2009 (3) TMI 101 - AT - Customs

When the transaction value is to be disregarded, the reasons for disregarding the transaction value have to be clearly spelt out. After giving reasons for rejecting the transaction value, the value has to be determined under the Valuation Rules by going sequentially through the Rule 4 to Rule 8. The original authority has not disclosed the reasons for disregarding the transaction value except saying that there were imports at a higher contemporaneous price - Further no allegation that the declared price by the respondent is a manipulated one - enhancement of value not justified

Summary

Issues:
Customs valuation - Transaction value vs. contemporaneous value comparison

Analysis:
The case involved a departmental appeal against the order of the Commissioner (Appeals) regarding the valuation of imported goods. The respondent imported Lyera Spandex Yarn and declared a price of US $13.25 per Kg. The original authority enhanced the price to US $15.25 per Kg based on the contemporaneous value of goods covered by a previous Bill of Entry. The Commissioner (Appeals) disagreed with the original authority and allowed the appeal.

Upon review, the Tribunal found that the respondent claimed to import on a larger scale, enabling them to negotiate for a lower price. They also highlighted that subsequent imports at the same price were accepted. The Tribunal emphasized that Section 14 of the Customs Act generally accepts the transaction value unless valid reasons are provided to disregard it. The Tribunal noted that the original authority did not clearly state reasons for disregarding the transaction value other than mentioning higher contemporaneous imports. The Tribunal highlighted that the level of imports by the respondent and the contemporaneous imports were not properly compared. Additionally, there was no allegation of manipulation regarding the declared price. Therefore, the Tribunal concluded that the Commissioner (Appeals) decision to not sustain the original authority's order was reasonable, and the department's appeal was rejected.

In conclusion, the Tribunal upheld the Commissioner (Appeals) decision, emphasizing the importance of providing clear reasons for disregarding transaction value and following the Valuation Rules sequentially. The Tribunal found no merit in the department's appeal, ultimately rejecting it.