2011 (5) TMI 83 - AT - Customs

Demand - Transaction value - Rule 5 of Customs Valuation Rules, 1988 - the contracted price was the price prevalent in the international market at the time of entering into the arrangement or there was fluctuation in the international price of the imported goods - In the absence of any evidence to show any flow back of money from the importers to their supplier, the rejection of the invoice price, which is duly supported by the purchase order and the sales confirmation, cannot be upheld on the sole ground that the appellant has not been able to substantiate their plea that the said commodity s price is open to fluctuations - Appeals are allowed

Summary

Issues:
1. Dispute over the declared price of imported goods.
2. Application of Customs Valuation Rules, 1988.
3. Rejection of transaction value by authorities.
4. Evidence required to support declared price.
5. Rejection of invoice price based on doubt.
6. Lack of evidence for fluctuation in international market prices.
7. Justifiability of enhancing assessable value based on contemporaneous prices.

Analysis:
The judgment by the Appellate Tribunal CESTAT, AHMEDABAD involved two appeals arising from the same impugned order passed by the Commissioner (Appeals) regarding the declared price of imported Aniline Oil. The appellants imported the goods and declared a price lower than similar imports from the same country. Revenue issued show cause notices to reject the declared price and enhance it under Rule 5 of Customs Valuation Rules, 1988, resulting in a demand for duty.

In response, the appellants, a government undertaking, defended the declared price as genuine, supported by purchase orders, invoices, and other documents. However, the authorities rejected the transaction value under Rule 10A of the Customs Valuation Rules, 1988, and confirmed the enhanced assessable value based on contemporaneous imports at a higher price. The Commissioner of Customs (Appeals) upheld this decision, leading to the present appeal.

Upon review, the Tribunal found that the appellants had validly entered into contracts at the declared price, which was supported by various documents. The rejection of the declared price by the authorities was based on doubt due to slightly higher prices in other imports. The Commissioner (Appeal) noted the lack of evidence from the appellants regarding fluctuations in international market prices, specifically PLATT journals or ICIS LOR.

However, the Tribunal emphasized that without evidence of money flowing back to suppliers or substantial price differences, the rejection of the declared price could not be justified. The Tribunal observed that the difference in price was not significant, supporting the appellants' claim of genuine pricing. Consequently, the Tribunal set aside the impugned order, allowing both appeals and providing consequential relief to the appellants.