2014 (12) TMI 1049 - AT - Customs

Determination of FOB value - denial of the exorbitant claim of DEPB scrips - Held that - To resolve the controversy between the parties, it would be fair to send back the matter to the adjudicating officer to issue notice to the respondent clearly stating why he disbelieves the value declared by the appellant. If such a notice is issued that shall serve the purpose of Rule 8 of the Export Valuation Rules. Upon receipt of the explanation of the respondent, learned authority shall examine the same threadbare and ignoring incredible evidence if any, shall consider only proper and cogent evidence to resort to the appropriate rule of valuation. - Decided in favour of Revenue.

Summary

Issues:
1. Dispute over the value of export declared by the respondent.
2. Allegations of arbitrary reduction of FOB value by the authorities.
3. Applicability of Export Valuation Rules, 2007.
4. Concerns regarding the lack of reasoning for rejecting the declared value.
5. Dispute over the appropriate rule for valuation.
6. Need for natural justice and proper examination of evidence.
7. Request for remittance of the appeal to the Original Authority for fresh adjudication.

Analysis:

1. The respondent argued that the FOB value declared was accurate and not questionable, emphasizing that once the FOB value is realized, there should be no further dispute on valuation. However, the authorities below arbitrarily reduced the declared value based on market reports, which were deemed unreliable under Rule 8 of the Export Valuation Rules, 2007. The rejection lacked proper reasoning, denying the respondent the right to understand the basis for the decision. The rejection of the declared value was not in accordance with the guiding principles outlined in the Customs Valuation Rules.

2. The Revenue contended that a market inquiry supported the reduction of the declared value to prevent an excessive claim of DEPB scrips. The Chartered Engineer's Certificate also backed the Revenue's stance. There was a discrepancy regarding the submission of documents, with the Revenue claiming that documents filed before the Tribunal were not presented before the lower authority, although an officer verified the contrary.

3. To address the dispute, the Tribunal decided to send the matter back to the adjudicating officer for a detailed re-examination. The officer was instructed to issue a notice to the respondent, clearly stating the reasons for doubting the declared value. This step was deemed necessary to adhere to Rule 8 of the Export Valuation Rules. The authority was directed to carefully evaluate the respondent's explanation, disregarding any unreliable evidence and focusing on credible evidence for valuation.

4. Emphasis was placed on ensuring natural justice throughout the proceedings, from issuing notices to the conclusion of the case. Despite the Revenue's complaints about the lack of relevant data cooperation from the respondent, proper adherence to natural justice principles was expected to address such grievances.

5. The Tribunal refrained from expressing any opinion on the case's merits due to valuation disputes and concerns about the violation of natural justice. Citing a precedent from the Hon'ble Supreme Court, the Tribunal directed the original authority to make an appropriate decision in line with the law.

6. Consequently, the appeal of the Revenue was remitted to the Original Authority for a fresh and detailed examination as per the directions provided. The respondent was granted the opportunity to present arguments on both factual and legal aspects during the fresh adjudication process.