2024 (9) TMI 1428 - AT - Customs

Valuation of imported goods - Motor Controller - rejection of declared value - classification of the item imported from CTH 8503 0090 to CTH 8708 9900. Valuation of goods - HELD THAT - The assessing officer has rejected the transaction values without any valid basis/reasons and without following the due procedure as laid down under Section 14 and Valuation Rules, especially when there is nothing on record to suggest that the transaction values declared by the appellant were not the price actually paid for the goods when sold for export to India. There is also nothing on record to suggest that the buyer and seller of the goods were related or price was not the sole consideration for sale. Also, it is found that the Department has adduced no evidence that the respondent has paid any amount over and above the invoice value to the foreign supplier. In these circumstances, the enhancement of assessable values by the ld. adjudicating authority is liable to be struck down and set aside and the impugned bill of entry is to be assessed at values declared by the Respondent - the Ld. Commissioner (Appeals) has given categorical findings to reject the enhancement of value by the assessing officer and there are no reason to interfere with the same - the impugned order passed by the Commissioner (Appeals) upheld, accepting the transaction value declared by the Respondent in the respective Bills of Entry. Classification of the goods imported by the Respondent - HELD THAT - The Respondent has classified the goods under the Tariff Heading 8503 0090. Customs Tariff Heading 8503 covers parts suitable for use solely or principally with the machines of heading 8501 or 8502 and Custom Tariff Item 8503 0090 covers parts of electric motor (other than DC motor) . The electric motor is classified under the chapter heading 8501. In the Assessment Order, the Ld. Adjudicating authority has observed that the 'Controller' is used for starting and stopping the motor, selecting forward or reverse rotation, selecting and regulating the speed etc. It is observed that all these functions are connected to motor and the 'controller' is principally used with the motor to perform these functions. Thus, the 'controller' imported by the Respondent is rightly classifiable under the chapter 8503. The controllers are not covered under the CTH 8708 as per the explanatory notes to Section XVII. It is also pertinent to note that the Notes to CTH 8503 covers the parts to be used with motor and as such merits the classification of the goods under CTH 8503. Thus, the goods imported by the Respondent are rightly classifiable under Chapter heading 8503 0090 as claimed by them in the respective Bills of Entry. The correct classification of the goods in question is CTH 8503 0090. Therefore, hold that the Ld. Commissioner (Appeals) has rightly held the classification of the impugned goods under CTH 8503 0090. There are no infirmity in the impugned orders and the same are upheld - the appeals filed by the Revenue are dismissed.

Summary

Issues Involved:
1. Valuation of imported goods.
2. Classification of imported goods.

Detailed Analysis:

1. Valuation of Imported Goods:

The Tribunal addressed the issue of valuation, where the Assessing Officer had enhanced the CIF value of the imported Motor Controller and Electric Tricycle Spare Parts, rejecting the declared value. The Revenue contended that the Ld. Commissioner (Appeals) failed to appreciate Rule 12(2)(iii) of the Custom Valuation Rules, 2007, which allows the proper officer to raise doubts on the declared value based on higher values of identical or similar goods imported around the same time.

The Tribunal found that the NIDB data relied upon by the Revenue showed the assessed value, not the declared value. Consequently, the enhancement made by the adjudicating authority was contrary to law. The Tribunal upheld the Ld. Commissioner (Appeals)'s decision, which struck down the enhancement in price, noting that the valuation of similar goods depends on factors such as country of origin, quantity, quality, and other characteristics. The lower authority had adopted a "pick and choose approach" without considering the true nature of the NIDB database.

The Tribunal cited several case laws, including Prayas Woollens Pvt. Ltd. vs. CC Import Mumbai, which emphasized that for applying the price of contemporaneous goods, it is necessary to ascertain that the goods are of the same character, quality, quantity, and country of origin. The Tribunal concluded that there was no sufficient basis for the Revenue to enhance the value of imported goods and restored the assessable value as declared by the respondent.

2. Classification of Imported Goods:

The second issue involved the classification of the imported goods. The Assessing Officer had reclassified the Motor Controller under CTH 8708 9900, which pertains to parts and accessories of motor vehicles, instead of CTH 8503 0090, which covers parts suitable for use solely or principally with the machines of heading 8501 or 8502.

The Tribunal observed that the Motor Controller is used for starting and stopping the motor, selecting forward or reverse rotation, and regulating speed, all of which are connected to the motor. Therefore, the controller is principally used with the motor and should be classified under CTH 8503.

The Revenue argued that the controller is a separate and complete device used for controlling numerous activities, including that of the motor, and should be classified under CTH 8708. However, the Tribunal found that the controller cannot perform its functions without the presence of the motor and is not solely used in e-rickshaws. The Tribunal noted that there was no specific entry for the controller in the Customs Tariff Act, 1975, and the lower authority had not provided any evidence that the goods imported by the respondent were parts and accessories of e-rickshaw.

The Tribunal concluded that the correct classification of the goods is under CTH 8503 0090, as the controller is principally used with the motor. The Tribunal upheld the Ld. Commissioner (Appeals)'s decision, which had classified the goods under CTH 8503 0090.

Conclusion:

The Tribunal upheld the orders of the Ld. Commissioner (Appeals) on both valuation and classification issues, finding no infirmity in the impugned orders. The appeals filed by the Revenue were dismissed. The operative part of the order was pronounced in open court.