2024 (9) TMI 1037 - AT - Customs

Valuation of imported goods - Phenol Acetone - Hydrogen Peroxide - High Sea Sale agreement - enhancement of value - rejection of declared value - HELD THAT - The Appellant had produced sufficient evidence regarding the value and there is no dispute that the Appellant had paid anything over and above the value declared by them while procuring the goods. Hon ble Apex Court in the matter of HYDERABAD INDUSTRIES LTD. VERSUS UNION OF INDIA 2000 (1) TMI 46 - SUPREME COURT , held that the responsibility to prove that the High Sea Sale transaction constituted an international transfer of goods lay with the importer. However, inspite of submitting sufficient evidence, the Adjudicating authority rejected the declared value on the ground that in the absence of actual High Sea Sale value for inclusion in the CIF value of the import goods, 2% notional value is taken for assessment and accordingly assessable value worked out . Further as per Circular No. 32/2004 dated 11.05.2004, actual High Sea Sale contract price paid by the last buyer would be construed as a transaction value under Rule 4 of the Customs Valuation Rules and inclusion of commission on notional basis may not be appropriate. The transaction value to be taken into consideration is the transaction between the high seas supplier M/s Jay Polychem India Ltd., and the appellant, which clearly shows that the consideration for the goods is as declared by the appellant. Therefore, the appeal is sustainable. Appeal allowed.

Summary

Issues:
Valuation of imported goods under High Sea Sale agreement.

Analysis:
The appeal involved a dispute regarding the valuation of imported goods by the Appellant, a public sector undertaking engaged in manufacturing Phenol Acetone and Hydrogen Peroxide. The Appellant imported Benzene under a High Sea Sale agreement, and after provisional assessment and clearance, a show cause notice was issued by the Adjudication authority confirming a differential duty of Rs. 5,75,203 along with interest. The Commissioner (Appeals) upheld the Adjudication authority's order, leading to the present appeal.

During the hearing, the Appellant's Counsel argued that the transaction value declared to Customs was accurate, supported by bank transactions in Indian Rupees, and that adopting the sale price of a foreign seller was legally unsustainable. The Counsel cited various case laws and Circular No. 32/2004 to support their argument that once the transaction value is identifiable, adding commission on a notional basis is inappropriate. The Counsel emphasized the need to consider the actual High Sea Sale contract price as the transaction value.

The Authorized Representative for the Respondent contended that the case laws cited by the Appellant were irrelevant, and the inclusion of service charges/commissions in the CIF value of imported goods was necessary. The AR argued that the importer must prove the international transfer of goods and provide a chain of documents to establish the pricing authenticity. The AR disputed the Appellant's explanation for the lower High Sea Sale value and argued that the bid value lacked legal sanctity under the Customs Act.

After considering both sides, the Tribunal found that the Appellant had provided sufficient evidence to support the declared value, and there was no evidence of payment beyond the declared value. The Tribunal referred to Circular No. 32/2004, stating that the actual High Sea Sale contract price should be considered as the transaction value. Therefore, the Tribunal held that the transaction value between the high seas supplier and the Appellant should be the basis for valuation, allowing the appeal and providing consequential relief in accordance with the law.