2010 (7) TMI 708 - AT - Customs

Valuation - Transaction value rejection on suspicion that same underdeclared - Held that - if value declared is rejected Revenue should establish with details of contemporaneous imports of such or similar goods that the price declared is not correct transaction value and the value has to be determined under CVR - Commissioner did not reject the transaction value for valid reasons in the absence of contemporaneous imports of comparable CTP machines at higher prices. - In view of the decision of Apex Court in CC Calcutta v. South India Television (P) Ltd. (2007 -TMI - 1665 - SUPREME COURT OF INDIA) the revision of price demand of differential duty and interest confiscation of the impugned machine on the ground that the importer had mis-declared its value and consequent penalties are not sustainable. - Decided in favor of assessee.

Issues Involved:
1. Rejection of Transaction Value
2. Determination of Assessable Value
3. Confiscation of Imported Machine
4. Imposition of Penalties

Detailed Analysis:

1. Rejection of Transaction Value:
The Commissioner rejected the transaction value declared by the appellant on suspicion of under-declaration. The Commissioner found that the invoice price declared was not acceptable as the transaction value for assessment due to restrictions about the disposition or use of the machine by the buyer, as outlined in Rule 4(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (CVR). The Commissioner relied on an unsigned Tripartite Agreement and discrepancies in the invoice dates to reject the declared value. However, the Tribunal found that the Commissioner did not provide adequate reasons to show that the transaction value fell within the exceptions particularized under Rule 4(2) of CVR. The Tribunal emphasized that the transaction value should be accepted unless it is vitiated by circumstances specified in Rule 4(2). The Tribunal noted that the Commissioner failed to establish that the declared price was not the actual price paid or that it was a special price owing to an abnormal discount, relationship with the seller, or any condition governing its post-import use.

2. Determination of Assessable Value:
The Commissioner re-determined the assessable value of the imported machine by comparing it to the price of a different model and using unreliable adjustments. The Tribunal found that the Commissioner adopted an unreliable method to determine the value, as the comparison was not permissible in law. The Tribunal highlighted that the valuation of goods traded across borders is governed by Section 14 of the Customs Act, which mandates that the assessable value should be the transaction value unless disqualified by specific circumstances. The Tribunal cited the Apex Court's judgment in Eicher Tractors Ltd. v. CC, Mumbai, which emphasized that the transaction value should be accepted unless there are valid reasons to reject it. The Tribunal concluded that the Commissioner did not provide cogent reasons for rejecting the invoice price and failed to establish the value with details of contemporaneous imports of similar goods.

3. Confiscation of Imported Machine:
The Commissioner confiscated the imported machine under Section 111(m) of the Customs Act, offering an option for redemption on payment of a fine. The Tribunal found that the confiscation was not sustainable as the re-determination of the assessable value was without adequate legal justification. The Tribunal noted that the Commissioner did not have any good reason to reject the invoice value and that the revision of the price was contrary to the prescriptions contained in Rule 4 of CVR. The Tribunal emphasized that the charge of under-valuation must be supported by evidence of prices of contemporaneous imports of like goods, which the Commissioner failed to provide.

4. Imposition of Penalties:
The Commissioner imposed penalties on the appellant and its Managing Director under Sections 114A and 112(a) of the Customs Act, respectively. The Tribunal found that the penalties were not sustainable as the demand of differential duty, interest, and confiscation of the machine were not justified. The Tribunal noted that the Commissioner did not provide sufficient evidence to support the charge of under-valuation and that the transaction value should have been accepted. The Tribunal vacated the impugned order and allowed both appeals, setting aside the penalties imposed.

Conclusion:
The Tribunal concluded that the revision of the price, demand of differential duty and interest, confiscation of the imported machine, and the consequent penalties were not sustainable. The Tribunal emphasized the importance of accepting the transaction value unless there are valid reasons to reject it and found that the Commissioner failed to provide adequate justification for rejecting the declared value. The appeals were allowed, and the impugned order was vacated.

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