2013 (1) TMI 309 - AT - Customs

Rejecting of Transaction value of imported goods Under Rule 2(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Provisional assessment Related party - Rule 5 of Customs (Valuation) Rules, 1988 Price of identical goods imported by unrelated buyers in India - Assessee engaged in assembly/manufacture of electric motors, A.C or D.C., single phase or multi-phase -Importing Completely Built Units (CBUs) from parent company - Section 28 of the Customs Act - Held that - No material has been brought on record to show that the price declared is not the real transaction value. For loading of the value declared for charging customs duty, the best evidence that Revenue can produce is flowback of extra consideration. Since the parties are related parties such evidence may not easily be available. But in such cases evidence of imports at higher prices by unrelated buyers will be good evidence. Since the appellants have produced evidence, vide letter dated 18-5-2010, to show that presently the prices are not influenced by the relationship and Revenue has not rebutted this contention with any evidence, we set aside the impugned order and direct that the assessments of goods imported by the appellant be assessed at prices declared by them with effect from 31-1-2010 with consequential benefits if any. This order shall act as a bar on ordering provisional assessment of future imports at higher prices based - In favour of assessee

Summary

Issues:
1. Assessment of imported goods based on provisional basis.
2. Review of assessment practices regarding Extra Duty Deposit (EDD).
3. Dispute over continuation of EDD collection.
4. Change in manufacturing pattern and pricing over time.
5. Justification for loading declared value for customs duty.
6. Request for separate assessment orders for Completely Built Units (CBUs) and parts.
7. Allegation of violation of principles of natural justice.
8. Burden of proof on importer regarding relationship with supplier and pricing.
9. Lack of evidence and arbitrary assessment practices by Revenue.
10. Application of Customs Valuation Rules and justification for assessment values.
11. Final decision on assessment values and future implications.

Analysis:
1. The appellants, engaged in assembly/manufacture of electric motors, imported Completely Built Units (CBUs) for assembly from a German supplier since 2000. Assessments were made on provisional basis by loading declared value by 5% initially. Later, a new practice of 1% Extra Duty Deposit (EDD) was introduced.
2. The assessment practices were reviewed periodically, leading to a dispute when the Revenue initiated a further review after the three-year period ended in 2010. The appellants contested the continuation of EDD collection, leading to appeals and challenges before higher authorities.
3. The appellants argued that changes in manufacturing patterns and pricing justified no loading of value for customs duty. They highlighted the shift from importing CBUs to parts and the lack of imports of comparable goods into India by other buyers.
4. The appellants emphasized the need for separate assessment orders for CBUs and parts due to different import scenarios. They raised concerns over the violation of natural justice principles in passing the adjudication order without proper notice or evidence disclosure.
5. The judgment focused on the burden of proof on the importer to show that the relationship with the supplier did not affect pricing. It highlighted the lack of evidence from Revenue to justify loading values and arbitrary assessment practices over a decade.
6. The decision emphasized the importance of disclosing evidence to the importer and following Customs Valuation Rules for assessments. It noted the lack of justification for assessment values and directed assessments based on prices declared by the appellants from 2010 onwards.
7. The final verdict allowed the appeal, setting aside the impugned orders of the lower authorities. It provided for future assessments based on declared prices, subject to Revenue producing evidence of misdeclaration or issuing notices for provisional assessments at higher prices with proper disclosure and hearing.

This detailed analysis of the judgment covers the issues involved, the arguments presented, and the final decision rendered by the Appellate Tribunal CESTAT, New Delhi.