The Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) Chennai emphasised the limitations of using National Import Database (NIDB) data as the sole basis for rejecting declared import values.
The decision came in the case of M/s. MBM (India) Pvt. Limited, appealed against the revaluation of goods by customs authorities, which was initially upheld by the Commissioner of Customs (Appeals).
The judgment provides critical insights into the procedural requirements for assessing transaction values under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, specifically focusing on Rule 12(1).
The case arose when customs authorities found a significant discrepancy between the value declared by the importer, M/s. MBM (India) Pvt. Limited and the NIDB data for similar goods. Citing this variance, the customs authorities rejected the transaction value declared by the appellant company and proceeded with revaluation under Rule 5 of the Customs Valuation Rules.
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Rule 12(1) of the Customs Valuation Rules permits the rejection of a declared transaction value if customs officers have “reason to doubt” the accuracy or truth of that value. However, this rule requires valid grounds for doubt to be documented and shared with the importer to enable a fair response.
The appellant, M/s. MBM (India) Pvt. Limited, represented by Shri R.R. Padmanabhan argued that without concrete evidence beyond the NIDB data, the customs authorities could not justify their decision.
The appellant cited the Supreme Court ruling in Gira Enterprises vs. Commissioner of Customs, Ahmedabad, where the court held that relying solely on NIDB data without substantive evidence or fair opportunity for rebuttal is insufficient.
The respondent revenue, the Commissioner of Customs, represented by Shri N. Satyanarayanan contended that the significant discrepancy between the importer’s declared value and NIDB data justified rejecting the declared value. They argued that revaluation was necessary under Rule 5 of the Customs Valuation Rules, as the available NIDB data indicated a more accurate transaction value for similar goods.
The bench noted that in this case, customs authorities did not provide sufficient reasons for doubting the declared value, nor did they make the contemporaneous import data available to the appellant, thus denying them a fair opportunity to rebut the revaluation basis.
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The CESTAT cited previous rulings where NIDB data alone was deemed inadequate to establish a basis for revaluation. The bench reiterated that the transactional value should not be dismissed lightly or based on assumptions or surmises. It highlighted a long-standing legal position that reliance solely on comparative data, such as the NIDB, without any other corroborating evidence or valid reason, is unjustifiable.
In result, the two-member bench of the CESTAT comprising Mr. P. Dinesha (Judicial Member) and Mr. Vasa Seshagiri Rao (Technical Member) found that the rejection of the declared transaction value by the customs authorities was legally unsound, as it did not meet the transparency and procedural fairness mandated by Rule 12(1).
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The bench set aside the order issued by the Commissioner of Customs and restored the declared value submitted by M/s. MBM (India) Pvt. Limited. The ruling stressed the importance of procedural compliance in customs valuation and the rights of importers to receive clear, evidence-based justifications for any valuation rejections. The CESTAT clarified that data sources like NIDB cannot override an importer’s declared value without due procedural justification.
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