CESTAT sets aside Transaction Value Enhancement due to Lack of Evidence in Chartered Engineer’s Report [Read Order]

The Chennai Bench of Customs, Excise and Service Tax Appellate Tribunal(CESTAT)  set aside the transaction value enhancement, due to lack of evidence in the Chartered Engineer’s report.

Sri Aisvaresvaraya Imports,appellant-assessee,challenged the rejection of the declared transaction value and its enhancement based on a Chartered Engineer’s report.

The Bill of Entry was marked for the first check, where shed officers found the declared value low. SIIB officers at Customs House, Tuticorin, later examined the cargo with a Chartered Engineer, who assessed a higher value in his report dated January 17, 2014. The first-check officers had no basis to determine under-valuation.

Based on the report, the Revenue reclassified items 1 to 5 in the Bill of Entry. On January 21, 2014, the assessee’s Operations Executive requested the cargo’s release without a show-cause notice or hearing due to heavy demurrage. The request was accepted, and OIO No. 01/2014 was passed on February 14, 2014, rejecting the declared value, reclassifying the goods, and revising the value under Rule 9 of the 2007 Customs Valuation Rules.

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A penalty was imposed under Section 112(a)(ii) of the Customs Act, 1962, and all items from Sl. Nos. 1 to 11 were confiscated, though items 6 to 11 were not discussed.

The Commissioner (Appeals) upheld the order, leading to this appeal.

The CESTAT set aside the impugned order, stating that the authorities rejected the declared transaction value without valid grounds.

Read More: CESTAT Directs Re-Adjudication of Customs Matter after Authority Fails to Furnish Test Reports

The Supreme Court, in Century Metal Recycling Pvt. Ltd. v. Union of India (2019), ruled that transaction value must be accepted unless there were reasonable doubts under Rule 12 of the 2007 Customs Valuation Rules. The tribunal found that in this case, the Revenue failed to justify such doubts.

Initially, the authorities noted the declared value seemed low and brought in SIIB officers and a Chartered Engineer, who increased the value. However, there was no claim that the parties were related or that the transaction was influenced by external factors. Instead, the Chartered Engineer reassessed the value without proving the declared amount was incorrect.

The two member bench comprising P.Dinesha (Judicial Member) and Vasa Seshagiri Rao(Technical Member) held that the Revenue acted prematurely by assuming under-valuation without first establishing valid reasons for doubt. Citing similar rulings, it ruled that the rejection of the declared value was unjustified and set aside the order.

To Read the full text of the Order CLICK HERE

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