2019 (6) TMI 1079 - AT - Customs

Valuation of imported goods - enhancement of the assessable value of the goods based upon the calculation of recoverable percentage of aluminium and the prices as reflected in the LME on the relevant date - Rule 9 of Customs Valuation Rules - HELD THAT - As per the settled law the transaction value is the assessable value unless established to be incorrect. The aluminium content recoverable from the dross cannot be adopted as a reason for enhancing the transaction value, for which sufficient evidences establishing that there was flow back of money from the importer to the supplier of the goods are required. The latest decision of the Hon ble Supreme Court in the case of COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, NOIDA VERSUS M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD. 2018 (12) TMI 738 - SUPREME COURT has observed that transaction value has to be accepted as correct assessable value and the same cannot be enhanced on the basis of NIDB data. Applicability of CVD - HELD THAT - Inasmuch as the CVD leviable on imported goods is directly related to duty of excise required to be paid by the Indian manufactured goods and there being no duty of excise on the dross, no CVD is leviable on the imported aluminium dross. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Assessment of aluminum ingots based on recoverable aluminum content.
2. Enhancement of assessable value and imposition of penalties.
3. Applicability of Countervailing Duty (CVD) on imported aluminum dross.

Analysis:
1. The appellant imported aluminum dross for manufacturing aluminum ingots, declaring recoverable aluminum content ranging from 21-22%. The Customs department conducted tests revealing aluminum content of 77.8% and 71.1% in samples, differing from the declared 58%. Retesting showed recoverable aluminum at 71% and 54% for different entries. Proceedings were initiated to enhance assessable value based on recoverable aluminum percentage and London Metal Exchange (LME) prices under Rule 9 of Customs Valuation Rules. The Commissioner rejected declared value, imposed duties, penalties, and redemption fine, leading to the appeal.

2. The Tribunal found that the CRCL report indicating higher recoverable aluminum was not conclusive as the extraction process was not from imported samples. Transaction value is accepted unless proven incorrect, as per settled law. The Tribunal cited a Supreme Court decision emphasizing the acceptance of transaction value as the assessable value. Enhancing value based on LME prices without proving transaction value incorrect was deemed inappropriate. Therefore, the Tribunal set aside the enhancement of value.

3. Regarding the applicability of CVD on imported aluminum dross, the Tribunal referenced a Delhi High Court order directing consideration of CVD leviability. The Supreme Court had previously ruled aluminum dross as non-excisable, and a Board's Circular confirmed it as a waste product not subject to excise duty. As CVD is linked to excise duty on Indian manufactured goods, and since no excise duty applies to dross, the Tribunal concluded that CVD is not applicable to imported aluminum dross. Consequently, the impugned order was set aside, and the appeal was allowed, providing relief to the appellant by overturning duty demands, penalties, and redemption fine.