2010 (8) TMI 290 - AT - Customs

Valuation - enhancement of the value - contemporaneous import - sale by the UAE-based trader to the Indian importer and the same was at a higher price as indicated in the invoice issued by the trader - enhancement of the value of the goods imported by the appellant Held that - value declared by the importer should ordinarily be accepted where it is shown that none of the special circumstances mentioned under Rule 4(2) did not exist for rejection of the declared value

Summary

Issues:
1. Valuation of imported Polypropylene Carpets.
2. Rejection of declared value and determination of assessable value.
3. Confiscation of goods and imposition of penalty.
4. Consideration of contemporaneous import data.
5. Legal interpretation of Customs Valuation Rules.

Valuation of imported Polypropylene Carpets:
The appellant contested the enhancement of value ordered by the Commissioner for Polypropylene Carpets imported in November 1997. The Commissioner rejected the declared value of US$ 7 per piece and determined the value at US$ 3.59 CIF per square meter based on similar goods imported by the same manufacturer at the relevant time and place. The Commissioner found no evidence of payment above the declared price, leading to dropping of confiscation and penalty charges. The appellant argued that the declared value should have been accepted under Customs Valuation Rules as no special circumstances existed for its rejection.

Rejection of declared value and determination of assessable value:
The Commissioner's decision to reject the declared value was based on comparison with contemporaneous import data. The appellant highlighted that the Commissioner failed to consider certain imports made by the appellant at the same price from the same supplier, which were ignored during adjudication. The appellant argued that the Commissioner's valuation was unsustainable as the comparison was made with a higher-priced import without considering all relevant circumstances.

Confiscation of goods and imposition of penalty:
The show-cause notice initially proposed confiscation and penalty for alleged misdeclaration of value by the importer. However, the Commissioner dropped these charges due to lack of evidence of payment above the declared price. The appellant contended that since the proposal for confiscation was dropped, the question of enhancing the value did not arise, as per the Customs Act and Valuation Rules.

Consideration of contemporaneous import data:
The appellant criticized the Commissioner's method of comparing the price of goods with a prior import transaction that took place after the subject import. The Commissioner's reliance on the higher-priced import for valuation was deemed incorrect by the appellant, who argued that the value determined was unsustainable in law and fact.

Legal interpretation of Customs Valuation Rules:
The Tribunal found flaws in the Commissioner's decision, noting that there was no effort to ascertain the existence of circumstances for rejecting the declared value under Rule 4(2) of the Customs Valuation Rules. The Tribunal concluded that the Commissioner's valuation was based on misconceived facts and failed to align with the legal principles outlined in relevant judicial decisions. Ultimately, the Tribunal set aside the Commissioner's order regarding valuation and allowed the appeal.