2018 (3) TMI 648 - AT - Customs

Valuation of imported goods - rejection of declared value - Held that - For arriving at such deductive value, the adjudicating authority has taken into account the effect of neutralization of taxes and only thereafter arrived at a conclusion that assessable value of goods viz. Vina Adela Red and White Wine should be pegged at ₹ 140 per bottle; that Mondelion Calatayud Wine should be pegged at ₹ 195 per bottle and finally Campo de Borja Crianza Red Wine should be pegged at ₹ 245 per bottle - there are merits in the Revenue s appeal that the Commissioner (Appeals) has been peremptory in setting aside the findings and conclusions of the original authority. The portion of the impugned order setting aside rejection of declared value and enhancement of value of the imported goods cannot be sustained and is therefore set aside - appeal dismissed - decided against Revenue.

Summary

Issues:
1. Rejection of declared value of imported wines
2. Inclusion of transportation charges in the valuation
3. Authenticity of invoice and payment terms

Analysis:

Issue 1: Rejection of declared value of imported wines
The case involved the import of red and white wines from Spain, with the original authority rejecting the invoice value declared by the appellants and ordering higher values per bottle. The appellants contended that the rejection was unfounded, citing various factors influencing wine pricing and the absence of comparable higher contemporaneous values. The Commissioner (Appeals) set aside the enhancement of value but upheld the inclusion of transportation charges. The Revenue appealed, arguing that the declared value was significantly lower compared to local market prices and raised concerns about the authenticity of the invoice from a trader rather than a manufacturer.

Issue 2: Inclusion of transportation charges in the valuation
The original authority had included transportation charges in the valuation under Rule 10(2) of the Valuation Rules, 2007. The Commissioner (Appeals) upheld this inclusion, stating it was proper. However, the Revenue appealed against the order, challenging the decision. The Tribunal found that the Revenue did not appeal against the transportation charges inclusion separately, and therefore, the original authority's decision was restored, allowing the department's appeal on this ground.

Issue 3: Authenticity of invoice and payment terms
The Revenue raised concerns about the authenticity of the invoice, as it was from a trader and not a manufacturer, and questioned the unusual payment terms of telephonic transfer (TT) with a 90-day credit period. The adjudicating authority noted discrepancies in the pricing and the nature of the import, emphasizing that the goods were sold by a trader, not a manufacturer. The authority applied Rule 7 of the Valuation Rules to determine the value of the goods based on deductive value, considering the effect of neutralization of taxes. The Tribunal found merit in the Revenue's appeal, setting aside the Commissioner (Appeals) decision to reject the declared value and enhance the value of the imported goods, ultimately allowing the department's appeal on this issue.

In conclusion, the Tribunal upheld the inclusion of transportation charges in the valuation but set aside the rejection of the declared value of the imported wines, ruling in favor of the Revenue's appeal on the grounds of discrepancies in pricing, nature of import, and authenticity concerns regarding the invoice and payment terms.