Imported Guar Gum was of Food Grade: CESTAT confirms Re-determining value based on Contemporaneous Values of Imports available in NIDB

The New Delhi Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT), confirmed the re-determining value based on contemporaneous values of imports available in the National Import Database (NIDB) as the imported guar gum was of food grade.

M/s Nanz Med Science Pharma Pvt Ltd, imported guar gum (Hydroxypropyl Trimonium Chloride) and declared it to be of Technical Grade, Not for Pharma /food grade and declared a value of Rs.19.264 per kg. Doubting these declarations, the officers of the department checked and found that the actual quantity of guar gum imported 34260 kg against 32,580 kg declared in the Bill of Entry, i.e, there was an excess quantity of 1,680 kg.

Doubting the declaration that the guar gum imported was not of Pharma grade and was also not of food grade, samples were drawn by the departmental officers and sent for testing to the Central Revenue Control Laboratory which reported that the guar gum was of food grade and the appellant requested the officers to get the samples re-tested indicating some tests to be conducted.

The Counsel for the appellant submitted that NIDB data should not have been considered as the appellant purchased these goods at a very low price and that transaction value must be accepted. The Counsel further submitted that although the overseas supplier and Nanz were related parties, such relationship cannot be held to have affected the price and when the goods are valued, if the prices of contemporaneous imports are considered, they must be only of identical goods and cannot be even of similar goods.

The Counsel for the Revenue contended that a very important factor in determining the value of the imported goods and if they are related parties, it is a very significant factor. The appellant mis-declared that the overseas supplier and the appellant are not related.

The Tribunal of PV Subba Rao, Technical Member and Binu Tamta, Judicial Member observed that “The appellants contention that valuation should be based on the transaction value is not correct for four reasons. Firstly, the quantity of the goods is much larger than what was declared. Secondly, the buyer and seller are related parties. Thirdly, the grade of the guar gum has been mis-declared by the appellant as “not of food grade‟ but on testing, it is found to be of food grade. Fourthly, the declared value is Rs 19.264 per kg as opposed to the contemporaneous import prices of Rs. 424.95 per kg.”

The Bench concluded that “We find that the impugned order is correct in rejecting the transaction value and re-determining the value based on the contemporaneous values of imports available in NIDB.

To Read the full text of the Order CLICK HERE

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