2012 (11) TMI 365 - AT - Customs

Demand of duty and interest rejection of declared transaction value - upward revision of transaction value based on the value of contemporaneous imports of identical /similar items as available in NIDB Held that - Declared transaction value can be rejected only if the conditions specified in Rule 4(2) of the Customs Valuation Rules are not satisfied and in this case, no cogent evidence in this regard has been produced by the Department demand rejected

Issues Involved:
1. Valuation of imported goods.
2. Rejection of declared transaction value.
3. Application of Customs Valuation Rules.
4. Use of NIDB data for determining value.
5. Burden of proof for undervaluation.

Issue-wise Detailed Analysis:

1. Valuation of Imported Goods:
The respondent filed Bills of Entry for clearance of four consignments of ball bearings of Chinese origin, declaring the value based on supplier invoices. The department initially assessed the duty based on declared CIF prices but later issued show cause notices for upward revision of transaction value based on contemporaneous imports data from NIDB.

2. Rejection of Declared Transaction Value:
The department sought to reject the declared transaction value, arguing that contemporaneous imports of identical or similar goods were at higher prices. The Commissioner (Appeals) dismissed the department's review appeals, relying on the Apex Court's judgment in Eicher Tractors Ltd., which stipulates that declared transaction value can only be rejected if specific conditions in Rule 4(2) of the Customs Valuation Rules are not met.

3. Application of Customs Valuation Rules:
During the period of dispute, Section 14(1) of the Customs Act, 1962, and the Customs Valuation Rules, 1988, governed the valuation of imported goods. The assessable value was deemed to be the price at which such goods are ordinarily sold in international trade under fully competitive conditions. Rule 4(1) specified that the transaction value should be the price actually paid or payable, adjusted according to Rule 9. Rule 10A allowed for rejection of transaction value if there were reasons to doubt its truth or accuracy.

4. Use of NIDB Data for Determining Value:
The department relied on NIDB data to argue that the declared transaction value was undervalued. However, the Tribunal noted that the department did not provide details of the contemporaneous imports, such as whether the goods were identical or similar to those under assessment, or whether the difference in price could be explained by trade discounts or other factors.

5. Burden of Proof for Undervaluation:
The Tribunal emphasized that mere suspicion or difference in declared value and NIDB data is insufficient to reject the declared transaction value. The department must provide concrete evidence to prove that the conditions in Rule 4(2) are not satisfied or that there are reasons to doubt the declared value under Rule 10A. The Apex Court's judgment in Aggarwal Industries Ltd. was cited, stating that the onus to prove undervaluation is on the Revenue, and once this burden is discharged, it shifts to the importer to prove the correctness of the declared value.

Conclusion:
The Tribunal found no justification for rejecting the declared transaction value, as the department failed to provide sufficient evidence to prove undervaluation or to invoke Rule 10A. The appeals by the Revenue were dismissed, and the declared transaction values were upheld. The Tribunal reiterated that the burden of proof lies with the department to provide cogent evidence for rejecting declared values, and mere reliance on NIDB data without detailed analysis is inadequate.

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