2017 (8) TMI 1512 - AT - Customs

Valuation of imported goods - Ethyl Alcohol - rejection of declared value - enhancement of declared value - Rule 10A of the Customs Valuation Rules, 1988 - only basis on which in the present proceedings, such a course of action was taken is that there were certain imports through Mumbai Port which had a value higher by 7.6% - Held that - The original authority did not elaborate the reasons for resorting to provisions of Rule 6. He has not addressed the submissions of the appellant regarding the contract being entered into in June, 2004 itself. A variation of about 7% spread over a period of over four or five months cannot per se lead to a conclusion that the imported goods are undervalued. Additional corroborative evidences are required in such situation to reject the transaction value and to re-determine the same - In the present case, there is no discussion or finding at all, on this valuation aspects - Appeal allowed - decided in favor of appellant.

Issues: Customs Valuation - Rule 10A and Rule 6 applicability, Correctness of declared value, Comparison with other imports, Evidence requirement for rejecting declared value

Customs Valuation - Rule 10A and Rule 6 applicability:
The appeal challenged an order by the Commissioner (A) upholding the rejection of the declared value of Ethyl Alcohol imported by the appellant. The declared value was enhanced based on Rule 6 of the Customs Valuation Rules, 1988. The appellant argued that the declared value was correct, and no evidence was presented by the department to prove otherwise. The lower authorities had used Rule 10A to reject the declared value and compared it with other imports, leading to a value enhancement. The appellant contended that the comparison was invalid as the value of Ethyl Alcohol fluctuates monthly, and the comparison was made with imports from different periods. The Tribunal noted that a mere 7% variation over a few months did not justify rejecting the declared value without additional evidence. The impugned order was set aside as it lacked merit.

Correctness of declared value:
The appellant maintained that the value declared at the time of import was accurate, with no additional consideration paid for the consignment. They argued that the department failed to provide evidence contradicting the invoice value. The appellant's position was that the declared value should not have been rejected and re-fixed without a legal basis, especially considering the fluctuating nature of Ethyl Alcohol prices. The Tribunal agreed that the rejection of the declared value without proper justification was unfounded, leading to the appeal being allowed.

Comparison with other imports:
The department had compared the declared value with other imports to justify the enhancement under Rule 6 of the Valuation Rules. However, the appellant contended that such comparisons were flawed as they were based on different periods and quantities, without any evidence of extra consideration paid. The Tribunal found the comparison lacking in legal basis and emphasized the need for additional corroborative evidence to reject the declared value, ultimately ruling in favor of the appellant.

Evidence requirement for rejecting declared value:
The Tribunal highlighted the importance of the revenue questioning and proving the incorrectness of the declared value, especially when resorting to provisions like Rule 6 for value enhancement. In this case, the Tribunal found that the original authority did not provide sufficient reasoning or address the appellant's submissions regarding the contract timeline and fluctuating prices. The lack of detailed analysis and findings on valuation aspects led to the impugned order being deemed without merit and set aside in favor of the appellant.

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