have resulted into Department being on sound footing but these basic things which are sacred to "rule of law" were ignored. Not following Principles of Natural Justice, which is basic to any democratic jurisprudence, is bad in law and ideally I should have remanded the case back to Lower Authority to pass a reasoned order. However, since Act/Rule has not given me power to remand, I proceed to decide the case on merits. From this observation of .....

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