2022 (2) TMI 307 - AT - Customs

Valuation of imported goods - Hot Rolled HR Steel Coil from foreign suppliers - rejection of declared value - rejection of value on the ground that the imports were made at a higher price by other importers than at the price at which the Appellant imported HR Coils in question - applicability of data as available form contemporaneous imports - HELD THAT - What has to be seen under section 14(1) of the Customs Act, as amended in 2007, is the transaction value of the goods imported or exported for the purpose of customs duty and transaction value is stated to be the price actually paid or payable for the goods when sold for export to India for delivery at that time and place of importation. Sub-section (1) of section 14 of the Customs Act also makes it clear that the price actually paid or payable for the goods will not be treated as transaction value‟ where the buyer and the seller are related to each other. As per the first proviso to the amended section 14 (1), certain charges are to be added to the transaction value of the imported goods. It is, therefore, clear that while there was scope for addition of notional charges in the assessable value under the un-amended section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. It would be clear from a perusal of the Sales Order Number 1101041643 dated 10.04.2009 that the product was mentioned as HR Coil with country of origin as Ukraine and shipment was to be by 31 May, 2009. The payment terms were payable against confirmed L/C at 180 days after B/L date‟. The USD price PMT was mentioned as 392.70. The Assistant Commissioner had examined the contemporaneous imports of Alloy Steel during the relevant period. A perusal of the data contained in the order indicates that most of the imports were for substantially lesser quantity of HR Steel Plates and in one case where it was for prime HR Steel Coils Alloy and the quantity was 4964.9 MTs the unit price was USD 385.00. The value of Alloy Steel HR Coil as declared by the Appellant is in terms of the Sales Order entered into and mutually agreed upon by the Appellant and the supplier. It is not the case of the Department that any additional payment was made by the Appellant pursuant to which under invoicing was resorted to by the Appellant. In fact, the Bank Remittance Certificate evidences payment to the supplier for the imports in terms of the Sale Order dated 10.04.2009. The only ground on the basis of which the transaction value has been rejected is that the imports were made at a higher price by other importers than at the price at which the Appellant imported HR Coils in question - A perusal of the imports relied upon in the impugned order show that the quantity of imports were substantially different from the quantity of the import made by the Appellant. Rule 5 of the Valuation Rules requires, amongst others, that the transaction value of identical goods should be at the same commercial level and in substantially the same quantity as the goods being valued to determine the value of the imported goods. In the present case neither the goods were identical nor of substantially the same quantity. Thus, what was actually required to be ascertained was the value of similar goods which were commercially interchangeable with the goods being valued. The Appellant had declared USD at ₹ 392.70 PMT and as seen from contemporaneous data relied upon by the Department for a sale of 4964.9 MTs on 27.09.2009 of Prime HR Steel Alloy, the unit price was USD 385.00. Such being the position, the value declared by the Appellant in the three Bills of Entries could not have been rejected under rule 12 of the Valuation Rules - It is only when the value of the imported goods is not taken to be the transaction value that the value has to be determined sequentially in the manner provided for in rules 4 to 9. Appeal allowed - decided in favor of appellant.

Summary

Issues Involved:
1. Classification of imported goods.
2. Rejection of declared value under rule 12 of the Customs Valuation Rules.
3. Determination of valuation under rule 5 of the Customs Valuation Rules.
4. Comparison of HR Steel Coils with HR Steel Plates for valuation.
5. Use of London Metal Exchange (LME) Bulletin for valuation.

Issue-Wise Detailed Analysis:

1. Classification of Imported Goods:
The Assistant Commissioner classified the imported goods as Alloy Steel under Customs Tariff Item (CTI) 7225 30 90. This classification was based on the test report confirming that the goods were Alloy Steel. The classification was not contested by the Appellant.

2. Rejection of Declared Value under Rule 12 of the Valuation Rules:
The Assistant Commissioner rejected the declared value of USD 392.70 PMT under rule 12, citing that the value did not reflect the true transaction value. The rejection was based on the failure of the Appellant to submit an actual payment certificate and the discrepancy between the declared value and higher values found in the NIDB and LME Bulletin.

3. Determination of Valuation under Rule 5 of the Valuation Rules:
The Assistant Commissioner proceeded to determine the valuation under rule 5, which pertains to the value of similar goods. The minimum value of similar goods was assessed at USD 460 PMT CIF, based on contemporaneous imports. This re-determined value resulted in a duty difference of ?47,48,458/-.

4. Comparison of HR Steel Coils with HR Steel Plates for Valuation:
The Appellant contended that HR Steel Plates could not be compared with HR Steel Coils for valuation purposes. The Tribunal agreed, citing the decision in Commissioner Customs (EP), Mumbai v/s Yatin Steels India Pvt. Ltd., which held that HR Coils and HR Steel Plates are not similar or identical goods. The Tribunal noted that the values relied upon by the Department for enhancement were not legally sustainable as they were based on HR Steel Plates, not HR Coils.

5. Use of London Metal Exchange (LME) Bulletin for Valuation:
The Appellant argued that the LME Bulletin, which indicated the value of HR Plates, should not have been used as the sole basis for rejecting the transaction value. The Tribunal supported this view, noting that the LME Bulletin values were for HR Plates, not HR Coils, and thus could not be directly applied.

Conclusion:
The Tribunal found that the declared value of USD 392.70 PMT was based on a legitimate sales order and payment terms, with no evidence of additional payments or under-invoicing. The rejection of the transaction value by the Assistant Commissioner was deemed improper as the goods compared were not similar or identical, and the LME Bulletin values were not applicable. Consequently, the Tribunal set aside the impugned order dated 29.11.2012 by the Commissioner (Appeals) and allowed the appeal with consequential benefits.