2013 (11) TMI 38 - AT - Customs

Provisional Assessment - Transaction Value Waiver of Pre-deposit - The goods were provisionally assessed and cleared on executing a bond and bank guarantee - Later on the department sought to finalise the provisional assessments and issued notices to the appellants for the same proposing to enhance the value Held that - The allegation of the department remains a mere allegation without any basis and that cannot be the reason for enhancement of values - no evidence has been adduced by the department to show that the values declared by the appellants are lower than the contemporaneous value of imports - No attempt has been made to collect data with regard to the prices declared for poppy seeds imported from various countries including Turkey and to compare the prices and arrive at a conclusion that the value declared in the present transaction cannot be accepted - In case the transaction value is rejected, then the department has to proceed sequentially through Rules 5 to 9 and determine the value in the course of international trade - Prices reported in journals/magazines and adoption of the same for the purpose of valuation is not one of the prescribed methods under Rule 5 to 9 and therefore they cannot be adopted or restored to. Prima facie the appellants have made out a strong case in their favour for grant of stay - The appellants have also agreed to keep the bank guarantees alive which they had executed at the time of provisional assessments - Pre-deposit of dues was waived against the appellant and stay recovery during the pendency of the appeals stay granted.

Summary

Issues involved:
Common issue in five appeals and stay applications regarding the enhancement of value of imported White Poppy Seeds from Turkey based on alleged undervaluation due to cartel operation and discrepancy with prices in the Public Ledger.

Detailed Analysis:

Issue 1: Allegation of undervaluation based on cartel operation and Public Ledger prices
The appellants imported White Poppy Seeds declaring a value of USD 1700 PMT. The department sought to enhance the value to USD 3406 PMT, citing a cartel in Turkey controlling prices and discrepancy with prices in the Public Ledger. The department rejected the declared value, proposing an average of prices from the Public Ledger. The appellants challenged this assessment, arguing lack of evidence for undervaluation and questioning the existence and pricing behavior of the alleged cartel.

Issue 2: Legal arguments and case laws
The appellant's counsel contended that the department failed to provide evidence of undervaluation or the existence of the alleged cartel influencing prices. They argued that even if a cartel existed, its prices should be higher, contrary to the lower prices reported. The counsel cited relevant case laws to support their position and emphasized the lack of concrete evidence supporting the department's claims.

Issue 3: Customs valuation rules and evidentiary requirements
The Tribunal analyzed the Customs Act and Valuation Rules, highlighting the importance of transaction values unless valid reasons exist for valuation under prescribed methods. The Tribunal noted the absence of evidence supporting the department's claims, such as studies on cartel existence or comparison of import prices. Emphasizing the need for sequential valuation methods under Rules 5 to 9, the Tribunal rejected reliance on Public Ledger prices and upheld the appellants' argument regarding lack of evidence for undervaluation.

Judgment:
The Tribunal found in favor of the appellants, granting a stay on the recovery of dues and waiving pre-deposit during the appeal process. The appellants were allowed to maintain the bank guarantees from provisional assessments. The Tribunal acknowledged the appellants' strong case and permitted an application for early appeal hearing if desired, based on the lack of substantiated evidence supporting the department's valuation enhancement.