2008 (8) TMI 162 - AT - Customs

Enhancement of value of imported goods (optical frames) on ground of price arrived on basis of some market enquiry - Copy of market enquiry has never been furnished to the respondent or to the appellate authority nor it is available as of now with tribunal - Even the backward calculation done to arrive at CIF value has not been explained by revenue - hold that the value cannot be enhanced in such arbitrary manner without any evidence

Summary

Issues:
Undervaluation of imported goods, rejection of transaction value, enhancement of value by Revenue, market survey evidence, calculation of CIF value, rejection of appeal by Revenue.

Analysis:
The case involved a dispute regarding the valuation of imported optical frames by M/s. Guide Optical Co. The importing firm had declared a value of US $0.60 per frame, which was suspected to be undervalued. The partner of the importing firm admitted to under-invoicing the goods at US $1.80 per frame. The Revenue conducted a market survey to ascertain the value of similar frames available locally. The Revenue calculated the CIF value at Rs. 178.95 per frame based on Rule 7 of the Customs Valuation Rules, 1988. The adjudicating authority rejected the transaction value, confiscated the frames, imposed a redemption fine, and a penalty on the importer. However, on appeal, the order was set aside, providing consequential relief to the importer.

The Revenue contended in its appeal that the adjudicating authority had not submitted documentary evidence, including the market enquiry report, regarding the price of similar goods. The Revenue argued that the statement of the partner of the importing firm, admitting undervaluation, should be considered valid evidence. The Revenue cited legal precedents to support the admissibility of such statements.

The advocate for the respondent argued that the Revenue had not relied on the partner's statement and had instead based its valuation on a market enquiry report, which was not shared with the respondent or the appellate authority. The respondent questioned the basis for calculating the value at Rs. 178.95 per frame and highlighted discrepancies in the Revenue's approach, including the failure to consider bill of entry documents showing similar imports at comparable prices.

The Tribunal observed that the sole evidence for enhancing the value was the partner's retracted statement, which the Revenue did not accept. The Tribunal noted the lack of details regarding the market enquiry used to determine the new value, the absence of supporting documentation, and the failure to explain the basis for claiming similarity between the imported frames and those surveyed in the market. The Tribunal concluded that the value could not be arbitrarily enhanced without proper evidence and rejected the Revenue's appeal, upholding the order of the Commissioner (Appeals).

In conclusion, the Tribunal's decision emphasized the importance of reliable evidence in valuation disputes, highlighting the need for transparency and justification in determining the customs value of imported goods.