2017 (11) TMI 1409 - AT - Customs

Valuation - re-determination of value by the Original Authority - mutuality of interest - Held that - It is apparent that different brand names carry different values. It is not practicable to have a comparison of one brand with another for Customs duty purpose. Such determination will be highly subjective. As such, the Original Authority is left with only option of arriving at the correct assessable value by backward calculation, which he did. The second major point contested by the appellant is that postimportation expenditure and profit margin allowed is not correct - Held that - While we note that the appellants contested the post-importation expenditure on the ground that the goods are fragile and some breakage is to be accounted for, we are not convinced by the said submission for the reason that the items are appropriately packed and no evidence is produced to support a particular quantum of breakage occurring during transportation. In the absence of such material evidence we cannot proceed based on simple assertion of the appellant. Appeal dismissed - decided against appellant.

Summary

Issues:
Rejection of declared value under Customs Act, 1962
Methodology for determining assessable value under Customs Valuation Rules, 2007
Applicability of deductive method for valuation
Consideration of comparable goods for valuation
Validity of profit margin and post-importation charges deductions

Analysis:

*Rejection of declared value under Customs Act, 1962:*
The case involved three appeals against a common order of the Principal Commissioner (Preventive), Customs, New Delhi, regarding the clearance of electric decorative lightings by the main appellant, a regular importer. The Original Authority rejected the declared value of the consignments, leading to differential duties and penalties under the Customs Act, 1962. The impugned order re-determined the assessable value based on the relationship between the exporter and importer, brand names not being declared, and financial transactions, resulting in the imposition of penalties.

*Methodology for determining assessable value under Customs Valuation Rules, 2007:*
The impugned order re-fixed the assessable value of the imports by applying Rule 7 read with Rule 9 of the Customs Valuation Rules, 2007. The methodology involved a deductive method based on sale price, profit margin deductions, and post-importation charges deductions. The appellants contested this methodology, arguing that it was arbitrary and lacked a reasonable basis. However, the Tribunal found the methodology to be in accordance with the Valuation Rules.

*Applicability of deductive method for valuation:*
The appellants challenged the deductive method used for valuation, suggesting that comparable goods with different brand names could have been considered. The Tribunal disagreed, stating that different brand names carry different values, making direct comparisons impractical for customs duty purposes. Consequently, the Original Authority's use of backward calculation for valuation was deemed appropriate.

*Consideration of comparable goods for valuation:*
The Tribunal upheld the Original Authority's decision not to consider comparable goods with different brand names for valuation purposes, emphasizing the subjective nature of such comparisons. The focus remained on determining the correct assessable value through the prescribed methodology rather than cross-brand comparisons.

*Validity of profit margin and post-importation charges deductions:*
The appellants contested the profit margin and post-importation charges deductions, claiming they were not adequately supported by evidence. Despite arguments about breakage risks and fragile items, the Tribunal found no substantial evidence to warrant adjustments to the deductions. The Original Authority's consideration of profit margin, post-importation charges, and tax elements was deemed appropriate based on the available evidence.

In conclusion, the Tribunal dismissed the appeals, affirming the Original Authority's decision on the rejection of declared value and the re-fixing of assessable value, penalties, and duties under the Customs Act, 1962 and the Customs Valuation Rules, 2007. The judgment highlighted the importance of accurate declaration, proper valuation methodology, and adherence to prescribed rules in customs matters.