2019 (2) TMI 504 - AT - Customs

Valuation of imported goods - Polyester Chips Semi Dull Raw White A Grade - rejection of declared value - contemporaneous unit price of polyester chips was higher than declared unit price - Difference of opinion. Held that - As there is difference of opinion, the matter is referred to Hon ble President, to refer the matter to Third Member to determine; Whether the appeal should be dismissed as held by Member (Judicial) or it should be allowed as held by Member (Technical).

Summary

Issues Involved
1. Determination of the transaction value for customs duty purposes.
2. Applicability of Section 14 of the Customs Act, 1962.
3. Consideration of detention and demurrage charges in the valuation of imported goods.
4. The timing of the importation and its impact on the valuation.

Issue-wise Detailed Analysis

1. Determination of the Transaction Value for Customs Duty Purposes
The primary issue revolves around whether the transaction value declared by the respondent, M/s Sun Tex, at USD 600/MT should be accepted for customs duty purposes. The Assistant Commissioner of Customs initially rejected this value, assessing it at USD 1400/MT, referencing Rule 12(i) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. However, the Commissioner (Appeals) accepted the respondent's declared value, noting that the price was mutually agreed upon in a fresh sale and was the sole consideration for the sale, as supported by various case laws including "CCE, Rajkot vs. Jai Bharat Steel" and "Collector of Customs, Calcutta vs. Salim Abbas Bhai."

2. Applicability of Section 14 of the Customs Act, 1962
Section 14 of the Customs Act, 1962, outlines the valuation of goods for customs purposes, emphasizing the transaction value, i.e., the price actually paid or payable for the goods when sold for export to India. The Commissioner (Appeals) concluded that the transaction between the respondent and the exporter met all the criteria under Section 14, including the price being the sole consideration and the buyer and seller not being related. The Tribunal upheld this interpretation, referencing the Supreme Court's rulings in "Eicher Tractors Ltd. v. C.C., Mumbai" and "Chaudhary Ship Breakers vs. Commissioner of Customs, Ahmedabad," which mandate accepting the transaction value unless exceptions in Rule 4(2) apply.

3. Consideration of Detention and Demurrage Charges in the Valuation of Imported Goods
The respondent argued that the detention and demurrage charges, amounting to USD 505/MT, justified the lower transaction value of USD 600/MT. The Tribunal accepted this reasoning, noting that the additional expenses incurred by the respondent were a valid explanation for the reduced price. The Tribunal emphasized that the transaction value must reflect the actual price paid or payable, including any additional costs borne by the importer.

4. The Timing of the Importation and Its Impact on the Valuation
The timing of the importation was a critical factor in determining the transaction value. The Revenue argued that the goods became taxable when they first landed in India on 23.8.2008. However, the Tribunal noted that the actual importation was completed only when the respondent took delivery of the goods in January 2009, after paying the agreed price and customs duty. The Tribunal referenced the Supreme Court's decision in "Garden Silk Mills Ltd. vs. UOI," which clarified that the taxable event occurs when the goods reach the customs barrier and the bill of entry for home consumption is filed. Since the bill of entry was filed by the respondent in January 2009, the Tribunal concluded that the transaction value at that time should be considered.

Separate Judgments Delivered by the Judges
The Tribunal's decision was not unanimous. The Member (Judicial) upheld the Commissioner (Appeals)'s decision to accept the respondent's declared transaction value, emphasizing the completion of all requirements under Section 14 of the Customs Act. However, the Member (Technical) dissented, arguing that the value should be based on the original price agreed upon by the first importer, M/s. Filatex, and that the reduction in value due to detention and demurrage charges was not justified. This disagreement led to the matter being referred to the Hon’ble President for determination by a Third Member.

Conclusion
The Tribunal ultimately upheld the Commissioner (Appeals)'s decision to accept the respondent's declared transaction value, rejecting the Revenue's appeal. The Tribunal emphasized the importance of considering the actual transaction value, including any additional costs incurred by the importer, and clarified the timing of the importation for valuation purposes. The matter of differing opinions between the judicial and technical members was referred to the Hon’ble President for resolution by a Third Member.