2017 (1) TMI 525 - AT - Customs

Valuation - High Seas Sale - CIF value 2% notional High Seas Sale commission when acceptable? - whether the difference between declared value in Bill of Entry and tax invoice value is includible in the assessable value? - Held that - the tax invoice raised by the High Sea seller to the High Sea buyer clearly disclosed that value charged is over and above the CIF Value 2%, therefore method of valuation i.e. CIF Value 2% will not be applicable in the present case. As regard the LC charges, we are of the view that since LC charges are borne during the course of import as L.C. is opened pre import of the goods, all the expenses which are borne pre-clearance of the imported goods shall be includible in the assessable value. As regard the administrative charges, which appellant claimed that it is on account of various services such as assistance in erection and installation of machine, we find that appellant could not produce any evidence in this regard either before the adjudicating authority or before the Commissioner(Appeals) even when the matter was heard by us, no evidence was produced regarding the nature of the administrative charges, therefore so called administrative charges, in our view is nothing but Sales profit only of the High Sea seller which at par with High Sea Sale commission. Therefore the same is clearly includible in the assessable value. Extended period of limitation - Held that - the value in the High Sea Sale contract was mis-declared and fact was suppressed from the department. In this circumstances extended period of demand was rightly invoked. Appeal dismissed - decided against appellant.

Summary

Issues:
Valuation of goods in High Sea Sale transactions; Inclusion of various charges in the assessable value; Applicability of High Sea Sale commission; Time limit for duty demand.

Valuation of Goods in High Sea Sale Transactions:
The case involved M/s. Jharsanya Logistics Pvt Ltd importing goods and selling them on a High Sea Sale basis. The investigation focused on the valuation of goods for the purpose of levy of duty, confiscation, and penalties. The High Sea Sale transactions involved importing Extec brand mining machines and selling them to various importers. The dispute arose regarding the assessable value declared in the Bill of Entry compared to the value charged in the tax invoice by the High Sea seller. The adjudicating authority allowed deductions for certain charges but included administrative expenses and LC charges in the assessable value. The Tribunal determined that the method of valuation as CIF Value + 2% notional High Sea commission is not applicable when the tax invoice clearly shows a value higher than the CIF Value + 2%. LC charges incurred pre-clearance were deemed includible in the assessable value, while administrative charges were considered part of the High Sea Sale commission and thus includible in the assessable value.

Inclusion of Various Charges in the Assessable Value:
The appellant argued that expenses such as L.C. charges and administrative charges should be deducted from the assessable value, similar to deductions made for transportation, port charges, etc. The Tribunal disagreed, stating that LC charges incurred pre-clearance are includible in the assessable value. Regarding administrative charges, the appellant failed to provide evidence of the nature of these charges, leading the Tribunal to consider them as part of the High Sea Sale commission and thus includible in the assessable value.

Applicability of High Sea Sale Commission:
The appellant contended that the general practice in customs is to use CIF Value + 2% as the notional High Sea Sale commission for valuation. However, the Tribunal clarified that this method is applicable only when the actual contract value is unavailable. As the tax invoice indicated a value higher than the CIF Value + 2%, the Tribunal deemed the method of valuation inapplicable in this case.

Time Limit for Duty Demand:
The appellant argued that the duty demand was time-barred due to no suppression of facts or willful misstatement. However, the Tribunal found that the High Sea Sale agreement mis-declared the value, justifying the invocation of the extended period for demand. Consequently, the Tribunal upheld the duty demand and dismissed the appeals.

This detailed analysis of the judgment highlights the key issues of valuation in High Sea Sale transactions, inclusion of charges in the assessable value, the applicability of High Sea Sale commission, and the time limit for duty demand, providing a comprehensive overview of the legal aspects involved in the case.