2024 (10) TMI 408 - AT - Customs

Rejection of declared value - Quotation obtained by under-invoicing - big difference in values between the quotation and the declared invoice value - enhancement of value based on the quotation with the acceptance from the importer - HELD THAT - Having rejected the declared value based on quotations received from M/s. Shanghi Light Industries Equipment, the Ld. Original Authority went on determine the value by adopting the prices in the quotation as he found them to be reasonable and having being accepted by M/s Evergreen Enterprises. It is found that it has been held by a Division Bench of this Tribunal in COMMISSIONER OF CUSTOMS, CHENNAI VERSUS SAHARA ENTERPRISES 2005 (9) TMI 572 - CESTAT, CHENNAI that a proforma invoice is in the nature of a quotation or offer and hence does not constitute valid basis for enhancement of value of the imported goods. The transaction value based on a much later day import where the value proposed by the department was accepted by another importer in his own case, cannot be the basis of valuation in the impugned case, where there is no such consent. It is only when a transaction value arrived at by mutual consent, between the importer and the department, is subjected to the rigorous of examination and meets statutory requirements that an Authority may be able to determine and assess its probative value in another case - Transaction value is a function of price, however there was no evidence to show that there is a flow back or that the importer in the impugned matter has paid any amount over and above the declared transaction value. Thus, Revenue has not proved its case and the impugned order hence merits to be set aside. The impugned order is set aside - appeal allowed.

Summary

Issues:
1. Customs valuation rules and under-invoicing suspicion
2. Enhancement of declared value based on quotations
3. Confiscation of goods, redemption fine, and penalty
4. Legal arguments regarding valuation and quotations
5. Tribunal's decision on valuation based on quotations

Analysis:

1. Customs valuation rules and under-invoicing suspicion:
The case involved the appellant filing a Bill of Entry for the clearance of padlocks, with the department suspecting under-invoicing due to significant differences in values between the declared invoice value and quotations obtained. The Additional Commissioner passed an Order in Original redetermining the declared value, leading to the confiscation of goods with an option for redemption and imposition of a penalty.

2. Enhancement of declared value based on quotations:
The appellant argued that the enhancement of value based on quotations is impermissible under the Customs Valuation Rules, citing various judgments in support of their position. They claimed that the declared values were true and correct as they had accepted a discount for stock clearance sale, and the values attributable to another importer accepting enhanced values could not be a basis for their case.

3. Confiscation of goods, redemption fine, and penalty:
The department determined the value of goods under Customs Valuation Rules sequentially, leading to confiscation of goods and imposition of a redemption fine and penalty on the appellant. The authorized representative for the respondent argued that due to significant variations in declared value and quotations, the transaction value could not be accepted, justifying the confiscation and penalty.

4. Legal arguments regarding valuation and quotations:
The Tribunal considered the arguments presented by both parties, emphasizing the rejection of declared value based on quotations and the subsequent determination of value by adopting prices from the quotations. The Tribunal referred to previous judgments to support the position that a proforma invoice or quotation cannot be a valid basis for enhancing the value of imported goods.

5. Tribunal's decision on valuation based on quotations:
The Tribunal highlighted that using transaction value from a later import where the department's proposed value was accepted by another importer could not be the basis for valuation in the present case. Without mutual consent between the importer and the department, using third-party data for valuation was not permissible. Consequently, the impugned order was set aside, and the appellant was deemed eligible for any consequential relief as per the law.

In conclusion, the Tribunal's decision emphasized the importance of following Customs Valuation Rules and ensuring that valuation is based on legally sustainable grounds, ultimately setting aside the impugned order in favor of the appellant.