2015 (12) TMI 404 - AT - Customs

Rejection of transaction value under Section 14 - Provisional assessment - Held that - Even if there was a doubt in terms of Rule 12, the Rule requires that the authority must be proceed sequentially through Rule 4 to 9. Rule 4 requires the transaction value to be based on value of identical goods sold for export to India. The adjudicating authority based its decision on identical goods sold by the importer on high sea sale basis at US 165 PMT which is equal to the Platt price. We find that the contract between the supplier and importer was agreed upon in July 2000 whereas the said high sea sale took place much later. The adjudicating authority did not consider this fact. At the same time, the Commissioner (Appeals) has clearly stated that on further inquiry in the Custom House, the contemporaneous imports in the months of July, August and October 2000 were found to be US 140, 125 & 115 PMT respectively. It is not established by the department in the grounds of appeal that such contemporaneous imports did not take place. In these circumstances, it is incorrect on the part of the adjudicating authority to ignore the actual contemporaneous prices in terms of Rule 4 (earlier Rule 5). The department has not been able to either establish existence of any circumstances as in Rule 3(2) (earlier Rule 4(2) nor did it consider the correct contemporaneous imports. Reliance on judgments must be made in a proper context and not out of context. The judgments cited by Revenue do not say that when contemporaneous import prices are available, the same should be rejected and journal prices accepted. In this view of the matter, the grounds of appeal have no basis and are accordingly rejected. - Decided against Revenue.

Summary

Issues:
- Appeal against Order-in-Appeal passed by Commissioner (Appeals) Mumbai-II regarding the assessment of imported Furnace Oil
- Determination of assessable value based on transaction value or internationally published prices

Analysis:
The appeal was filed by Revenue against the Order-in-Appeal passed by the Commissioner (Appeals) Mumbai-II concerning the assessment of imported Furnace Oil. The respondent had imported the oil from a trader in Dubai, declaring the CIF value at US$120 per metric ton (PMT). However, the department provisionally assessed the goods at US$165 PMT based on 'Platt' prices under Section 18(1) of the Customs Act. The adjudicating authority finalized the prices at US$165 under Rule 5 of Customs Valuation Rules after rejecting the transaction value under Section 14 of the Act. The Commissioner (Appeals) found contemporaneous imports at values comparable to the declared value of the impugned goods and set aside the Order-in-Original. Consequently, Revenue appealed against the decision of the Commissioner (Appeals).

The main grounds of appeal by Revenue were that the value of identical and similar goods of Dubai Origin was not considered, and the price was correctly determined based on internationally published prices. Revenue relied on previous judgments to support their view that the assessable value can be determined on the prices of published journals. However, the Tribunal carefully considered the facts and submissions from both sides.

The Tribunal noted that the contract value was established in the Letter of Credit (L/C) and mutual consent through the invoice constituted a valid contract. It was observed that the contract price was amended from US$131 PMT to US$120 PMT for 4000 metric tons, reflecting a commercial practice of reducing prices with increasing volumes. The Tribunal emphasized the importance of the Customs Valuation Rule 3, which requires the transaction value to be accepted subject to conditions in the proviso. It was highlighted that the adjudicating authority based its decision on high sea sale prices, ignoring the actual contemporaneous prices of imports in July, August, and October 2000, which were found to be lower. The Tribunal concluded that the grounds of appeal had no basis, as the department failed to establish the existence of circumstances as required by the rules and did not consider the correct contemporaneous imports. Therefore, the appeal was rejected by the Tribunal.