2024 (6) TMI 854 - AT - Customs

Valuation of imported goods - goods declared as Bovine Leather Upholster Sofa - rejection of declared value under Rule 12 of the Valuation Rules - enhancement of the transaction value declared by the Appellant - HELD THAT - It is ironic that the appellant who approached the Commissioner (Appeals) for relief from the re-assessed transaction value by the Original Authority was left worse off after having approached the Commissioner Appeals, without any notice being given for enhancing the value. The general principles is that the Commissioner (Appeals) should not travel outside the record of the lower authority and make out a case which eve Revenue did not canvas. In TROJAN CO. LTD VERSUS RM. N.N. NAGAPPA CHETTIAR 1953 (3) TMI 37 - SUPREME COURT , the Hon'ble Supreme Court considered the issue as to whether relief not asked for by a party could be granted and that too without having proper pleadings. The Court held that ' It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found. Without an amendment of the plaint, the Court was not entitled to grant the relief not asked for and no prayer was ever made to amend the plaint so as to incorporate in it an alternative case. ' As per Section 14 of the Customs Act, 1962 as well as Customs Valuation Rules the transaction value is required to be accepted unless there are valid reasons for rejection of such value as provided in the said Act and Rules. Basing the value of impugned goods on a circular issued by the department or on the basis of a market survey is totally against the legal provisions. It is settled law that the onus to prove that the declared price did not reflect the true transaction value is always on the Department. It is also a settled law that the Department is bound to accept the transaction value entered between the two parties unless they are able to disturb it by the application of law as set out in the Customs Act 1962 and the Rules framed there under. The impugned order is set aside - appeal allowed.

Summary

Issues involved:
The issues involved in this case are the rejection of declared value of imported goods, revaluation by the Commissioner of Customs (Appeals), and the legality of enhancing the assessable value without notice.

Rejection of Declared Value:
The appellant imported full leather sofas and declared them as Bovine Leather Upholster Sofa. The adjudicating authority rejected the declared value and redetermined it at USD 924 per set. The Commissioner of Customs (Appeals) further enhanced the value to USD 2112 per set, directing reassessment for recovery of differential duty. The appellant contended that the transaction value should be accepted u/s 14 of the Customs Act, 1962, and cited the case of Eicher Tractors Vs. Commissioner of Customs. The rejection of transaction value based on local market prices was deemed illegal.

Revaluation by Commissioner of Customs (Appeals):
The dispute involved the revaluation of imported full leather sofas by the Commissioner of Customs (Appeals) without giving notice for enhancing the value. The Tribunal found that the Commissioner (Appeals) should not go beyond the record of the lower authority. Citing M/s. Trojan & Co. Vs. RM.N.N. Nagappa Chettiar, it was emphasized that relief not asked for by a party cannot be granted without proper pleadings. The impugned order was set aside based on this principle.

Legality of Enhancing Assessable Value:
As per Section 14 of the Customs Act, 1962, the transaction value should be accepted unless valid reasons exist for rejection. Basing the value on a circular or market survey was deemed against legal provisions. The Tribunal referred to a previous case where it was held that the transaction value must be accepted unless valid reasons exist for rejection. The burden to prove that the declared price did not reflect the true transaction value lies on the Department. Taking recourse to extraneous evidence like Standing Orders was found impermissible, and the impugned order was set aside on merits.

Consequential Relief:
In line with the legal obligation to exercise power reasonably and in good faith, the impugned order was set aside, and the appellant was deemed eligible for consequential relief as per law. The appeal was disposed of accordingly.