2017 (4) TMI 832 - AT - Customs

Valuation - Rejection of transaction value on the ground that there is a discount which has been offered to the appellant which is not in conformity with the trade practice - Held that - the lower authorities have not given any contemporary price and also do not put any evidence to show that these discounts were special discount - the ratio of the decision of the apex Court in the case of Eicher Tractors Ltd vs. Commissioner Customs, Mumbai 2000 (11) TMI 139 - SUPREME COURT OF INDIA squarely covers the issue, where it was held that When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1) - appeal allowed - decided in favor of appellant,

Summary

Issues:
- Appeal against Order-in-Appeal No: 101 (Gr.IID)/2006 passed by the Commissioner of Customs (Appeals), Mumbai - II.
- Rejection of declared value for imported amusement machines.
- Applicability of Customs Valuation Rules, 1988.
- Discrepancy regarding discount offered by the supplier.
- Lack of evidence to support rejection of declared value.
- Interpretation of trade practices and discounts in import transactions.

Analysis:
The appellant filed an appeal against the Order-in-Appeal passed by the Commissioner of Customs (Appeals), challenging the rejection of the declared value for six imported coin-operated amusement machines from Japan. The declared value was based on a commercial invoice showing a discount of Y16,50,000/- for bulk purchase. The adjudicating authority rejected this declared value, assessing duty liability on the full value of Y36 lakhs. The first appellate authority upheld this decision, leading to the current appeal.

The appellant argued that the discount offered by the supplier was standard and extended to all purchasers, submitting a certificate to support this claim. They contended that the Customs Valuation Rules, 1988 should apply, and the enhancement of value was unjustified. The Learned Authorized Representative supported the lower authorities' findings on the value of the goods.

Upon review, the Tribunal found that the first appellate authority rejected the appeal based on the discount offered to the appellant, which was deemed inconsistent with trade practices. However, the Tribunal noted that the assessing officer can scrutinize declared transaction values but must adhere to Customs Valuation Rules. The lower authorities' decision lacked evidence to support the rejection of the declared value, especially regarding the discount offered by the supplier. The Tribunal highlighted that the appellant had provided a certificate showing the discount was standard practice and not specific to them.

Furthermore, the lower authorities' assertion that the discount was not general due to the quantity purchased was deemed unacceptable by the Tribunal, as bulk purchases often attract special discounts in business practices. The Tribunal emphasized the lack of evidence supporting the rejection of the declared value as a special discount. Referring to a precedent, the Tribunal concluded that the impugned orders were unsustainable and set them aside, allowing the appeal.

In the operative part of the order pronounced in court, the Tribunal officially set aside the impugned orders and allowed the appeal, ruling in favor of the appellant.