2019 (4) TMI 597 - AT - Customs

Valuation of exported goods - iron ore - enhancement of value based on contemporaneous export - Customs Valuation (Determination of Value of Export Goods) Rules, 2007 - Held that - It is on records, in the Order-in-Original itself there have been contemporaneous exports near about same quantity of iron ore with 61% Fe content at the price of US 116.50 PDMT (CFR). The Adjudicating Authority curiously did not accept this price was accepted by the exporters M/s Bagadiya Brothers Pvt. Ltd., but chose to recalculate/re-determine the export value of the appellants iron ore by basing the adjustments holding 63.5% as standard Fe content and working back the value to demand additional duty from the appellant. This approach of lower authority seems to be inconsistent and not in accordance with the provisions of the Customs Valuation Rules. The provisions of Customs Valuation (Determination of Value of Export Goods) Rules, 2007, provisions of Rule 4 provides for determination of export value by comparison. In the case in hand, the consignment brought in for exports was comparable with the goods which were exported by M/s Bagadiya Brothers Pvt. Ltd., in January, 2010. The exports in this case are April, 2010 which about three months from the export consignment of M/s Bagadiya Brothers Pvt. Ltd. The First Appellate Authority was absolutely correct in setting aside the Order-in-Original - Appeal dismissed - decided against Revenue.

Summary

Issues:
1. Valuation of goods exported - determination of appropriate value based on iron ore content and contemporaneous export values.

Analysis:
The appeal before the Appellate Tribunal CESTAT Hyderabad involved a dispute regarding the valuation of iron ore exported by the respondent. The Revenue contended that the value declared by the respondent at US $138 per DMT (FOB) for iron ore with 61% Fe content was undervalued compared to contemporaneous exports by other companies. The Adjudicating Authority revalued the iron ore at US $155 PDMT (FOB) based on prices declared by other exporters, leading to an appeal by the Revenue against the Order-in-Original. The First Appellate Authority set aside the Order-in-Appeal, emphasizing that the declared price of US $138 per DMT should be considered for assessment unless there was proof of the respondent receiving more than the declared price.

Upon review, the Appellate Tribunal found that the Adjudicating Authority's revaluation method was not supported by export valuation rules and lacked a clear rationale. The Tribunal noted that there were contemporaneous exports of iron ore with similar Fe content at a lower price, which the lower authority did not accept. The Tribunal highlighted the inconsistency in the Adjudicating Authority's approach and its deviation from Customs Valuation Rules, specifically Rule 4 on determining export value through comparison. The Tribunal agreed with the First Appellate Authority's decision to set aside the Order-in-Original, as the valuation method applied was deemed incorrect and not in line with the relevant rules.

In conclusion, the Appellate Tribunal upheld the First Appellate Authority's decision, rejecting the appeal by the Revenue and affirming the correctness and legality of the impugned order. The Tribunal emphasized the importance of adhering to Customs Valuation Rules in determining the export value of goods, especially when considering contemporaneous export prices and relevant provisions for comparison.