2016 (11) TMI 335 - AT - Customs

Valuation - second hand machinery - rejection of Declared value - rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - concessional rate under N/N. 29/1997-Cus dated 1st April 1997 - EPCG scheme - Held that - reliance placed on the decision of case of TOLIN RUBBERS PVT. LTD. Versus COMMISSIONER OF CUSTOMS, COCHIN 2003 (11) TMI 90 - SUPREME COURT OF INDIA where it was held that mode of determination of the value of the goods in question in such matters as has been laid down in Rule 4(1), the transaction value will have to be determined and under the Rule 4(2), if any exceptional circumstance is found then the transaction value indicated in Rule 4(1) will have to be rejected and further determination have to be made under Rule 8 - None of the authorities advert to this Rule or say for what reasons as provided under Rule 4(2) the transaction value will have to be rejected. The show cause notice does not justify rejection of value declared under rule 4 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Rejection of proposal for enhancing assessable value and recovering differential duty
2. Disallowance of concessional rate of duty under Export Promotion Capital Goods Scheme
3. Misdeclaration of value and description warranting reclassification
4. Imposition of penalty under Customs Act, 1962

Analysis:
1. The appeals of Revenue challenged the rejection of the proposal to enhance the assessable value in the bill of entry and recover differential duty. The dispute arose from the alleged suppression of the relationship between the supplier and the importer, impacting the declared value. The Revenue contended that the declared value did not reflect the actual transaction value due to the internal transfer of proprietary machines within a corporate group decision. However, the adjudicating authority dropped the proceedings, leading to Revenue's dissatisfaction. The Tribunal found no evidence supporting the influence of the corporate headquarters on the price, thus rejecting the appeal.

2. The disallowance of the concessional rate of duty under the Export Promotion Capital Goods Scheme was a key issue. The importer had cleared goods at a lower value by availing the concessional rate, which was challenged by Revenue. The Tribunal examined the invoices and the relationship between the buyer and seller. It was argued that the transaction value reflected in the invoices was fair and certified by a Chartered Engineer. Citing relevant legal precedents, the Tribunal upheld the fairness of valuation and rejected Revenue's contentions.

3. The misdeclaration of value and description warranting reclassification was another aspect of the case. Revenue sought reclassification of the goods based on alleged misdeclaration and undervaluation. The Tribunal scrutinized the evidence, including insurance documents valuing the machinery. It was emphasized that the insurance value could not be the sole basis for enhancing the assessable value. Referring to Customs Valuation Rules, the Tribunal concluded that the declared value met the requirements and dismissed the appeal.

4. The imposition of penalty under the Customs Act, 1962 was also contested. The Tribunal's analysis focused on the compliance with valuation rules and the absence of evidence supporting Revenue's claims. Citing a Supreme Court decision, the Tribunal emphasized the importance of following valuation procedures. Ultimately, the Tribunal found the appeal lacking merit and rejected it accordingly.