The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Bangalore bench has held that the change in business model shall not be s reason for rejecting the transaction value under the Customs Act, 1962.
The appellants, M/s Bytesware Electronics have imported some integrated circuits and have declared value of Rs 29,37,162. The department attempts to re-value the goods on the basis of another bill of entry filed by the appellants in the past for integrated circuits. The appellants challenged the order of the customs department on the grounds that the declared assessable value was rejected without giving any cogent reasons and the valuation was arrived at on the basis of another bill of entry of the appellant holding that the goods are identical.
The appellants contended that the declared value was transaction value for the purposes of Section 14 of the Customs Act, 1962 and the department has not made any case for rejection of value under Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007; the another imported goods being not identical and not in comparable quantity, valuation under Rule 4 of CVR, 2007 is not legally sustainable.
The Shri. S.K. Mohanty (Judicial Member) and Shri P.Anjani Kumar (Technical Member) has held that the Department has not even alleged that there was the flow of extra consideration, than the declared value, form the appellant to the overseas supplier, leave alone any evidence to that effect.
“Moreover, we find force in the argument of the appellants that the quantity imported is not comparable. Department is attempting to compare the value at which 23750 Nos of ICs were imported, with the value at which a meagre 13 Nos were imported vide another B/e. Department overlooked the very common principles of business that the price is dependent on volumes. Therefore, we find that the invocation of, Rule 4 of CVR, 2007, after rejecting the declared value under Rule 12 ibid, though for no cogent reasons, is not legally sustainable,” the Tribunal said.
The Tribunal held that the findings of the impugned order are cryptic and not reasoned. We find that commissioner has based his conclusions on the basis of the business model of the appellants and the description of the item in Bills of entry.
“There are no fixed business models that should be followed by all. We find that the ultimate use of the imported goods cannot be criteria for deciding the valuation. Every businessman is free to adopt his own way of conducting business. In any case, this cannot be reason for rejecting the value of the impugned goods. In the absence of any technical opinion obtained, comparing the impugned goods with other goods, simply on the basis of description, is not acceptable. Moreover, as per Rule 4 of CVR, 2007 the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods. In the instant case, the comparison of the quantities, betrays a complete mismatch. Therefore, the valuation arrived on the basis of so-called identical goods is not legally sustainable,” the Tribunal said.
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