2018 (12) TMI 738 - SC - Customs

Valuation of imported goods - Aluminum Scrap - rejection of declared value - enhancement of assessable value - Held that - As per Sections 14(1) and 14(1-A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of deemed value of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value. The Tribunal has clearly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value. Since there is no such exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, Order-in-Original was, therefore, clearly erroneous. There is no merit in the appeal - appeal dismissed.

Issues Involved:
1. Transaction value/assessable value of imported Aluminum Scrap.
2. Rejection of declared value by the Assessing Officer.
3. Reassessment and enhancement of assessable value.
4. Appeal against the assessment order.
5. Tribunal's decision to reject the enhancement.
6. Legal principles regarding transaction value under Section 14 of the Customs Act, 1962.

Detailed Analysis:

1. Transaction value/assessable value of imported Aluminum Scrap:
The core issue in these appeals is the determination of the transaction value or assessable value for imported Aluminum Scrap. The respondent imported various types of Aluminum scrap between August 27, 2013, and December 29, 2014, filing 843 Bills of Entry with declared transaction values for customs duty purposes. The Assessing Officer found these declared values to be low and rejected them, leading to a reassessment with increased values.

2. Rejection of declared value by the Assessing Officer:
The declared values were not accepted by the Assessing Officer, who deemed them too low. Consequently, the Assessing Officer rejected the declared transaction values and reassessed the goods by increasing the assessable value. This decision was explained in a speaking order dated March 25, 2015, which considered the grades of scrap, Aluminum content, and the presence of other metals.

3. Reassessment and enhancement of assessable value:
The reassessment by the Assessing Officer was based on the perceived inadequacy of the declared values. The Deputy Commissioner of Customs, NOIDA, issued a speaking order enhancing the assessable value after the High Court of Allahabad directed a detailed examination of the declared values.

4. Appeal against the assessment order:
The respondent challenged the reassessment order by filing appeals before the Commissioner (Appeals), Central Excise and Customs, NOIDA, which were dismissed. Subsequently, the respondent approached the Customs, Excise and Service Tax Appellate Tribunal (Tribunal), which allowed the appeals and rejected the enhancement of assessable value by the Revenue.

5. Tribunal's decision to reject the enhancement:
The Tribunal's decision, detailed in paragraphs 7 and 8 of the impugned judgment, highlighted that the Original Authority failed to properly examine the evidence available with the department necessary for enhancing the assessable value. The Tribunal emphasized that the assessable value should be based on the price actually paid, as provided by Section 14 of the Customs Act, 1962, unless it is proven that the price is not the sole consideration or the buyers and sellers are related persons. The Tribunal found that such an exercise was not conducted in this case, leading to the rejection of the enhancement and restoration of the declared values.

6. Legal principles regarding transaction value under Section 14 of the Customs Act, 1962:
The Supreme Court reiterated the principles laid down in Section 14 of the Customs Act and related case law, emphasizing that the assessable value should be based on the price actually paid, unless specific conditions warrant rejection of the declared value. The Court cited several judgments, including Eisher Tractors Ltd. vs. Commissioner of Customs, Mumbai, to underline that the declared transaction value should be accepted unless there is evidence of misdeclaration or special circumstances. The Court noted that the Assessing Officer must provide cogent reasons and material evidence to reject the declared value.

Conclusion:
The Supreme Court dismissed the appeals, upholding the Tribunal's decision to reject the enhancement of the assessable value. The Court emphasized the need for the Assessing Officer to follow the principles laid down in Section 14 of the Customs Act and provide substantial evidence and reasoning for rejecting declared transaction values. The Tribunal's decision was found to be in line with the established legal principles, and the declared values in the Bills of Entry were restored.

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