2018 (7) TMI 1299 - AT - Customs

Valuation of imported goods - Ball Valves - enhancement of value - the Departmental officers were of the view the assessable value should be adopted on the basis of the tariff value of the brass scrap during the period of import by loading the same by 30% as value addition - Rule 8 of the Customs Valuation Rules - Held that - The assessable value of the imported Ball Valves stands enhanced by the Revenue on the findings that the same is less than even the tariff value of the Brass scrap as notified by the Ministry of Finance for the relevant period of import and the importer has not been able to show the manufacturer s invoice - Admittedly, the goods stand imported by the appellant from a trader under an invoice reflecting the transaction value of the goods in question. In the present case, the Revenue s entire case is based upon the fact that the value of the Ball Valves/Check Valves cleared by the appellants under the declared transaction value is less than the value of even the raw material thus leading to a doubt about the correctness of the same - The Lower Authorities have jumped to the provisions of Rule 8 of the Customs Valuation Rule and has ordered value addition of 30%, without exhausting applicability of the previous Rules. Even if there was a doubt about the correctness of the transaction value, the onus was upon the Revenue to re-determine the value in terms of said Rules by applying them sequentially. As such without first exhausting earlier Rules which also include adoption of the transaction value as the assessable value it was not proper on the part of the Revenue to enhance the value. The transaction value has not been rejected by the Lower Authority by production of any positive evidences and the value stands enhanced only on the basis of suspicion and by referring the Tariff Value of the raw materials, there is no justifiable reasons to uphold the impugned order. Appeal allowed - decided in favor of appellant.

Summary

Issues:
Assessable value determination based on tariff value of brass scrap, application of Customs Valuation Rules, burden of proof on importer, correctness of transaction value, sequential application of valuation rules, judicial precedents on value enhancement.

Analysis:
The case involved the appellant, a manufacturer of brass ball valves and check valves, importing goods during 2009-2011. The dispute arose when the Department determined the assessable value based on the tariff value of brass scrap, leading to a demand for differential customs duty and penalties. The Additional Commissioner confirmed the duty demand, penalties, and imposed a redemption fine. On appeal, the Commissioner upheld the duty demand and penalties but set aside the redemption fine. The appellant challenged this decision. The appellant argued that the Department incorrectly determined the assessable value under Rule 8 of Customs Valuation Rules without considering sequential rules and without proving the transaction value as incorrect. The Department contended that the declared value was lower than the brass scrap price, shifting the burden of proof to the appellant.

The Tribunal analyzed the case, emphasizing the importance of transaction value unless proven incorrect by the Department with cogent reasons. It noted that suspicion alone is insufficient to reject the invoice value. The Tribunal highlighted that the Department should have exhausted earlier valuation rules before resorting to Rule 8 for value enhancement. The appellant cited precedents where similar value additions were set aside by the Commissioner (Appeals) and the Tribunal due to lack of evidence supporting incorrect transaction value. The Tribunal found no positive evidence to reject the transaction value in the present case, leading to the setting aside of the impugned order and allowing the appeal in favor of the appellant.

In conclusion, the Tribunal set aside the Department's decision on the assessable value determination and penalties, citing lack of evidence to reject the transaction value and improper application of valuation rules. The judgment highlighted the importance of following sequential valuation rules and providing concrete evidence before enhancing the value. The decision was in favor of the appellant, providing consequential relief.