2023 (7) TMI 320 - AT - Customs

Valuation of imported goods - various types of cosmetics - rejection of declared value - revision of assessable value under rule 7 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - requirement to carry the retail selling price (RSP) in accordance with requirements of Legal Metrology Act, 2009 - HELD THAT - The ascertainment of abatement from local sale price lipgloss / lipstick was applied, across the board, to other goods in the consignment entered for import by the appellant. This, in itself, is not acceptable as no justification had been offered for different types of goods to be treated alike. Furthermore, three conditions are pre-requisite in the deductive value method option, viz., that the sale is to persons who are not related to the person in India, that derivation of the unit price should have been from identical or similar imported goods sold in the highest aggregate quantity and that sale be in the condition as imported and about the time at which the bills are presented for import. The rejection of declared value without subjecting the invoice of the manufacturer to scrutiny is clear breach of circumstances in which rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 could be invoked legally. Compounding this deviation from the law, failure on the part of the adjudicating authority to acknowledge the local sale invoices as evidence of existence of transaction value of identical/similar goods is further indication of command performance instead of application of mind warranted by the exercise of valuation in accordance with statutory prescription. In such circumstances, rejection of the declared value under the authority of rule 3(3) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 requires that transaction value of identical goods/similar goods takes precedence over substitution by deductive value from local prices even if the ascertainment had been of each type of goods and in conformity with the conditions therein. It would appear that the original authority has improperly proceeded beyond the preceding methods in the sequential enumeration. The first appellate authority, in endorsing the re-determination, had failed to take note of breach of this prescriptionin Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Accordingly, the resort to deductive value for assessment is incorrect. The impugned order is set aside and appeal allowed.

Summary

Issues involved:
The rejection of challenge to the order revising the assessable value of cosmetics imported under Customs Valuation Rules and the correctness of rejection under rule 12.

Summary:
1. The appeal arose from the rejection of challenge by M/s Lakyou Beauty India regarding the revising of the assessable value of imported cosmetics under Customs Valuation Rules. The goods were required to carry the 'retail selling price (RSP)' as per Legal Metrology Act, 2009. A multiplier of 0.3515 was applied to the intended selling price to arrive at the revised value.

2. The issue in dispute was the correctness of rejection under rule 12 of Customs Valuation Rules and the adoption of the 'deductive value' method. The appellant argued that the manufacturer's invoice should have sufficed for accepting the declared value, citing relevant case law.

3. The appellant contended that the rejection of declared value based on retail price in the Indian market was erroneous. They argued that without evidence of contemporaneous imports at a higher price, the Customs Valuation Rules should not have been applied. The onus of establishing undervaluation was emphasized.

4. The 'deductive value' method was defended by the Authorized Representative, stating that the 'first check' revealed a gap between the intended selling price and declared price. Reasonable abatement towards discount and profit margins was applied, leaving no room for grievance.

5. The original authority initiated proceedings based on a report showing a gap between declared value and retail price. The rejection of declared value under rule 12 was supported by the investigators' findings. The 'deductive value' was calculated based on local sale invoices of specific goods, which was deemed improper as different goods were treated alike without justification.

6. The ascertainment of abatement from local sale prices without justification was deemed unacceptable. The conditions for the 'deductive value' method were not fully met, and the rejection of declared value without proper scrutiny was considered a breach of legal requirements.

7. The rejection of declared value without proper scrutiny of manufacturer's invoice and failure to acknowledge local sale invoices as evidence of 'transaction value' were highlighted as deviations from legal requirements. The resort to deductive value for assessment was deemed incorrect.

8. Consequently, the impugned order was set aside, and the appeal was allowed based on the improper application of the 'deductive value' method under Customs Valuation Rules.

(Order pronounced in the open court on 05/07/2023)