In a recent Judgement, the Delhi bench of the Customs Excise and Service Tax Appellate Tribunal ( CESTAT ) has set aside the order that wrongly rejected the transaction value under Rule 8 of the Customs Valuation Rules, noting that there was no evidence of over-valuation of goods and no reasonable doubt about the truth or accuracy of the declared transaction value.
The Assessee, M/s Universal Offset, engaged in the export of printed banners, imported printing machinery under the Export Promotion Capital Goods ( EPCG ) Scheme, which permits import at concessional duty rates provided the machinery is used to manufacture and export goods with a higher value than the duty saved. Universal filed a shipping bill on March 23, 2015, declaring the FOB value of the exported banners as USD 7.65 per piece, totaling Rs. 1,45,21,020/-. The consignment was examined by customs officials, who found the declared value unusually high.
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An investigation was conducted, revealing that the cost of raw materials and manufacturing was lower than the declared value. Santosh Kumar Sinha, Manager ( Accounts ) of Universal, stated that the export goods were overvalued to meet the EPCG export obligations before the deadline. He also alleged that past over-valued exports were received in USD and subsequently distributed among various companies. Despite this, there was no direct evidence of money flow back to the buyer in the UAE.
Statements from Vikas Gupta and a market survey, along with a Chartered Engineer’s report, supported the declared value, indicating it was in line with international market prices. The Additional Commissioner, however, rejected the declared value and re-determined it based on the Chartered Engineer‘s assessment, which was significantly lower.
The bench reviewed the case and concluded that there was no reasonable doubt about the truth or accuracy of the declared transaction value. The Tribunal found that the transaction value should not have been rejected under Rule 8 of the Customs Valuation Rules, which allows rejection only if there is reasonable doubt about the declared value’s truth or accuracy. The only evidence was a statement from Santosh Kumar Sinha,, which did not substantiate any direct evidence of over-valuation or flow-back of funds.
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Therefore, the two member bench of the tribunal Dr Rachana Gupta ( Judicial member ) and P.V. Subba Rao ( Technical member ) set aside the impugned order, ruling that the declared value in the shipping bills should be accepted. As a result, the confiscation, fines, and penalties imposed were deemed unwarranted. Both appeals were allowed, and consequential relief was granted to M/s Universal Offset and Shri Vikas Gupta.
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