2019 (5) TMI 394 - AT - Customs

Valuation of imported goods - rejection of declared value - enhancement of transaction value - Absence of contemporaneous imports - challenge to assessment orders - HELD THAT - Initially value has been enhanced by the adjudicating authority on the basis of the alert issued by DGOV Alert Circular No.14/2005 dated 16.12.2015. The said alert cannot be the basis to reject the transaction value, in the absence of any contemporaneous import of the similar or identical goods during the relevant time. Also, after rejecting the declared value, no order under Section 17 (5) of Customs Act has been passed by the adjudicating authority. Thus, the LME price cannot be the basis to enhance the declared price, in the absence of any contemporaneous value of the imported goods is available on record - the transaction value has been enhanced arbitrarily without any evidence on record. The declared value of the imported goods declared by the appellants cannot be accepted - appeal allowed - decided in favor of appellant.

Summary

Issues:
- Disputed valuation of imported goods based on Bills of Entry
- Rejection of declared price and enhancement of value by adjudicating authority
- Applicability of DGOV Alert Circular No.14/2005 on valuation
- Comparison with contemporaneous imports for valuation purposes
- Legal principles governing transaction value under Customs Valuation Rules

Analysis:
The judgment by the Appellate Tribunal CESTAT NEW DELHI involved appeals arising from a common issue of disputed valuation of imported goods based on Bills of Entry. The appellants, engaged in trading of S.S. Scrap and Aluminium Scrap, challenged assessment orders where the value declared was rejected and enhanced by the adjudicating authority. The appeals were dismissed by the ld. Commissioner (Appeals) citing reasons such as declared prices being lower than international prices and linked with ISRI grades. The appellant contended that the Bills of Entry reflected prices charged by foreign suppliers without any additional payments. The Tribunal considered the submissions and found that the valuation was enhanced based on DGOV Alert Circular without evidence of contemporaneous imports of similar goods.

The Tribunal referred to previous cases to establish that the DGOV Circular cannot override Customs Valuation Rules and rejected values must be justified with specific reasons. It was noted that no Section 17 (5) order was passed after rejecting the declared value, and no contemporaneous imports were found to support the enhanced valuation. The Tribunal emphasized the importance of following transaction value principles under Customs Valuation Rules, where the price actually paid or payable should be accepted unless specific exceptions apply.

Further, the Tribunal highlighted the legal requirement for the assessing officer to provide cogent reasons for rejecting declared values and to consider contemporaneous import prices as the best guide for valuation. The judgment also referenced a Department of Revenue letter clarifying that LME prices cannot be used to allege undervaluation without contemporaneous evidence. Ultimately, the Tribunal concluded that the enhanced transaction value lacked evidential support and upheld the declared value of the imported goods, setting aside the demands raised against the appellants. The appeals were allowed with consequential relief, emphasizing the importance of adhering to legal principles in determining transaction value for imported goods.