2019 (10) TMI 335 - AT - Customs

Valuation of imported goods - Brass Valve Zinc Valves - rejection of declared transaction value - Rule 12 of Customs Valuation (Determination of Price of imported Goods) Rules, 2007 - HELD THAT - The issue is squarely covered by the decision of tribunal in case of S.K. DHAWAN AND RAJEEV SETH, ESSFO IMPEX PVT. LTD. AND ESS DEE TRADING CO. VERSUS COMMISSIONER OF CUSTOMS (IMPORT) , MUMBAI 2016 (3) TMI 888 - CESTAT MUMBAI where it was held that the appellant importer had submitted details of contemporaneous imports of the same goods and the value seems to be more or less is same as declared by the appellant importer is not addressed to and also the adjudicating authority has not recorded a single sentence of finding on such contemporaneous import detail given by the appellant and thus the rejection of value was not supported. The distinction sought to be made by the learned Authorized Representative, do not address the crux of issue of rejection of transaction value - Without rejecting the transaction value, the application of any other rule, for re-determination of the value for the purpose of levy of Custom Duty is neither permissible nor admissible position in law as per the decision referred to by counsel for law. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Undervaluation of imported Brass Valves and Zinc Valves.
2. Rejection of declared transaction value.
3. Redetermination of value under Customs Valuation Rules.
4. Validity of statements under Section 108 of Customs Act, 1962.
5. Reliance on contemporaneous imports and evidence.

Detailed Analysis:

1. Undervaluation of imported Brass Valves and Zinc Valves:
The companies imported Brass Valves and Zinc Valves from China during 2008-09. Based on intelligence, it was found that the declared transaction value was less than the cost of raw materials. The Proprietors/Directors admitted to declaring lower values than the raw material cost in their statements under Section 108 of the Customs Act, 1962.

2. Rejection of declared transaction value:
The declared transaction value was rejected under Rule 12 of the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007. The re-determined value was based on the cost of raw materials plus 30% manufacturing cost, which was accepted by the appellants, and part of the duty was paid voluntarily.

3. Redetermination of value under Customs Valuation Rules:
The re-determined values were calculated based on the prevailing prices of raw materials as per the LME Bulletin. The adjudicating authorities confirmed the demand for differential duty with interest and imposed penalties.

4. Validity of statements under Section 108 of Customs Act, 1962:
The appellants contested the show cause notices, but the adjudicating authorities upheld the demands. The appellants argued that similar cases had been decided in their favor, where the tribunal set aside demands based on alleged undervaluation, citing the case of S K Dhawan [2016 (344) ELT 436 (T-Mum)].

5. Reliance on contemporaneous imports and evidence:
The appellants argued that the revenue did not produce contemporaneous imports to justify the rejection of transaction value. They also cited several decisions where the rejection of transaction value based solely on statements was not upheld. The tribunal found that the adjudicating authority's methodology was flawed, as it was based on presumptions without evidence of the actual composition of the imported goods.

Conclusion:
The tribunal agreed with the appellants that the issue was covered by the decision in the case of S K Dhawan. The tribunal emphasized that without rejecting the transaction value, applying any other rule for re-determination of value for customs duty is not permissible. The tribunal set aside the impugned orders and allowed the appeals with consequential relief, if any.