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2024 (11) TMI 19 - AT - CustomsRejection of self-assessed value of imported aluminium scrap - Determination of the method of valuation - direction to re-determine the value under rule 9 of the Valuation Rules with a direction to the respondents to pay the differential duty on the enhanced value with interest - seeking clearance of goods declared as aluminium scrap namely Zorba , Twitch , Tense , Troma , Taint Tabor Tense/Taint Tabor . Rejection of value declared by the importers in the Bills of Entry - For rejection of the transaction value, the principles enshrined in section 14 of the Customs Act and the Valuation Rules have to be adhered to. In fact, Explanation (iii) to rule 12 of the Valuation Rules provides examples where the proper officer shall have the powers to raise doubts about the truth or accuracy of the declared value. Payment of additional consideration is not even a ground stated therein. The finding recorded by the Commissioner (Appeals), that in the absence of any additional consideration having been paid by the importers to the sellers, the transaction value could not have been rejected is not in conformity with the provisions of the Customs Act or the Valuation Rules. Even if no additional consideration is paid, still the proper officer can proceed to reject the vale under rule 12 of the Valuation Rules, if he has a reasonable doubt that the declared value does not represent the transaction value. Doubts can be raised on the truth or accuracy of the declared value based on certain reason which may include the six reasons mentioned in Explanation (iii) of rule 12 of the Valuation Rules. One such reason is where identical or similar goods imported at or about the same time in comparable quantities in comparable commercial transaction were assessed at a significantly higher value. Commissioner (Appeals) has also placed reliance upon the decision of the Supreme Court in Motor Industries 2008 (4) TMI 436 - SUPREME COURT which holds that formation of opinion regarding reasonable doubt as to the truth or accuracy of the valuation and communication of the said ground to the importer is mandatory. This procedure had been followed by the Deputy Commissioner in the present case. The doubt must be reasonable based on a degree of objectivity. The Supreme Court also observed that the reasons have to be recorded and if requested disclosed/communicated to the importer. The Supreme Court also clarified that a general direction is not being issued that the transaction value declared in the Bills of Entry should invariably be accepted in all cases where the imports of aluminium scrap are involved, and the matter has to be examined on a case to case basis on the basis of the evidence and the material placed on record. In the present case, as noticed, the reason assigned by the Deputy Commissioner for rejection of the transaction value was not based on mere suspicion but was based on proper and objective consideration of the facts. The reasons were also communicated to the importers. Commissioner (Appeals) was, therefore, not justified in holding that the transaction value declared by the importers in the Bills of Entry could not be rejected. The Deputy Commissioner has given good and cogent reasons for rejecting the transaction value declared by the importers in the Bills of Entry. Re-determination of value - . After having rejected the value mentioned by the importers in the Bills of Entry, the Deputy Commissioner was required to re-assess the duty leviable on the imported goods and pass a speaking order on the re-assessment. Deputy Commissioner, after nothing that rule 4 would not be applicable proceeded to re-determine the value under rule 5 holding that the data for similar goods, with near identical/similar description for grade/type/specification were found in NIDB for the contemporary times against various Bills of Entry was available. Commissioner (Appeals) has not examined this contention regarding rule 5 of the Valuation Rules raised by the importer and, in fact, has observed that the Deputy Commissioner had resorted to rule 9 of the Valuation Rules for re-determination of the value. Thus, a very cryptic finding has been given by the Deputy Commissioner for applying 5 of the Valuation Rules for re-determination of the value and the fact that the Commissioner (Appeals) has not examined this issue at all, it would be appropriate to remit the matter to the Deputy Commissioner for re-determining the value of the goods in accordance with the provisions of the Customs Act and the Valuation Rules.
Issues Involved:
1. Rejection of the declared transaction value of imported aluminum scrap. 2. Re-determination of the value under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Issue-Wise Detailed Analysis: Rejection of Value: The primary issue was whether the transaction value declared by the importers in the Bills of Entry could be rejected. The Deputy Commissioner rejected the declared value based on three reasons: the value was lower compared to the DGoV Alert dated 15.11.2018, there was a significant difference between the declared value and the London Metal Exchange (LME) prices, and the NIDB data indicated a significantly lower declared value compared to contemporaneous imports. The Deputy Commissioner issued a show cause notice to the importers and, after considering their replies, determined that the transaction value was not true and fair, thus rejecting it under Rule 12 of the Valuation Rules. The Commissioner (Appeals) set aside this rejection, stating that the department failed to provide reasonable and cogent evidence to reject the declared value. The Commissioner noted that there was no allegation of additional consideration or mis-declaration, which would warrant such rejection. However, the appellate tribunal found that the Deputy Commissioner had provided sufficient reasons for doubting the declared value, and the rejection was based on objective considerations rather than mere suspicion. The tribunal emphasized that the absence of additional consideration does not preclude the rejection of declared value if there are reasonable doubts about its accuracy. Re-determination of Value: After rejecting the declared value, the Deputy Commissioner re-determined the value under Rule 9 of the Valuation Rules, which deals with the residual method. The Deputy Commissioner concluded that rules 4 to 8 were not applicable due to the nature of the goods and the absence of identical or similar goods information. The re-determination was based on contemporaneous imports data available in India, as permitted by the Interpretative Note to Rule 9. The Commissioner (Appeals) disagreed with this re-determination, arguing that reliance on DGoV Circular and LME prices was contrary to the Valuation Rules and the Supreme Court's decision in Century Metal Recycling. The tribunal, however, found that the Deputy Commissioner had not based the re-determination solely on these factors but had used contemporaneous import data to establish the value, which was consistent with the principles of Rule 9. In three specific appeals (Customs Appeal No. 51942 of 2022, Customs Appeal No. 51943 of 2022, and Customs Appeal No. 51944 of 2022), the Deputy Commissioner had used Rule 5 instead of Rule 9 for re-determination. The tribunal noted that the Commissioner (Appeals) had not addressed this issue, and the Deputy Commissioner's reasoning was insufficiently detailed. Therefore, these three cases were remitted back to the Deputy Commissioner for a proper re-determination of value in accordance with the Customs Act and Valuation Rules. Conclusion: The tribunal allowed the department's appeals in 359 cases, setting aside the Commissioner (Appeals)'s orders and restoring the Deputy Commissioner's orders. However, in the three remitted cases, the Deputy Commissioner was instructed to re-determine the value per the Customs Act and Valuation Rules.
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