2016 (12) TMI 567 - AT - Customs

Rejection of declared value - re-determination of value based on NIDB data - Sodium Saccharin - Held that - Transaction-value cannot be enhanced merely based on NIDB data and on the contents of a Proforma Invoice issued for the goods of Chinese origin, which is different from the origin of the subject goods, unless NIDB data is for contemporary imports of all comparable goods only. The Proforma Invoice of Chinese Company is also of not much significance as origin of present goods is Taiwan and not China. The revenue has also not given any evidence that there has been payment of extra money to the supplier to compensate for the alleged under-valuation by the appellant importer. Thus, there are not enough evidences for rejection of transaction value for the present imports. In this regard CESTAT Delhi in case of Commissioner of Customs v/s Modern Overseas 2005 (2) TMI 202 - CESTAT, NEW DELHI has held that the transaction value can be rejected on the basis of reasonable and cogent evidence of contemporaneous import of identical/similar goods. The comparable goods need to have same country of origin and has to be at same commercial level. The enhancement of the value which was done mainly based on NIDB data and Profoma Invoice of the Chinese manufacturer cannot be sustained - appeal allowed - decided against Revenue-respondent.

Summary

Issues:
- Rejection of declared value and re-determination
- Justification for value enhancement based on NIDB data
- Comparison of goods and purity determination
- Application of Valuation Rules 2007
- Evidence for under-valuation and rejection of transaction value
- Legal precedents and case laws supporting transaction value acceptance

Rejection of Declared Value and Re-Determination:
The appellant, M/s Vaibhav Industries, appealed against the Commissioner's order rejecting the declared value and re-determining the value, which was sustained. The appellant argued that the revenue wrongly enhanced the value based on NIDB data without providing sufficient evidence regarding the similarity of goods, purity determination, and specific values for comparable goods. The appellant emphasized that the mean value approach used by the department was unjustified and not in line with Valuation Rules 2007.

Justification for Value Enhancement Based on NIDB Data:
The revenue justified the value enhancement primarily based on NIDB data, indicating that the imported goods, Sodium Saccharin, were of pharma grade and imported at higher values. However, the Tribunal found the revenue's reasoning inadequate under judicial scrutiny. The appellant presented reports from the Assistant Drug Controller and FSSAI, indicating that the goods were not intended for pharmaceutical use but for electroplating industries. The Tribunal concluded that the revenue's reliance on NIDB data and a Proforma Invoice from a Chinese manufacturer was not sufficient to support the value enhancement.

Comparison of Goods and Purity Determination:
The revenue's assessment of the goods as pharma grade based on the NIDB data and Proforma Invoice was challenged by the appellant, who provided evidence that the goods were used for industrial purposes. The Tribunal noted that the revenue failed to provide substantial evidence of under-valuation through contemporary imports of identical or similar goods at the enhanced value. The origin of the goods and the lack of evidence regarding extra payments to the supplier further weakened the revenue's case.

Application of Valuation Rules 2007:
The appellant argued that the revenue's rejection of the transaction value and re-determination of value did not adhere to Valuation Rules 2007. The appellant highlighted the requirement to consider the lowest value of identical goods when multiple transaction values exist, emphasizing that the declared value should have been accepted by the department.

Evidence for Under-Valuation and Rejection of Transaction Value:
The Tribunal emphasized the importance of substantial evidence to reject transaction value, citing legal precedents that require reasonable and cogent evidence of contemporaneous imports of identical or similar goods at the same commercial level. The Tribunal found the NIDB data and Proforma Invoice insufficient to justify the value enhancement, especially considering the origin of the goods and the lack of evidence of under-valuation compensation.

Legal Precedents and Case Laws Supporting Transaction Value Acceptance:
In support of the appellant's argument for accepting the transaction value, various case laws were cited, emphasizing the importance of proving under-valuation with substantial evidence of contemporaneous imports of identical or similar goods. The Tribunal, following the precedent set by CESTAT-Delhi, concluded that the value enhancement based on NIDB data and a Proforma Invoice was not sustainable, ultimately allowing the appeal with consequential relief.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, the Tribunal's assessment, and the legal principles applied in reaching the decision to set aside the impugned order and allow the appeal.