TMI Blog2022 (12) TMI 732X X X X Extracts X X X X X X X X Extracts X X X X ..... the transaction value can be rejected. The grounds on which the proper officer may raise doubts about the truth and accuracy of the transaction value have been illustrated in explanation 1 (iii) to Rule 12. The list is inclusive and not exhaustive. Thus, if the proper officer has reasonable doubt about the truth or accuracy of the value declared, it can be rejected. If this threshold is crossed or is undisputed, then we need to examine which of the Rules 4, 5, 7, 8 or 9 should be applied and if the sequence in which these Rules must be applied has been correctly followed. Both the lower authorities have found that the grounds for rejection of transaction values in respect of some Bills of Entry were absent in the case. We do not find anything in the appeal which convinces us that there was indeed not only a reason to doubt but also reasonable doubt which would warrant rejection of the transaction value under Rule 12. The fact that DRI officers had obtained a certificate from the Chartered Engineer is irrelevant to the case. The Chartered Engineer s certificate determines value through Deductive method (as per Rule 7). Valuation under Rule 7 becomes relevant only if the requ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enue Intelligence [ DRI ]. However, learned consultant for the Respondents specifically submitted that he was not pressing on the competence of the officers of DRI to issue the SCN as that issue is pending before the Supreme Court in a Review Petition filed by the Revenue. He prayed that the appeals may be decided on merits. 4. Officers of DRI received intelligence and suspected that the goods imported by the Respondent importers were mis-declared, undervalued, imported in violation of the restrictions on imports imposed by the Ministry of Electronics and Information Technology [ MEITY ] and initiated investigations and issued Show Cause Notices [ SCN ] proposing to: a) reject the declared values of the imported goods under Rules 12 of the Customs Valuation (Value of imported goods) 2007[ Rules ] and re-determine it under Rule 7; b) confiscate the goods under sections 111(d) and 111(m) for violation of Intellectual Property Rights (Imported Goods) Enforcement Rules, 2007 [ IPR Rules ] ; c) confiscate the goods under sections 111(d) and 111(m) for importing the goods without obtaining an NOC from Wireless Planning and Coordination wing of MEITY; and d) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 10. The Bills of Entry in question in each of the two Appeals are as follows: Appeal No. 51766 of 2021 of Wall Street Impex Bill of Entry where the transaction value was accepted by Commissioner (Appeals) S.No. Bill of Entry Number and date Original authority Commissioner (Appeals) 1 5369883 dated 26.2.2018 Accepted the transaction value Accepted the transaction value Bills of Entry where the transaction value was rejected and matter was remanded for determining the value based on contemporaneous imports by Commissioner (Appeals) S.No. Bill of Entry Number and date Original authority Commissioner (Appeals) 1 5186126 dated 13.2.2018 Re-determined value under Rule 7 Remanded with direction to re-determine duty on the basis of contemporaneous imports 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion Rules ]. Section 14 reads as follows: Section 14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export 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 to India for delivery at the time and place of importation, or as the case may be, 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 subject to such other conditions as may be specified in the rules made in this behalf: Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling charges to the extent and in the manner specified in the rules made in this behalf: Provid ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r instance, if the sale is on Free on Board basis, the costs of transportation to the place of import, transit insurance, etc. will have to be added. c) Price is the sole consideration for sale. d) Some amounts indicated in the first proviso to sub-section 1 of section 14 must be included. e) Valuation will be as per any other conditions as may be specified in the Rules. 13. Thus, the default position is that the value shall be the transaction value. The first proviso to sub-section 1 of section 14 provides for some additions to the transaction value which are not relevant for the present case. The second proviso to this sub-section provides for Rules to be made in this behalf to provide for: a) the circumstances in which the buyer and the seller shall be deemed to be related ; b) the manner of determination of value in respect of goods when there is no sale , c) the manner of determination of value in respect of goods if the buyer and the seller are related , d) the manner of determination of value in respect of goods where price is not the sole consideration for the sale ; e) the manner of determination of value in respect of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he valuation is done as per Rule 3. Rule 11 requires the importer to make a declaration. Rule 12 lays down the provision for rejection of transaction value. Rule 13 provides for interpretative notes for the Rules. 17. To sum up, valuation has to be done sequentially as follows: a) If a tariff value is fixed by the Board, it is the value (subsection 2 of Section 14); b) If no tariff value is fixed by the Board, valuation is as per the transaction value, if necessary, with some additions (as per the first proviso to sub-section 1 of section 14 and as per Rule 10); c) If the transaction value is rejected as per Rule 12 by the proper officer, valuation has to be done as per the value of identical goods (Rule 4); d) If transaction value is rejected and there is no value of identical goods, then it must be as per the value of similar goods (Rule 5); e) If transaction value is rejected and there is no value of identical goods or similar goods, value must be determined through Deductive method (Rule 7) f) If transaction value is rejected and there is no value of identical goods or similar goods and it is not possible to determine value following ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... reasons which may include - (a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed; (b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price; (c) the sale involves special discounts limited to exclusive agents; (d) the mis-declaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production; (e) the non-declaration of parameters such as brand, grade, specifications that have relevance to value; (f) the fraudulent or manipulated documents. 19. Thus, if the officer has reason to doubt the truth and accuracy of the transaction value, he can call for information including documents and evidence. If the information and evidence is presented and after examining it or if no information or evidence as called for is presented, if the proper office has reasonable belief then it shall be deemed that the value cannot be determined as per Rule 3 (i.e., based on transaction value with additions, if necessary). While the of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n of transaction value have been laid down by the Supreme Court in Century Metals as follows: (a) The proper officer should have reasonable doubt as to the transactional value on account of truth or accuracy of the value declared in relation to the imported goods. (b) Proper officer must ask the importer of such goods further information which may include documents or evidence; (c) On receiving such information or in the absence of response from the importer, the proper officer has to apply his mind and decide whether or not reasonable doubt as to the truth or accuracy of the value so declared persists. (d) When the proper officer does not have reasonable doubt, the goods are cleared on the declared value. (e) When the doubt persists, sub-rule (1) to Rule 3 is not applicable and transaction value is determined in terms of Rules 4 to 9 of the 2007 Rules. (f) The proper officer can raise doubts as to the truth or accuracy of the declared value on certain reasons which could include the grounds specified in clauses (a) to (f) in clause (iii) of the Explanation. (g) The proper officer, on a request made by the importer, has to furnish and int ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... basic mobile game hard massager, Decon Copper, Zabra Wireless Buds, Air Humid-diffuser/Airdiffuser and Laptop bag, etc. for which no contemporaneous data has been provided by the importer . It has been recorded by the investigating authority in paragraph 16 of the Show Cause Notice that no data of contemporaneous import of impugned goods were available for these items, therefore, valuation provided by the Chartered Engineer ought to have been considered by the Commissioner (Appeals). 27. We find that as per Rule 3(2), if the value cannot be determined based on the transaction value (with adjustments as per Rule 10), then the value should be determined sequentially through Rules 4 to 9. The only exception to this sequentially determination is provided in Rule 6 according to which, at the option of the importer, Rule 8 can be resorted to before Rule 7. It needs to be pointed out that this option is with the importer and not with the assessing officer. 28. As per Rule 4 the value shall be value of contemporaneous imports of identical goods and if such a value is not found, then as per Rule 5, the value shall the be the value of contemporaneous imports of similar goods. 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