The CESTAT examined the overvaluation of goods case involving ...

Customs valuation row: Accepted export price despite lower manufacturing cost.

September 3, 2024

Case Laws     Customs     AT

The CESTAT examined the overvaluation of goods case involving rejection of declared export value, re-determination of value, confiscation of goods, and penalties. The key points are: The EPCG Scheme allows importers to import capital goods at nil/concessional duty rates, subject to fulfilling export obligations based on the duty forgone. The export obligation is determined by the FOB value of exports, which should align with the buyer-seller agreement and remittances received. The transaction value is generally the assessable value, but exceptions exist u/s 14 and Valuation Rules. The Customs officer can reject the transaction value if reasonable doubts exist. In this case, the sole basis for rejecting the declared value and re-determining it based on the Chartered Engineer's certificate was flawed. The exporter received remittances as per declared values, and no evidence suggested fund flow back to the buyer. Cost of manufacture could be lower than export price. No reasonable doubt existed regarding the transaction value's truth or accuracy. Therefore, the CESTAT held that the transaction value declared in shipping bills deserves acceptance, rendering confiscation, fines, and penalties immaterial. The impugned order was set aside, and the appeal was allowed.

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