Establishment of Fake or Fabricated Invoice Not necessary to reject Transaction value u/r 12 of Customs Valuation Rules: CESTAT [Read Order]

The New Delhi Bench of Customs, Excise, and Service Tax Appellate Tribunal ( CESTAT ) has stated that the transaction value is not the only basis for assessment of the duty. It is sufficient if the proper officer has reasonable doubt for the transaction value to be rejected under Valuation Rule 12.

Mittal Appliances Limited, the assessee had filed Bill of Entry to clear Copper Scrap Birch/Cliff imported by it from UAE. The assessee self-assessed duty as per the value declared by it. The proper officer asked the assessee to provide material or evidence to justify the value declared by it in the Bill of Entry. Since the reported value was less than the contemporaneous value of the Copper Scrap Birch/Cliff imported during that time, the appropriate officer reevaluated the Bill of Entry.

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In accordance with Rule 12 of the Customs Valuation Rules, 2007, the Deputy Commissioner denied the declared value. The assessee, who was upset with the Deputy Commissioner, appealed to the Commissioner (Appeals), who dismissed the appeal and maintained the Deputy Commissioner's decision. Before the Tribunal, the assessee has contested the Commissioner's (Appeals) ruling.

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The assessee argued that the assessment should have been completed in accordance with the invoice's transaction value, which should have been approved. The Revenue argued that the scrap's worth was less than similar scrap's contemporaneous values. The appropriate officer asked the assessee for an explanation or supporting documentation, but none was given. Consequently, the appropriate officer reevaluated the Bill of Entry using the value of comparable products and rejected the transaction value in accordance with Rule 12.

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The two member bench of Dilip Gupta (President) and P. V. Subba Rao (Technical) has observed that, transaction value is not the only basis for assessment of the duty. Transaction value may be rejected in accordance with Section 14 of the Act and the Valuation Rules. The customs officer just rejects the transaction value as the assessable value for calculating the duty; they do not alter the transaction value.

The Tribunal noted that as scrap is categorized according to ISRI criteria and various types of copper scrap have been given distinct names, the assessee's argument that there cannot be equivalent items in scrap cannot be accepted. According to the Tribunal, the imported copper scrap in this instance is birch/cliff. According to ISRI classification, copper scrap is traded internationally and was also imported by the assessee. Consequently, the market-known copper scrap birch/cliff is comparable to other imported birch/cliff.

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While dismissing the appeal, the bench ruled that rejecting the transaction value does not need proof that the invoice was fraudulent or falsified. Furthermore, it is not required to prove a family connection between the buyer and seller. It is sufficient if the proper officer has reasonable doubt for the transaction value to be rejected under Valuation Rule 12.

To Read the full text of the Order CLICK HERE

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