2017 (11) TMI 496 - AT - Customs

Misdeclaration of imported goods - Valuation - mixed lots of PU leather cloth fabrics - rejection of transaction value declared by the respondents - contemporaneous imports - Held that - the declared value has been rejected on mere assumptions and presumptions. The department has not been able to adduce any cogent evidence for holding that the declared transaction value is not correct. The Commissioner (Appeals) in para 4.6 has rightly discussed that there is no allegation in the present case that the buyer is related to seller and therefore Rule 7A cannot be invoked without first excluding Rules 5 to 8 with valid reasons - there is no evidence of contemporaneous imports put forward so as to hold that the respondents have declared incorrect transaction value. The department has failed to prove that the goods imported by the respondents are of the same quality of the goods referred in the DRI Alert Circular. That being so, the rejection of transaction value is not acceptable - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
The judgment involves issues related to the rejection of transaction value by the department, enhancement of value based on NIDB data, invocation of Rule 7A without excluding Rules 5 to 8, and the validity of the Commissioner (Appeals) decision.

Detailed Analysis:

Rejection of Transaction Value:
The case revolved around the rejection of the transaction value declared by the respondents for importing PU Coated Fabrics. The department, based on a DRI Alert Circular, suspected evasion of customs duty due to discrepancies in the thickness of the imported fabrics. The department issued a show cause notice, rejected the declared value, and enhanced it. However, the Commissioner (Appeals) set aside the enhancement, leading to the appeals by the department.

Enhancement of Value Based on NIDB Data:
The department enhanced the value of the imported goods primarily relying on NIDB data. The respondents argued that NIDB data alone cannot justify enhancing the declared value, citing precedents where such reliance was deemed unacceptable. The Tribunal agreed with the respondents, emphasizing that suspicion without concrete evidence cannot replace proof. The Tribunal held that the department failed to prove the discrepancy in the declared value and that the NIDB data was an insufficient basis for enhancement.

Invocation of Rule 7A and Commissioner (Appeals) Decision:
The department invoked Rule 7A to reject the transaction value without excluding Rules 5 to 8 with valid reasons. The Commissioner (Appeals) found no ground for rejecting the transaction value and set aside the enhancement of value and the demand for differential duty. The Tribunal concurred with the Commissioner (Appeals) and dismissed the appeals filed by the Revenue, highlighting that the rejection of transaction value lacked evidence and that NIDB data alone was inadequate for enhancing the declared value.

In conclusion, the judgment scrutinized the department's grounds for rejecting the transaction value, the validity of enhancing value based on NIDB data, and the Commissioner (Appeals) decision. The Tribunal emphasized the importance of concrete evidence over suspicion, ruling in favor of the respondents and dismissing the appeals filed by the Revenue.