2019 (2) TMI 319 - AT - Customs

Valuation of imported goods - Hot Rolled Coils (HR Coils) - enhancement of declared value based on contemporaneous imports - applicability of Rule 12 of the Customs Valuation Rules, 2007 - Held that - As per Clause (iii) of explanation under Rule 12, if contemporary import of identical or similar goods is noticed at the higher price, invoice value can be rejected and same can be determined under Rule 5 to 9 of the Rules. The said rule 12 ibid provide for proper officer seeking clarification from the importer to provide further information to satisfy the correctness of the declared assessable value. In the present case, the respondents did submit the invoice, irrecoverable LC and supporting contract documents with reference to the impugned consignments. Nothing more is required with the importer to further substantiate the value. Merely because the assessee failed to submit any payment certificate or Bill of Exchange, the Assessing officer rejected the value declared by the respondent/assessee - The Assessing officer has to give valid reasons in order to reject the declared value and thereafter to proceed with the re-assessment, after due enhancement. Explanation (1)(i)(iii)(a) in Rule 12 appears to have applied by the adjudicating authority in the present case. HR Coil and HR Steel Plates cannot be said to be similar or identical goods. If the revenue is rejecting the value declared by the respondent, then they are bound to prove beyond reasonable doubt that the goods compared with are similar goods or identical goods - HR Coils and HR Plates cannot be termed as one and the same for the purpose of contemporaneous value. Both the goods are different in nature and therefore the values relied upon by the Department for enhancement of declared value is not legally sustainable. The Adjudicating Authority has erred in rejecting the declared price/transaction value of the goods imported by the respondent by taking recourse to Rule 12 of Customs Valuation Rules, 2007. Section 14 of Customs Act, 1962 as well as Custom Valuation Rules, 2007 do not sanction such a method, as adopted by the Adjudicating Authority, for redetermination of assessable value - appeal dismissed - decided against Revenue.

Summary

Issues Involved:
1. Enhancement of declared value of Hot Rolled Coils (HR Coils) based on contemporaneous imports of Hot Rolled Plates (HR Plates).
2. Determination of transaction value under Section 14 of the Customs Act, 1962.
3. Application of Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
4. Comparison of HR Coils with HR Plates as similar goods.

Issue-wise Detailed Analysis:

1. Enhancement of Declared Value of HR Coils:
The Revenue sought to enhance the declared value of HR Coils based on the value of contemporaneous imports of HR Plates. The respondent had entered into a contract in May 2009 for importing HR Coils at a declared price of USD 445 per MT. The adjudicating authority doubted this declared value and provisionally assessed the goods. The authority then re-determined the value at USD 460 per MT, based on contemporaneous imports of HR Plates, which it deemed similar goods.

2. Determination of Transaction Value under Section 14 of the Customs Act, 1962:
Section 14 of the Customs Act, 1962 stipulates that the value of imported goods shall be the transaction value, i.e., the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation. The Revenue argued that the transaction value should be based on the prevailing market price at the time and place of import, not the contract date. However, the Tribunal emphasized that the transaction value should be accepted unless there are valid reasons to doubt it.

3. Application of Rule 12 of the Customs Valuation Rules, 2007:
Rule 12 allows the proper officer to reject the declared value if there is reason to doubt its truth or accuracy. The respondent provided all necessary documents, including the invoice, irrevocable LC, and contract documents, substantiating the declared value. The Tribunal found that the assessing officer did not provide valid reasons for rejecting the declared value and did not follow the proper procedure under Rule 12, which requires significant evidence of higher contemporaneous values for identical or similar goods.

4. Comparison of HR Coils with HR Plates as Similar Goods:
The Tribunal examined whether HR Plates and HR Coils could be considered similar goods under Rule 2(f) of the Customs Valuation Rules. It found that HR Plates and HR Coils do not perform the same functions and are not commercially interchangeable. HR Coils are extensively used in the auto industry and are processed into CR Coils, whereas HR Plates are already made to size and used differently. The Tribunal agreed with the Commissioner that there was no basis for treating HR Plates and HR Coils as similar goods.

Conclusion:
The Tribunal upheld the Commissioner’s order, finding that the adjudicating authority erred in rejecting the declared transaction value of HR Coils based on the value of HR Plates. The declared value should be accepted unless there are valid reasons for rejection as per the Customs Valuation Rules. The appeal filed by the Revenue was dismissed, and the transaction value declared by the respondent was accepted.