Adopting Values Fixed by Valuation Committee Without Revealing Methodology and Basis Adopted is not Correct: CESTAT [Read Order]

The Chennai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), observed that adopting values fixed by the Valuation Committee without revealing the methodology and the basis adopted is not correct.

The appellant in the present matter is M/s. Kalima Exim. On entertaining a suspicion that the cargo was overvalued, the export goods were detained by the SIIB and the samples were drawn for testing. It appeared that the appellant had submitted cost construction statement for each of the items covered in the above two shipping bills, duly certified by a Chartered Accountant, with a request to release for export these goods as the foreign buyer was insisting on dispatch of the goods.

However, drawback due was withheld till finalization of the valuation issue and the samples drawn were sent to the Valuation Committee apparently in terms of the Circular No.07/2003-Cus dated 05.02.2003. The valuation committee fixed the price of the samples and accordingly, the FOB value of exports in respect of the above two shipping bills dated 27.02.2012 was determined as Rs.4,68,377/- as against the revised value of Rs.8,26,715/-.

M. Karthikeyan representing the appellant has submitted that their manager was on leave for ten days for his father’s treatment and their Accountant who filed these two shipping bills has wrongly mentioned the value based on the earlier shipping bills.

The Counsel further submitted that SIIB, detaining the cargo on the ground that the value of the export goods was overvalued, permitted provisional release based on the cost construction statement certified by the Chartered Accountant accepting the revised value as reasonable.

The Authorised Representative Sridevi Taritla (Additional Commissioner) reiterated the findings of the lower adjudicating authorities and argued that there is a mis-declaration of the value of export goods and also as to the description of the commodity and consequently the drawback amounts payable on their goods and so, justified restriction of the drawback, confiscation of the goods and imposition of penalty.

A Two-Member Bench of the Tribunal comprising P Dinesha, Judicial Member and Vasa Seshagiri Rao, Technical Member observed that “As such adopting the values as fixed by the Valuation Committee without revealing the methodology and basis adopted for such values is not correct and is not in accordance with the Valuation Rules.”

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