2024 (10) TMI 1359 - AT - Customs

Valuation of imported goods - rejection of declared value - enhancement of value - goods were supplied by the foreign company to the related Indian company at a much lesser price when compared with those supplied to an unrelated buyer in India or not - HELD THAT - When the imported goods were running into more than 100 items, a reference was made only to 22 items. Whatever the inputs information submitted by the Respondent whether was considered or not is not clear from the orders passed. Further, it is not disputed that the grounds on the basis of which values were enhanced were not intimated to the Respondent-importer. The volumes of imports by the Respondent are far higher when compared to the quantities imported by M/s. Vestas. The provisions of Rule 3(b) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 are very clear as to arriving at the transaction value in respect of imports by the related persons. Both the foreign supplier and the importer-respondent must be having published pricelists for sale of various components being manufactured by them, which were not examined at all. Thus, it is not disputed that the Original Authority has clearly violated the principles of natural justice by not intimating the grounds on the basis of which enhancement of the values of the imported products was resorted too. As the issue of arriving at appropriate values in terms of CVR, 2007, requires further detailed examination clearly the Original Authority should have examined the values of all the items under import with those values of identical or similar items imported by the independent buyers from the same supplier or other identical or similar contemporaneous imports. The Lower Appellate Authority has also without examining the issue in detail has simply ordered to set aside the order of the Original Authority leaving a vacuum as to the values to be adopted for the imported goods by the related importer-respondent. The case is to be remanded to the Lower Original Authority for considering the issue afresh in strict observance of the principles of the natural justice. As considerable time has already elapsed, such an order may be passed within three months from the communication of this order. The appeal filed by the Department is allowed by way of remand to the Original Adjudicating Authority.

Summary

Issues:
Customs valuation rules application, comparison of declared values, violation of natural justice, remand for fresh consideration.

Analysis:
The case involved an appeal by the Department against an Order-in-Appeal passed by the Commissioner of Customs (Appeals), Chennai, regarding the valuation of related imports by a company engaged in manufacturing hydraulic components. The Department sought to set aside the Order-in-Appeal and remand the case for re-examination of the valuation issue.

The Special Valuation Branch of the Department had conducted an investigation into the imports made by the company from its related supplier abroad. The Department rejected the declared values and ordered for re-determination by enhancing values after considering contemporaneous imports by unrelated importers in India. The company appealed, and the Order-in-Appeal held that the values determined by the Department were not in accordance with the Customs Valuation Rules. The Department raised several grounds in the appeal, including the need for a detailed examination of all imported items' values and the potential revenue loss due to undervaluation.

During the hearing, the Department reiterated its grounds for appeal, emphasizing the legal infirmities in the lower authority's order and the revenue loss implications. The company's counsel argued that the Department had only compared prices of a few items, ignoring many others, and that the original authority failed to consider all relevant information. The counsel also cited a precedent regarding uniform loading of value.

After hearing both sides and examining the evidence, the Tribunal found that the original authority had violated principles of natural justice by not intimating the grounds for enhancing values to the company. The Tribunal observed that a detailed examination of all imported items' values was necessary, as well as consideration of published pricelists by both the foreign supplier and the company. Therefore, the Tribunal allowed the Department's appeal and remanded the case to the original adjudicating authority for a fresh consideration within three months.

In conclusion, the Tribunal's decision focused on the need for a thorough examination of all imported items' values, adherence to natural justice principles, and the potential revenue implications of undervaluation. The case was remanded for further consideration in line with the Customs Valuation Rules to ensure a fair and accurate valuation of the imported goods.