2017 (6) TMI 990 - AT - Customs

Valuation - Sony and Pioneer brand CD players and speakers - it was felt that the value declared by the importer for Sony and Pioneer brand CD players and speakers was very low in comparison with the contemporaneous imports - Held that - the Customs authorities have arrived at the value of the imported goods by deduction method from the market price - It is settled position of law that in terms of Section 14 of the Customs Act, 1962, the transaction value is required to be accepted as above. The value can be determined by resorting to Customs Valuation Rules only in those cases when the transaction value is rejected for valid reasons. Only thereafter, the value shall be determined by proceeding sequentially through Valuation Rules. In the present case, the transaction value has been sought to be rejected only on the basis of the price list, catalogue, market enquiry as well as contemporaneous import of some of the items. All these grounds can at best raise a suspicion that value declared for assessment may be less. However, none of these can be considered as valid reasons for ignoring the transaction value - appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Allegation of undervaluation of imported goods.
2. Rejection of declared value by Customs authorities.
3. Validity of grounds for rejecting transaction value.
4. Application of Customs Valuation Rules.
5. Adherence to transaction value under Section 14 of the Customs Act, 1962.
6. Comparison with relevant legal precedents.

Analysis:
1. The appeal challenged the Order rejecting the declared value of imported Sony and Pioneer brand goods, alleging undervaluation. Customs authorities initiated further investigation due to the low declared value compared to contemporaneous imports. The investigation included obtaining data on imports by Sony India Pvt. Ltd. and market enquiries to determine the actual Retail Sale Price (RSP) of the goods. The authorities rejected the declared value and redetermined the assessable value, leading to a differential duty and confiscation order.

2. The appellant contended that the declared value was accurate, supported by purchase orders and invoices matching the Bill of Entry. The Customs authorities relied on price lists, catalogues, and market enquiries to allege undervaluation, which the appellant argued lacked legal sanction under Customs Valuation Rules. The appellant cited legal precedent emphasizing the acceptance of transaction value unless valid reasons under the Valuation Rules existed to reject it.

3. The Revenue supported the impugned order, justifying the rejection of declared value based on suspicion under Rule 10A of the Customs Valuation Rules. The Customs authorities argued that evidence indicated under-valuation, warranting the rejection of declared value.

4. The Tribunal emphasized that the transaction value should be accepted under Section 14 of the Customs Act, 1962, unless valid reasons existed to reject it as per the Valuation Rules. The rejection of transaction value based solely on price lists, catalogues, and market enquiries was considered insufficient, following legal precedents like the Eicher Tractors case. The Tribunal highlighted that suspicion alone could not justify disregarding transaction value.

5. Relying on the legal principles established in the Eicher Tractors case, the Tribunal set aside the impugned order, allowing the appeal and providing consequential relief. The decision emphasized the importance of adhering to transaction value unless valid reasons under the Customs Valuation Rules warranted its rejection.

This detailed analysis of the judgment highlights the issues raised, the arguments presented by both parties, the legal principles applied, and the final decision reached by the Tribunal, ensuring a comprehensive understanding of the case.