2023 (6) TMI 712 - AT - Customs

Over-Valuation of goods - Referring the matter to the Valuation Committee for re-fixing of the transaction -export of 100% Cotton Woven / Knitted T-Shirts under duty drawback scheme - value declared at higher transaction value - re-determination of the transaction value by by the Valuation Committee in terms of Rule 4 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 - HELD THAT - There are no justifiable reasons, in the first place, for the rejection of transaction value by the Revenue. When, admittedly, the transaction value is not rejected specifically, then it is for the Revenue to justify for not accepting the transaction value which is declared and secondly, what prompted the Revenue to refer to the Valuation Committee to refix the transaction value is also not forthcoming from the orders of the lower authorities - the mandate of Rule 8 is not a mere formality i.e., the rejection of declared value is not a mechanical process and the proper officer should have reason to doubt the truth or accuracy of the declared value. If he entertains any doubt, then the immediate follow-up action, as prescribed under Rule 8, is to put across the same to the exporter asking it to furnish further information including documents or other evidence . Without following the mandate of Rule 8, the officer has referred to the Valuation Committee and it is not the case of the Revenue that the Valuation Committee comprised experts in the field, but the said committee comprised only the departmental officers who are naturally interested. There is also no finding by the lower authority that the parties are related in any way and hence, the adjudicating authority should have looked into Section 14 ibid., which is also not done - there are nothing in either of the orders of lower authorities that on what basis did they arrive at the conclusion that the transaction value declared was abnormal or very much high. Mere allegation would not suffice the requirement of law, what is essential is some semblance of evidence to justify such allegation. The action of the authorities in referring to the Valuation Committee for re-fixing of the transaction value is without basis and the denial of appropriate duty drawback to the appellant was also not in accordance with the principles of law - Appeal allowed.

Summary

Issues involved:
The issues involved in the judgment are the re-fixing of transaction value by the Valuation Committee affecting duty drawback benefit claimed by the appellant and the legality of such re-fixing under the Customs Valuation Rules, 2007.

Issue 1: Re-fixing of transaction value by the Valuation Committee
The appellant, a registered exporter of garments, exported 100% Cotton Woven/Knitted T-Shirts under the duty drawback scheme. The Revenue, upon examination, found discrepancies in the declared transaction value. The Valuation Committee, comprising departmental officers, re-fixed the transaction value based on various factors. The appellant challenged this re-fixing, leading to a Writ Petition and subsequent adjudication. The adjudicating authority upheld the re-fixed value, leading to an appeal before the Commissioner (Appeals) and eventually to the present appeal.

Issue 2: Legality of the Valuation Committee's re-fixing
The key question before the Tribunal was whether the re-fixing of transaction value by the Valuation Committee was sustainable in the eye of the law. The appellant argued that the rejection of declared value without following Rule 8 of the Customs Valuation Rules, 2007 was improper. They contended that the transaction value, being the price actually paid or payable for the goods, should have been accepted. The Revenue, however, supported the findings of the lower authorities, emphasizing the correctness of the re-fixed value by the Valuation Committee.

Judgment:
The Tribunal analyzed the contentions of both parties and reviewed the relevant provisions of the Customs Valuation Rules, 2007 and the Customs Act, 1962. They found that the rejection of the transaction value by the Revenue lacked justification and adherence to Rule 8 procedures. The Tribunal highlighted that the Valuation Committee's composition and lack of expert representation raised concerns. Additionally, they noted the absence of evidence supporting the allegation of abnormal transaction value. Consequently, the Tribunal held that the re-fixing of the transaction value by the Valuation Committee was unfounded and not in line with legal principles. As a result, the appeal was allowed in favor of the appellant.

Separate Judgment:
No separate judgment was delivered by the judges in this case.