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DGOV Circular can’t override the Provisions of Valuation Rules: CESTAT [Read Order]

CESTAT - Regional benches - Taxscan

The Custom, Excise, Service Tax Appellate Tribunal (CESTAT), while quashing all the impugned order issued by the lower authority held that Directorate General of Valuation (DGOV) cannot override the provisions of Valuation Rules.

The tribunal in the light of other decisions observed that invoice price is not sacrosanct but before rejecting the invoice price the department has to give cogent reasons for such rejection. Assessing Authority has to examine each and every case on merit for deciding its validity. He could not form the view to reject all transactions only on the basis of the same general criteria based on DGOV circular.

The appellant, Guru Rajendra Metalloys India Pvt Ltd uses scrap namely Taint Tabor, Tread, Tense, Zorba, Talk, Troma, terse, Twitch, Telic, etc. imported from various countries as raw material for self-consumption in the manufacture of Aluminum Ingots, Aluminium Alloy Ingots, etc. The case of the department is that the appellant has given a consent letter to the proposal of the enhancement of the value from USD 990 PMT as per invoice value. In the consent letter, it was stated that the appellant has gone through the contemporaneous data of import of similar/identical goods and the appellant has agreed to enhance the assessable value from the declared value of USD 990/- PMT to enhanced value of USD 1587/- PMT. The appellant challenged the assessment of Bills of Entry before the Commissioner (Appeals) who has dismissed the appeal.

The appellant contended that the enhancement was made on the basis of the DGOV circular. Therefore, though it is mentioned in the consent letter that the appellant has gone through the contemporaneous import data but the price is not on the basis of any contemporaneous import but in fact it is on the basis of DGOV Circular.

The tribunal consisting of a Judicial Member, Ramesh Nair, and a Technical Member Raju while quashing all the impugned order issued by the lower authority held that Directorate General of Valuation (DGOV) cannot override the provisions of Valuation Rules. The invoice price is not sacrosanct but before rejecting the invoice price the department has to give cogent reasons for such rejection. Assessing Authority has to examine each and every case on merit for deciding its validity. He could not form the view to reject all transactions only on the basis of the same general criteria based on DGOV circular. It was, however, held that if contemporaneous imports were not noticed, Rules 5 and 6 of Customs Valuation Rules 1988 could not be applied, the question of rejecting the transaction valued under the Rule 10(A) does not arise at all.

“In view of above judgments, particularly, in respect of the identical cases, and on the various issues, such as whether after giving consent by the importer, the value can be enhanced, whether enhancement can be made on the basis of DGOV circular have been considered and conclusively held that in such circumstances invoice prices cannot be disputed and enhancement of the value cannot be made,” the tribunal said

To Read the full text of the Order CLICK HERE
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