Assessable Value must be computed based on Price shown in Bill of Entry: Supreme Court [Read Judgment]

A two-judge bench of the Supreme Court has held that the assessable value must be determined on the basis of the value shown in the Bill of Entry.

According to the bench comprising Justice AK Sikri and Justice S Abdul Nazeer, normally assessable value for the purpose of Customs Tax Act has to be arrived at on the basis of the price declared in the Bills of Entry and this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the assessing authority could hold that the paid price was not the sole consideration of the transaction value.

The respondent was aggrieved by the order of the Commissioner of Central Excise and Service Tax, Noida who rejected the declared value in the Bills of Entry and reassessment was done by increasing the assessable value.

On appeal, the Tribunal quashed the original order and the Revenue had approached the Supreme Court.

Dismissing the appeal, the bench held that “The transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other.”

Referring to the relevant provisions of the Customs Act, the bench observed that “The law, thus, is clear. As per Sections 14(1) and 14(1-A), the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of ‘deemed value’ of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer.”

The court also explained when such a declared value can be discarded. It observed: “The transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value.”