2020 (5) TMI 154 - AT - Customs

Valuation of imported goods - Aluminium scrap - rejection of declared value of the goods under import, without rejecting the transaction value/declared price - Section 14 of the Customs Act - HELD THAT - There are no cogent reasons have been given by the Court below for rejection of transaction value. The declared transactions value can only be rejected with cogent reasons by undertaking the exercise as to on what basis the paid price was not the sole consideration, or the transactions value. Since, no such exercise is done by the Court below to reject the price declared or the transaction value in the bills of entry, the orders of Court below are erroneous and fit to be set aside. The Adjudicating Authority was bound to accept the transaction value declared by the appellant - importer, and erred in rejecting the declared price without recording any finding for rejecting the same, as required under Section 14 of the Customs Act. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Whether the Revenue can enhance the declared value of the imported goods without rejecting the transaction value as provided in Section 14 of the Customs Act.

Issue-Wise Detailed Analysis:

1. Enhancement of Declared Value Without Rejecting Transaction Value:
The primary issue in these appeals is whether the Revenue is justified in enhancing the declared value of imported aluminium scrap without rejecting the transaction value as stipulated under Section 14 of the Customs Act. The appellant, engaged in manufacturing aluminium alloys, regularly imports aluminium scrap and declares the self-assessed value based on the invoice value. The Assessing Officer reassessed and enhanced the transaction value without disclosing the basis for such enhancement.

The Commissioner (Appeal) initially set aside the assessment order and remanded the matter to the Assessing Authority to pass a reasoned order. However, the Adjudicating Authority reaffirmed the enhanced value, citing a pending appeal before the Supreme Court in a similar case and an order-in-appeal in another case involving similar imports.

The appellant contended that the logic used by the Adjudicating Authority, which suggested that the value of goods cannot be lower than the constituent materials, does not apply to scrap imports. The appellant emphasized that scrap value is inherently lower than prime metal value and argued that the declared transaction value should be the basis for duty levy as per Section 14 of the Customs Act.

Section 14 of the Customs Act specifies that the value of imported goods shall be the transaction value, i.e., the price actually paid or payable when sold for export to India, provided the buyer and seller are not related and the price is the sole consideration. The appellant relied on a precedent where the Tribunal held that transaction value could only be rejected with cogent reasons, supported by material evidence.

The Tribunal, in the case of Sanjivani Non-Ferrous Trading Pvt. Ltd., and subsequently upheld by the Supreme Court, emphasized that the normal rule is to accept the price actually paid as the assessable value unless there are cogent reasons to reject it. The Supreme Court clarified that the Assessing Officer must provide reasons, supported by material, to reject the transaction value and establish that the price is not the sole consideration.

The Tribunal in the present case noted that the Court below did not provide cogent reasons for rejecting the transaction value. The declared transaction value can only be rejected with cogent reasons by undertaking an exercise to determine why the paid price was not the sole consideration. Since no such exercise was done, the orders of the Court below were deemed erroneous and set aside.

The Tribunal concluded that the Adjudicating Authority was bound to accept the transaction value declared by the appellant and erred in rejecting the declared price without recording any finding for rejecting the same, as required under Section 14 of the Customs Act. The appeals were allowed, and the impugned orders were set aside, entitling the appellants to consequential benefits in accordance with the law.

Conclusion:
The Tribunal allowed the appeals, setting aside the impugned orders, and directed that the transaction value declared by the appellant must be accepted as per Section 14 of the Customs Act, as no cogent reasons were provided for rejecting the same.