2019 (2) TMI 1506 - AT - Customs

Valuation of exported goods - fabric, made out of Spun yarn from MM Fibre MM Filament yarm W/W embroidery W/W metalized yarn w 112 cm. - EPCG DEPB Schemes - Revenue entertained a view that the goods appeared to be over-invoiced - Rule 6 of the Customs Valuation (Determination of value of Export Goods) Rules, 2007 - 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 appeals should be allowed as held by Member (Judicial) or the same should be dismissed as held by Member (Technical)?

Issues Involved:
1. Determination of the correct value of export goods for the purpose of DEPB.
2. Sequential application of Customs Valuation Rules, 2007.
3. Validity of market survey and comparison with similar goods.
4. Rejection of declared value and procedural compliance under Rule 8.
5. Consideration of previous export transactions and cost sheets.
6. Applicability of legal precedents and circulars.

Issue-wise Detailed Analysis:

1. Determination of the correct value of export goods for the purpose of DEPB:
The core issue in these appeals is the correct valuation of the exported fabric for DEPB benefits. The appellants declared higher values for their consignments, which the Revenue contested as over-invoiced. The Assistant Commissioner of Customs re-determined the value based on market surveys and comparative export data, significantly lowering the declared values.

2. Sequential application of Customs Valuation Rules, 2007:
The appellants argued that the valuation should follow the Customs Valuation Rules, 2007 sequentially, starting from Rule 3. The Tribunal emphasized that Rule 3 mandates a sequential approach through Rules 4 to 6 if the transaction value cannot be determined. The Tribunal found that the Revenue jumped directly to Rule 6 without first exhausting Rules 4 and 5, which is not in consonance with the law.

3. Validity of market survey and comparison with similar goods:
The Revenue conducted a market survey and used data from other exporters to justify the lower valuation. However, the Tribunal noted that the market survey did not establish the similarity of goods conclusively. The goods compared were not identical in terms of description, dimensions, or quality. The Tribunal highlighted the absence of expert opinions or documents proving the comparability of the goods.

4. Rejection of declared value and procedural compliance under Rule 8:
The Tribunal scrutinized the procedural compliance under Rule 8, which allows the proper officer to doubt the declared value and seek further information. The Tribunal found that the Revenue did not provide sufficient grounds or evidence to reject the declared value. The Tribunal emphasized that the declared value should be accepted unless proven otherwise with substantial evidence.

5. Consideration of previous export transactions and cost sheets:
The appellants submitted previous export transactions and cost sheets to support their declared values. The Tribunal criticized the Revenue for not considering these documents adequately. The Tribunal noted that the previous exports to the same buyers at similar values were accepted by the department, and the cost sheets provided a realistic basis for valuation under Rule 5.

6. Applicability of legal precedents and circulars:
The Tribunal referenced several legal precedents and circulars, including the Supreme Court's decision in Vishal Exports Overseas Ltd. and the Tribunal's decisions in Kanak Metal Industries and Sitaram Ramdhan & Co. These cases supported the appellants' contention that the declared FOB value should be accepted unless proven otherwise. The Tribunal found that the Revenue's reliance on market surveys and comparison with other exporters was not justified without substantial evidence.

Separate Judgments:
The Member (Judicial) allowed the appeals, emphasizing that the Revenue did not follow the sequential application of valuation rules and failed to provide sufficient proof to reject the declared values. The Member (Technical) dissented, supporting the Revenue's re-determined values based on market surveys and comparative data. The matter was referred to the Hon’ble President for a third member's opinion to resolve the difference.

Conclusion:
The Tribunal allowed the appeals, concluding that the Revenue did not substantiate its claims with adequate evidence and did not follow the required procedural steps for valuation. The declared FOB values by the appellants were accepted, and the appeals were allowed with consequential relief.

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