2022 (8) TMI 721 - AT - Customs

Valuation of imported goods - Integrated Circuits - declared assessable value was rejected without giving any cogent reasons and the valuation was arrived at on the basis of the another bill of entry of the appellant holding that the goods are identical - assessment of Bills of Entry in question as per Section 17(5) of the Customs Act, 1962 - opportunity of personal hearing was accorded to the appellants or not - HELD THAT - The department has not given any cogent reasons for rejection of the declared value, except stating that the appellants have imported identical goods in the past at a higher price. Nothing is forthcoming in the impugned orders as to how they constitute identical goods except for the description. We find force in the contention of the appellants that the description IC is a generic one. The department has not obtained any technical opinion on the impugned goods so as to examine the identical nature of the products. Department has not even alleged that there was flow of extra consideration, than the declared value, form the appellant to the overseas supplier, leave alone any evidence to that effect. Moreover, there are force in the argument of the appellants that the quantity imported is not comparable. Department is attempting to compare the value at which 23750 Nos of ICs were imported, with the value at which a meagre 13 Nos were imported vide another B/e. Department overlooked the very common principles of business that the price is dependent on volumes. Therefore, we find that the invocation of, Rule 4 of CVR, 2007, after rejecting the declared value under Rule 12 ibid, though for no cogent reasons, is not legally sustainable. The ultimate use of the imported goods cannot be criteria for deciding the valuation. Every business man is free to adopt his own way of conducting business. In any case, this cannot be reason for rejecting the value of the impugned goods. In the absence of any technical opinion obtained, comparing the impugned goods with other goods, simply on the basis of description, is not acceptable. Moreover, as per Rule 4 of CVR, 2007 the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods - In the instant case, the comparison of the quantities, betrays a complete mismatch. Therefore, the valuation arrived on the basis of so called identical goods is not legally sustainable. The department has not made any case for rejection of the value declared by the appellants in the impugned Bill of Entry - Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Rejection of declared assessable value in Bill of Entry
2. Application of Customs Valuation Rules
3. Justification for rejection of transaction value
4. Comparison of imported goods for valuation
5. Legal sustainability of valuation under Customs Act

Analysis:
1. The case involved the rejection of the declared assessable value in a Bill of Entry for the import of Integrated Circuits by M/s Bytesware Electronics. The department raised queries regarding the value declared, leading to an assessment order under Section 17(5) of the Customs Act, 1962. The Assistant Commissioner held that the declared value was incorrect based on past imports and ordered re-determination of value.

2. The rejection of the declared value was made under Rule 12 of the Customs Valuation Rules, 2007, and re-determined under Section 14 of the Act read with Rule 4. The appellants appealed before the Commissioner of Customs (Appeals), who upheld the department's decision. The appellant argued that the rejection lacked cogent reasons and violated the principles of natural justice.

3. The appellant contended that the rejection of the transaction value was unjustified as the goods imported were functionally different and in a significantly larger quantity compared to past imports. They emphasized that the price paid was the sole consideration, and no extra remittance was made. The appellant also highlighted the oversight of technical usage evidence and the failure to conduct an independent inquiry.

4. The Tribunal found that the department failed to provide sufficient reasons for rejecting the declared value and comparing the goods based solely on description. The valuation under Rule 4 of the Customs Valuation Rules was deemed legally unsustainable due to the lack of technical opinion and the incomparable quantities imported in different consignments.

5. Relying on precedents, the Tribunal concluded that the department did not establish any grounds for rejecting the declared value. The judgment emphasized the importance of evidence showing extra remittance and the necessity for a valid basis to discard the transaction value. Ultimately, the Tribunal allowed the appeal, setting aside the impugned order and providing consequential relief as per law.