2022 (3) TMI 870 - AT - Customs

Valuation of imported goods - rejection of declared value - enhancement of value - evidence of any contemporaneous imports at a higher price or not - HELD THAT - It is settled principle of the commercial transactions that the prices of the transacted goods can be determined only on the date of transaction and not on any other date whether previous or subsequent. The prices may fluctuate on account of the vagaries of market but the contractual price agreed upon by the contracting parties would be sacrosanct unless the contract provides so. The contractual price entered between the parties need to be tested against the prevailing market prices on the date of contract rather than any subsequent price. The Appellant's contract was entered into on 19-1-2012 and the goods were shipped in March 2012. The contract price was US 713 per M.Ton. The appraisal price given in Metal Bulletin dated 30.01.2012 for production and exports of March 2012 of Chinese Mills, was in the range of US 685-695. Thus the Appellant's price was even higher than the appraisal price given in the Metal Bulletin of January 2012 for production and export of March 2012. The London Metal Bulletin prices of subsequent date 26.03.2012 giving the appraisal price for production and exports of May 2012 to be in the range of US 715 to 730 per MT, cannot form the basis of enhancing the value and for rejecting the transaction price. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Rejection of Transaction Value
2. Application of Section 14 of the Customs Act, 1962
3. Adherence to Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
4. Use of London Metal Bulletin (LMB) for Value Determination
5. Consideration of Contemporaneous Imports

Detailed Analysis:

Issue 1: Rejection of Transaction Value
The primary contention was the arbitrary rejection of the transaction value declared by the appellant, which was US$ 713 PMT for Cold Rolled Steel Sheets in Coils imported from Hong Kong. The Department enhanced the assessable value to US$ 722 PMT and US$ 721.64 PMT without issuing a speaking order. The appellant argued that the transaction value, as per Section 14 of the Customs Act, 1962, should be the price actually paid unless the Department could prove otherwise. The Tribunal noted that the Department failed to provide evidence of contemporaneous imports at a higher price and thus the rejection of the transaction value was deemed arbitrary and untenable in law.

Issue 2: Application of Section 14 of the Customs Act, 1962
Section 14(1) of the Customs Act, 1962, stipulates that the value of imported goods should be the transaction value unless specific conditions are met. The Tribunal referred to the Supreme Court's ruling in Eicher Tractors Ltd., which emphasized that the transaction value must be accepted unless the Department can demonstrate that it does not reflect the price at which such goods are ordinarily sold in the international market. The Tribunal found that the Department did not meet this burden of proof.

Issue 3: Adherence to Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007
The appellant argued that the Department did not follow the procedure laid down in Rule 12, which requires the proper officer to accept the declared value unless there are reasons to doubt its truth or accuracy. The Tribunal observed that the Department did not conduct the necessary enquiry or consultation with the importer and failed to provide evidence of contemporaneous imports at a higher price, making the rejection of the declared value arbitrary.

Issue 4: Use of London Metal Bulletin (LMB) for Value Determination
The Commissioner (Appeals) upheld the enhanced value based on the LMB prices close to the Bill of Lading date. However, the Tribunal noted that the LMB prices used were for a subsequent period and not for the period when the imports were made. The Tribunal emphasized that the transaction value should be based on the price at the time of the contract, which was higher than the LMB prices for the relevant period. The Tribunal cited the Supreme Court's ruling in Agarwal Industries Ltd., which held that the transaction value should be accepted unless there is evidence to the contrary.

Issue 5: Consideration of Contemporaneous Imports
The Tribunal found that the Department did not provide evidence of contemporaneous imports at a higher price. On the contrary, the appellant produced evidence showing that similar goods from the same supplier were imported at a lower transaction value, which was accepted by the Department. The Tribunal referred to the Supreme Court's ruling in Sanjivani Non Ferrous Trading Pvt Ltd., which stated that the transaction value should be accepted unless there is cogent evidence to reject it.

Conclusion:
The Tribunal set aside the impugned order, allowing the appeals. The Tribunal held that the transaction value declared by the appellant should be accepted as the assessable value for levy of customs duty. The Tribunal emphasized the importance of adhering to the procedures laid down in the Customs Act and the Customs Valuation Rules, and the necessity of providing evidence to reject the declared transaction value.

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