TMI Blog2024 (2) TMI 682X X X X Extracts X X X X X X X X Extracts X X X X ..... t has failed to warrant reasons for rejection of transaction value in the first place. It is observed that rejection of value declared on a Bill of Entry is a serious action that should be supported by compelling provision, evidence and justifiable reasons. Rule 5 is to be read subject to Rule 3 which should be read with Rule 12 of the Customs Valuation Rules, 2007 which brings us down to the very essence of the Valuation Rules that in order to re-determine assessed value, transaction value should be rejected based on cogent reasons and evidence. The transaction value of the appellant has been rejected merely on the ground that similar goods have been imported at higher value at various other custom stations without providing any evidence in support of their claim and failing to examine the applicability of Rule 12 of Customs Valuation Rules in the present case. It is found that neither the Adjudicating authority nor the Commissioner (Appeals) have established such circumstances as prescribed by law for rejection of transaction value and rejected it merely on the ground that goods have been imported at a higher value without properly examining the applicability of Rule 5 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... signment was imported by M/s. KJ Imports and Exports of Ahmedabad from Hong Kong via Mumbai that the said goods were seized in Mumbai alleging undervaluation. Based on this seizure at Mumbai an investigation was undertaken at Ahmedabad for past imports undertaken by the said importer. That based on a comparison of the value of imported Flash memory cards at various other Customs station it was alleged that the value declared by the Appellant was grossly undervalued. 1.1 The original adjudicating authority rejected the value declared by the appellant and re-determined the value of goods as per NIDB data under Rules of Customs Valuation Rules, 2007 and assessed bills of entry. Therefore, the Appellant challenged the assessment before the Commissioner (Appeals). However, the Learned Commissioner (Appeals) vide impugned Order-In- Appeal No. (AHD/CUSTM/000/APP/372 15 -16) dated 29.02.1026 has upheld the order of original adjudicating authority. Aggrieved by the said Order in Appeal, the Appellant has filed this appeal. 2. Shri Vikas Mehta, Learned Counsel appearing on behalf of the Appellant submits that the lower authorities have erred in invoking the provisions of Rule 5 of Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 has held the good liable for confiscation and imposed Penalty on the Appellant. He submits that the adjudicating authority has levied the said imposition without authority of law as the past imports were called upon for investigation which were cleared after examination without any objection so being raised in terms of mis-declaration in the first place. He has placed reliance on the following decisions:- Metro Tyre vs. Collector 1994 (74) ELT 964 West Cost Papers Mills Ltd. vs Commissioner 2001 (130) ELT 259 Liladhar Pasoo Forwarders P. Ltd vs Commissioner of Customs 2000 (122) ELT 737 (T). Hindustan Steel Ltd. vs State of Orissa AIR 1970 SC (253) Akbar Badruddin Jiwani vs Collector of Customs 1990 (47) ELT 161 (SC) Hari Impex vs. Collector of Customs 1999 (105) ELT 503 Amba Exports vs. Commissioner of Customs 2006 (199) ELT 734 Asha Enterprises vs. Collector of Customs 1998 (100) ELT 441 Eicher Motors Ltd. vs Union of India 1999 (106) ELT 3 (SC) 3. Shri Prashanth Tripathi, Superintendent (AR) appearing on behalf of the Revenue has reiterated the findings of the impugned order. 4. Heard both the sides and perused the re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hich the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below. (3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. (b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the sa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the importers. (iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain 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 misdeclaration 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. From a cursory reading of the above provisions, it is evident that Rule 5 is to be read subject to Rule 3 which should be read with Rule 12 of the Customs Valuation Rules, 2007 which brings us down to the very essence of the Valuation Rules that in order to re-determine assessed value, transaction value should be rejected based on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... payable for the goods in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exceptions specified in Rule 4(2), namely :- (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which - i. are imposed or required by law or by the public authorities in India; or ii. limit the geographical area in which the goods may be resold; or iii. do not substantially affect the value of the goods; (b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued; (c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3). 7. These exceptions are in expansion and explicatory of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India. If the phrase the transaction value used in Rule 4 were not limited to the particular transaction, then the other Rules which refer to other transactions and data would become redundant. 12. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules. 13. The Assistant Collector in this case determined the value of the imported goods under Rule 8. The question is whether he should have determined the transaction value under Rule 4 at the price actually paid by the appellant for the 1989 beari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... logical commercial bases, they cannot be denied under Section 14. It appears from the judgment that a distinction was drawn between a discounted price special to a particular customer and discounts available to all customers 19. As already noted all these cases dealt with imports made prior to the coming into force of the Rules in 1988. Now the special considerations are detailed statutorily in Rule 4(2). 20. In the case before us, it is not alleged that the appellant has mis- declared the price actually paid. Nor was there a misdescription of the goods imported as was the case in Padia Sales Corporation. It is also not the respondent s case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. In doing so, the Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor s price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commercially acceptable mea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ertain 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; From the above provisions it is clear that to re assess value under Rule 5, it is important to establish that the goods were similar. In the present case Appellants have disputed that though the contemporaneous import goods were relied upon, both the adjudicating authorities failed to establish goods of contemporaneous imports are similar to the goods of the assessee. We observe that in the present case no effort was made by the adjudicating authority to ascertain quality, quantity and characteristics of the goods of the contemporaneous import, the authorities have failed to carry out any test to ascertain that the goods of contemporaneous import are similar under what circumstances. Only reports of NIDB have been relied upon. No assessment with regards to comparable quantity and quality of the goods have been established by the Department when re-assessing the value of the said goods. Based on the facts we note that the data relied upon by the departme ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e requirement. We also find that there is no mention from the department s side about recording of reasons for doubts. The truth or accuracy and communication of the same even when requested at the de novo remand stage of litigation by the appellant s importers. Further it is also for the proper officer to given opportunity of hearing before deciding transaction value in terms of Valuation Rules 2007. We find that the above procedure required as per Rule 12 and also mandated by the Apex Court has been jettisoned by the department. What has been decided by settled law is woefully lacking in the present proceeding, while rejecting transaction value. Rejection is therefore improper. 11. Above failure of the department in the instant case makes the impugned order fit for setting aside, we therefore order accordingly. Therefore, since no other material has been relied upon to enhance value of the said goods other than the NIDB data, and department was unable to adduce evidence in support of their claim as regards undervaluation, the same is insufficient to establish that the assessee have suppressed the value. 4.6 As regards the alleged violation of Section 111(m) of the Cu ..... X X X X Extracts X X X X X X X X Extracts X X X X
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