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2018 (5) TMI 449 - AT - CustomsValuation - rejection of declared value - Such rejection has been ordered on the basis of market enquiry as well as the opinion regarding such local market value by CMFRI - Held that - In the present case, we note that the transaction values have been rejected only on the basis of a market enquiry carried out with a trader and on the basis of the inputs given by CMFRI. The Principal Scientist of CMFRI has deposed in the cross examination that the prices indicated by them were on the basis of enquiries made in the local market. The CBEC vide Circular No. 56/2002-Cus. dated 09.09.2002 has directed that the present market value shall be the basis for granting DEPB benefit. But we are of the view that such a situation cannot be used to reject the transaction value. The circular can only be used for calculating/restricting the DEPB benefit. The evidence gathered by the department can at best raise doubt about the declared value. But such evidence cannot be used to reject the transaction value and redetermine the same in the case of the present case - confiscation and penalties set aside - appeal allowed - decided in favor of appellant.
Issues Involved:
1. Allegation of over-valuation of export goods for claiming DEPB benefit. 2. Rejection of declared transaction value leading to confiscation of goods and imposition of penalties. 3. Applicability of Customs Valuation Rules in determining the value of export goods. 4. Comparison of declared value with market prices and implications on DEPB benefit. Issue 1: Allegation of over-valuation of export goods for claiming DEPB benefit: The appellant exported goods with declared values for which DEPB benefit was claimed. Customs authorities suspected over-valuation and initiated an investigation based on market enquiries and reports from Marine Products Exports Development Authority (MPEDA) and Central Marine and Fisheries Research Institute (CMFRI). The authorities rejected the transaction value, seized the goods, and proceeded with adjudication. Issue 2: Rejection of declared transaction value leading to confiscation of goods and imposition of penalties: The adjudicating authority rejected the declared transaction value, leading to confiscation of goods under Section 113(i) of the Customs Act, 1962. The appellant was ordered to pay a fine and penalties under Sections 114(iii) and 114AA of the Customs Act, 1962. The appeal was filed against this impugned order. Issue 3: Applicability of Customs Valuation Rules in determining the value of export goods: The Customs Valuation (Determination of Value of the Export Goods) Rules, 2007, provide the basis for determining the value of export goods. The rules empower the proper officer to doubt the declared value based on various reasons, including significant variations in value, mis-declaration of goods, and comparison with market values. Issue 4: Comparison of declared value with market prices and implications on DEPB benefit: The rejection of the declared transaction value was based on market enquiries and reports from CMFRI, indicating lower market prices compared to the declared value. The appellant argued that market values should not be the sole basis for rejecting transaction value and confiscating goods. The Tribunal referred to relevant case laws and emphasized that market values should not be used to reject transaction values, but only for calculating or restricting DEPB benefits. In the detailed analysis, the Tribunal noted that while evidence raised doubts about the declared value, it was insufficient to reject the transaction value and re-determine it based solely on market values. The Tribunal cited precedents where market enquiries were found inadequate to reject declared values. Ultimately, the Tribunal set aside the confiscation of goods and penalties imposed on the appellant, following the principles established in previous judgments. The appeal was allowed, emphasizing that market values should not be the sole basis for rejecting declared transaction values in export cases.
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