1991 (5) TMI 182 - AT - Customs

Summary

Issues Involved:
1. Misdeclaration of value of imported goods.
2. Applicability of transaction value u/s 14(1) of the Customs Act, 1962.
3. Use of London Metal Exchange (LME) prices for valuation.
4. Burden of proof for undervaluation.

Summary:

1. Misdeclaration of Value:
The appellants imported Brass Ash Dross and declared the invoice value based on the invoice price. The authorities, suspecting misdeclaration, conducted investigations and sought to assess the goods based on the price of copper as given in the metal bulletin showing the London general price. A show cause notice was issued indicating a higher price, and the importers were charged with misdeclaration of the value of the goods. Enhanced duty based on this value was also sought to be charged.

2. Applicability of Transaction Value u/s 14(1) of the Customs Act, 1962:
The appellants resisted the demand, urging that the declared value should be accepted as the transaction value u/s 14(1) of the Customs Act, 1962. They cited contemporaneous imports of similar goods where the invoice value had been accepted and pleaded that the value should alternatively be determined as per the valuation clause 3(1) or 5 to 8 of the Customs Valuation Rules. The lower authority, however, did not accept the transaction value, stating that the computer print-outs for similar importation through Bombay showed a higher value, necessitating recourse to the Rules of Valuation.

3. Use of London Metal Exchange (LME) Prices for Valuation:
The lower authority used the LME Bulletin formula to determine the value, which the appellants contested, arguing that the LME prices were not applicable for goods meant for export to other countries and that Brass Ash Dross is an inferior raw material compared to Brass Scrap. The appellants also argued that the formula was not correctly applied and that the Metal Bulletin prices were for the local UK market, not for international trade.

4. Burden of Proof for Undervaluation:
The appellants cited several case laws to argue that the burden of proving undervaluation lies with the Department. The authorities must show that the imports were made at a higher price and that the invoice did not represent the correct price charged by the exporter. The lower authority failed to provide evidence of contemporaneous imports at higher values and did not furnish details of the computer print-outs relied upon.

Judgment:
The Tribunal observed that the appellants did not produce sufficient evidence to support their claim that the invoice price reflected the transaction value. The lower authority's reliance on the LME Bulletin and computer print-outs without providing details to the appellants was flawed. The Tribunal set aside the lower authority's order and remanded the matter for de novo adjudication, instructing the lower authority to furnish details of the imports at Bombay and give the appellants an opportunity for a hearing. The appeals were allowed by remand.