2024 (11) TMI 300 - AT - Customs

Valuation of import of Aluminium Scrap - re-determining the assessable value - respondent self-assessed the duty, but the AO prima facie did not accept the value and put a query to the respondent that the value of the aluminium scrap did not match the contemporary import data available on NIDB - HELD THAT - As transpires from the speaking order passed by the AO and the order passed by the Commissioner (Appeals) that the reasons given by the AO for re-determining the assessable value have not been considered by the Commissioner (Appeals) at all. In fact, the Commissioner (Appeals) has addressed issues which were not even considered by the AO in the speaking order. Commissioner (Appeals), has not even examined the Bills of Entry referred to by the AO which formed the basis for rejection of the transaction value and the re-determination of the assessable value. The order passed by the Commissioner (Appeals) cannot be sustained. The Commissioner (Appeals) shall pass a fresh order as expeditiously as is possible and preferably within a period of four months from the date a copy of the order is produced.

Issues Involved:

1. Validity of the Assessing Officer's rejection and re-determination of the value of imported aluminium scrap.
2. Examination of the Commissioner (Appeals)'s decision to allow the respondent's appeal.
3. Assessment of the use of London Metal Exchange prices and Directorate General of Valuation circulars in determining the value of imports.
4. Consideration of the transaction value as per Section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 2007.

Detailed Analysis:

1. Validity of the Assessing Officer's Rejection and Re-determination of Value:

The core issue revolves around the Assessing Officer's decision to reject the declared value of aluminium scrap imported by the respondent and to re-determine it. The Assessing Officer based this decision on contemporaneous import data from the NIDB and the prices shown by the London Metal Exchange. The officer applied Rule 9 of the Customs Valuation Rules, 2007, to re-determine the value, citing discrepancies between the declared value and the international market standards for aluminium scrap, specifically the "Taint Tabor" grade as per ISRI specifications. The officer argued that the declared value was significantly lower than the contemporaneous import values and the LME price, thus deeming the transaction value as mis-declared and rejecting it under Section 14 of the Customs Act, 1962, read with Rule 12 of the Customs Valuation Rules, 2007.

2. Examination of the Commissioner (Appeals)'s Decision:

The Commissioner (Appeals) allowed the respondent's appeal, setting aside the Assessing Officer's order. The Commissioner critiqued the Assessing Officer's reliance on LME prices and the DGoV circular, stating that such an approach contradicted the mandate of Section 14 of the Customs Act and the Customs Valuation Rules. The Commissioner emphasized that the Assessing Officer did not provide evidence of any additional payments beyond the invoice value or any non-commercial considerations that would invalidate the declared transaction value. The Commissioner also highlighted the lack of discussion on the specific parameters related to the nature of the products when applying local market values or contemporaneous imports for valuation.

3. Assessment of the Use of LME Prices and DGoV Circulars:

The judgment scrutinized the reliance on LME prices and DGoV circulars for valuation. The Commissioner (Appeals) found this approach unsustainable, as it lacked corroborative evidence of contemporaneous imports. The judgment referenced previous cases, such as Jindal Strips Ltd. and Rajeshwari Metallurgical Ltd., where LME prices were deemed inappropriate for determining the value of scrap metals without supporting evidence. The Commissioner (Appeals) concluded that the Assessing Officer's method of enhancing the value based on these sources was contrary to established legal principles.

4. Consideration of Transaction Value Under Section 14 of the Customs Act, 1962:

The Commissioner (Appeals) determined that the rejection of the transaction value was unsustainable, as there was no evidence of mis-declaration or non-commercial considerations affecting the invoice value. The judgment emphasized the importance of adhering to Section 14 of the Customs Act, which dictates that the transaction value should be accepted unless proven otherwise. The Commissioner (Appeals) criticized the Assessing Officer for acting arbitrarily without establishing the declared value as not genuine.

Conclusion:

The appellate tribunal found that the Commissioner (Appeals) did not adequately consider the reasons provided by the Assessing Officer for re-determining the assessable value. The tribunal noted that the Commissioner (Appeals) addressed issues not raised by the Assessing Officer and failed to examine the Bills of Entry that formed the basis for the rejection of the transaction value. Consequently, the tribunal set aside the order dated 06.05.2021 and remanded the matter back to the Commissioner (Appeals) for a fresh order, instructing a comprehensive examination of the contentions raised by both the respondent and the department. The Commissioner (Appeals) is directed to pass a new order within four months, ensuring a thorough review in light of the tribunal's observations.

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