2004 (12) TMI 415 - AT - Customs

Summary

Issues: Valuation of imported LDPE/HDPE/PP mixed plastic granules/powder under Customs Valuation Rules, 1988.

The dispute in the present appeal revolves around the valuation of 360.89 MT of LDPE/HDPE/PP mixed plastic granules/powder imported by the appellant from Canada as part of a larger contract. The appellant declared the assessable value at US $ 228 PMT, while the Revenue increased it to US $ 288 PMT based on Standing Order 7493, Platt's prices, and contemporaneous imports. The appellant's contract with the foreign supplier specified a price of US $ 228 per M.T. for 5,000 MT of plastic granules/powder floor sweepings. Testing by the Indian Institute of Technology confirmed the nature of the imported goods as a mixture of HDPE & LLDPE granules and powders. The Revenue issued a show cause notice proposing to enhance the assessable value, leading to the impugned order by the Deputy Commissioner raising it to US $ 288 PMT under Rule 8 of the Customs Valuation Rules, 1988.

During the appeal, the appellant argued that the contract was for a mixed lot of granules of various polymers and sizes, as confirmed by the IIM report. The appellant contended that the authorities should have accepted the invoice price instead of referring to guidelines issued by the Commissioner. The appellant emphasized the variation in import prices dependent on the type of floor sweepings and highlighted the lack of evidence regarding the quantities involved in contemporaneous imports compared to the appellant's order. The appellant asserted that the Revenue must demonstrate that the invoice price is incorrect before resorting to other rules of Customs Valuation. The Tribunal agreed with the appellant, noting that the contracted price reflected the correct transaction value, and the variation in floor sweepings composition made reliance on contemporaneous imports irrelevant. The Tribunal held that the Standing Order lacked legal backing, citing precedents where Platt's prices alone could not establish undervaluation without doubt about the invoice price, ultimately ruling in favor of the appellant.

In conclusion, the Tribunal found the orders of the authorities below to be unsustainable and allowed the appeal, providing consequential relief to the appellants. The judgment emphasized the importance of correctly assessing the transaction value under the Customs Valuation Rules, highlighting the need for evidence to challenge the invoice price and the irrelevance of contemporaneous imports in cases of varying product compositions.