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TMI Blog2024 (9) TMI 71X X X X Extracts X X X X X X X X Extracts X X X X ..... ce dated 16.12.2018 issued by the directorate General of Foreign Trade [DGFT]. The EPCG Scheme allows import of capital goods at nil/ concessional rate of duty subject to the condition that the importer exports goods manufactured using the machinery. The export obligation has to be fulfilled in terms of FOB value of the exported goods. 3. Universal filed a shipping bill dated 23.03.2015 to export 30,600 printed banners of size 17" X 27" with digital effects. It declared FOB value of U.S. $ 7.65 per piece totaling Rs. 1,45,21,020/-. It also submitted invoice and packing list which showed the same value and the goods were to be exported to its buyer in Sharjah, UAE. This export consignment was examined 100% by the officers in the presence of the customs broker of the exporter and the quantity of the goods was as declared, but the value appeared to be very high. It was also found that the Universal had exported banners under five shipping bills in 2013. The statement of Shri Santosh Kumar Sinha, Manager (Accounts) of Universal who had come to the customs office in connection with the live consignment was recorded on 06.04.2015 under section 108 of the Customs Act, 1962 [Act]. In this ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iring him to produce details of manufacturing cost of the printed banner, but he had not appeared. Thereafter, a general market of survey was contacted and the goods were examined by the Chartered Engineer Shri Agarwal. Based on the market survey and the report of the Chartered Engineer, the value of the export goods was re-assessed as Rs. 2,75,400/-. A show cause notice [SCN] dated 05.10.2015 was issued to Universal and Vikas proposing to:- (i) Reject the declared assessable value of Rs.1,45,21,020/- and re-determine it as Rs. 2,75,400/- as per Rule 6 of the Customs Valuation (Determination of Value of Export Goods) Rules, 2007 [Valuation Rules] ; (ii) Confiscate the goods under section 113 (h) (i) ; (iii) Take penal action under section 114 and 114AA and (iv) Restrict the fulfillment of export obligations to the extent of re-assessed value. 7. Neither Universal nor Vikas filed any reply to the SCN. Personal hearing was fixed on 01.05.2018, 24.05.2018, 18.06.2018 and 25.06.2018, but none appeared on behalf of the Universal or Vikas. Thereafter, the Additional Commissioner passed the order-in-original re-determining the value of the export goods, as proposed in the SCN. He ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... product, the Density Meter and Spectro Photo Meter used to conduct objective analysis of the print quality and color information ; (viii) The Commissioner (Appeals) did not consider that five consignments were earlier exported against the same licence and export proceeds were received in full ; (ix) The Valuation Rules provide for the proper officer to doubt the truth or accuracy based on certain factors including significant variation in value on which goods of like kind and quality exported at or about the same time, significantly higher value compared to the market value of goods of like kind and quality at the time of export and mis-declaration of description, quality, quantity, year of manufacture or production etc. None of these are present in this case ; (x) No prudent businessman would import goods at a price higher in the international market value ; (xi) There is no evidence of over-valuation of goods nor any cash trail of the amount flowing back to the overseas importer. 10. In view of the above, it has been prayed that the impugned order may be set aside and the appeal may be allowed with consequential relief to Universal and to Shri Vikas. 11. Learned authori ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anyone who is a stranger to the contract including the customs officers. What the officers can determine under the Customs Valuation Rules is whether to accept the transaction value as the value under the Customs Act to assess duty or to reject it and determine the value following some other method prescribed in the Valuation Rules. In other words, what the officer decides is the assessable value of the goods under the Customs Act. In the normal course, the transaction value is the assessable value. However, there are exceptions under section 14 read with the Valuation Rules. The Valuation Rules indicate conditions under which the proper officer can doubt the transaction value and reject it. If the transaction value is rejected as the assessable value, then it has to be determined under any of the other methods provided in the Valuation Rules. 17. What needs to be noted is the customs officer does not and cannot alter the transaction value, but can only reject the transaction value and re-determine the assessable value through some other methods. An illustration will make the distinction clear. "A", living in U.K., sells his luxury car to "B" in India for GBP 1,000/-. The Customs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nformation including documents or other evidence and if, after receiving such further information, or in the absence of a response of such exporter, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, the transaction value shall be deemed to have not been determined in accordance with sub-rule (1) of rule 3. (2) At the request of an exporter, the proper officer shall intimate the exporter in writing the ground for doubting the truth or accuracy of the value declared in relation to the export goods by such exporter and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1)". 21. As may be seen it requires a proper officer to have some reason to doubt the truth or accuracy for the value declared and if he does he can call for further information. On receiving additional information or in the absence of any response, if the proper officer still has reasonable doubt about the truth or accuracy of the value declared it shall be deemed that the value cannot be determined as per the transaction value and then it can be determined sequentially through Rule 4 to 6. Rule 4 provides for determinatio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Chartered Engineer gave statement regarding the cost of production of the materials taking into consideration the price of raw material, printing cost, wastage etc. and thereby he assessed a fair market value. He also said that the panels were not digital or screen printed. For these reasons, the Additional Commissioner rejected the transaction value under Rule 8. 23. What emerges from the above is that the only basis for alleged over-valuation is the statement of Shri Santosh Kumar Sinha. Even in his statement, he asserted that remittances have been received as per the value declared in the shipping bills in the past in the account of the exporter. He said that the amounts were further distributed to other paper companies and he does not know how the money was returned to the buyer in UAE. Even if the statement is taken at face value, the remittances were received as per the declared transaction value. There is no allegation, let alone evidence, of any flow back to the buyer. The second ground for rejection is that the cost of the raw material including inks and the cost of printing of the banners, which were to be exported was much lower than the transaction value. The thi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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