2015 (11) TMI 1456 - AT - Customs

Valuation of the goods for export which are football goalkeeper gloves - Clim of duty drawback - Held that - value needs to be arrived based upon cost of production of manufacture or processing of export goods charges for design and an amount towards profit. In the case in hand the revenue authorities though being made aware of the supplier of the goods which were exported did not bother to check with the supplier to ascertain the correct value of the goods. In our considered view jumping directly to provisions of Rule 6 of the Valuation Rules for ascertain value by residual method is not in consonance of the law inasmuch as it is settled law that to determine value of goods sought to be exported the provisions of Valuation Rules should be applied sequentially. To our mind the appellant have a case in their favour as they have demonstrated that the goods which were exported were procured from a credible supplier whose name address and VAT number were available. In the absence of any contrary evidence we hold that the transaction value as declared by the appellant for claiming duty drawback is the correct value. - impugned order which upholds the re-determination of the value of the goods for export is incorrect and is liable to be set aside - Decided in favour of assessee.

Summary

Issues: Valuation of export goods for claiming duty drawback, application of Customs Valuation Rules, rejection of declared value, re-determination of value, imposition of penalty and redemption fine.

In this case, the appellant filed drawback shipping bills for exporting "football goalkeeper gloves of leather" but faced scrutiny by revenue authorities for allegedly overvaluing the goods to claim ineligible duty drawback. The lower authorities re-determined the value of the goods under Customs Valuation Rules, conducting a market enquiry and rejecting the declared value. The appellant's appeal against this decision was also rejected by the first appellate authority. The appellant argued that the lower authorities did not consider crucial evidence, including tax invoices, and did not follow the correct valuation procedure as mandated by the rules. The departmental representative, however, supported the lower authorities' findings, stating that the market value was ascertained as per the rules and endorsed by the appellant.

The main issue revolved around the valuation of the export goods, with the revenue claiming the declared value was high and re-determined it based on market enquiry. The Tribunal found the lower authorities' approach incorrect for several reasons. Firstly, the lower authorities failed to consider that the appellant had provided tax invoices from local vendors, satisfying all criteria of a valid invoice. Secondly, the revenue should have followed a sequential application of Customs Valuation Rules, starting with Rule 4 and 5 before resorting to Rule 6 for re-determination. The Tribunal highlighted that the revenue did not verify the correct value with the supplier and directly applied Rule 6, which was not in line with the law. Thus, the Tribunal held that the declared transaction value by the appellant was correct for claiming duty drawback.

Consequently, the Tribunal set aside the impugned order upholding the re-determined value, allowing the appeal and holding the declared value by the appellant as correct. The decision was based on the lack of contrary evidence to discard the transaction value and the failure of the revenue to follow the sequential application of Customs Valuation Rules.