2015 (5) TMI 910 - AT - Customs

Valuation of goods - whether the transaction value can be rejected under Rule 10A of the Customs Valuation Rules 1988 - Held that - During the months of July and August, 2004 there was volatility in the international price of Phenol. It is evident from the information available in international journal ICIS LOR for spot prices of Phenol on different dates - The appellant did not produce any evidence to show the international price consistent with the invoice presented by them along with the imported goods. They have also not produced any evidence to show that lesser price was charged from them by the same supplier on any commercial consideration such as quantity, quality or negotiation. - From the facts recorded by the first appellate authority international prices of PHENOL were increased after 30.07.2004 and were ranging between US 1256 PMT to 1322 PMT FOB. The contract entered between the appellants and the supplier is after 30.07.2004, therefore, higher price of US 1350 PMT CIF, at which same goods were imported by contemporaries in the same vessel, was justified for payment of duty and transaction value has been correctly rejected. - proceedings there is sufficient reasons to reject the transaction value under Rule 10A of the Customs Valuation Rules 1988 - Decided against assessee.

Summary

Issues:
1. Whether the transaction value can be rejected under Rule 10A of the Customs Valuation Rules 1988.

Analysis:
The appeals were filed challenging OIA No. 279/2006-KDL/Cus/Commr (A)/AHD dated 26.12.2006, where the first appellate authority upheld OIO No. KDL/AC-II/JPS/05 & 06/2006 dated 17/-3/2006. The appellant argued that the Adjudicating Authorities had enhanced the invoice value based on contemporary imports, but the transaction value should not be rejected as the contract was executed earlier. The Revenue contended that prevailing international prices justified the higher value. The main issue was whether the transaction value could be rejected under Rule 10A of the Customs Valuation Rules 1988.

The Rule 4 of the Customs Valuation Rules 1988 states that if the transaction values meet certain criteria, they should be accepted. However, if there is an abnormal discount or reduction from the ordinary competitive price, the value can be rejected under Rule 10A. In this case, the appellants imported goods at a significantly lower price compared to contemporary imports, indicating a more than 25% difference. The Revenue doubted the accuracy of the declared value, leading to the rejection under Rule 10A.

The first appellate authority discussed a similar case where evidence of prevailing international prices was crucial in determining the correctness of the invoice price. The international prices of phenol had increased after a certain date, justifying the higher price paid by contemporaries for the same goods. The judgement of the Apex Court emphasized the importance of contemporaneous evidence in determining transaction value and shifting the burden of proof to the importer to establish the correctness of the declared value.

Based on the legal provisions and precedents, the rejection of the transaction value under Rule 10A was deemed justified in this case. The appellate tribunal found no reason to interfere with the orders passed by the lower authorities, ultimately rejecting the appeals filed by the appellants.