Rejection of Transactional Value on Export of Iron Ore Fines not in accordance with provisions of Section 14 of Customs Act: CESTAT Quashes Customs Duty Demand [Read Order]

Customs Duty deletion due to violation of section 14 of the Customs Act,1962. 

The Hyderabad bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) quashed the Customs duty demand for rejecting the transactional value of export of iron ore fines which was done not under section 14 of the Customs Act. 

Krishna Traders, the appellant assessee was an exporter of Iron Ore Fines and entered into a contract for sale with a buyer located in China, as per the contract the quantity to be supplied was 20,000 from Haldia Port at the rate of 62.5 USD WMT, and 25,000 WMT from Vizag Port at the rate of 62.5 USD. Another contract was entered for a supply of 7000 WMT at the rate of 82.5 from Vizag Port. 

The assessee appealed against the order passed by the Commissioner (Appeals) for confirming the differential customs duty against the assessee. 

D V Subba Rao, the counsel for the assessee contended that there was no basis for rejection of the transaction value. The transaction value had been rejected whimsically, without there being any cogent reason for rejection of the same, and at the relevant time the duty for lumps in an export consignment of Iron Ore Fines, had been reduced from 15% ad-valorem to 10% ad-valorem, and accordingly the duty had been calculated excessively. 

Rangadham, the counsel for the department contended that the Iron Ore Fines prices keep moving in the International Market, and the customs authority as per the impugned order was aware of the higher international prices. Further, such allegation of there being higher prices at the relevant time was also supported by the metal bulletin referred to by the Adjudicating Authority. 

The Bench observed that there was no basis except assumption and presumption for drawing adverse inference on this account and there was no evidence that the assessee had received anything extra, higher than the invoice amount, and the reasons given for rejecting the transition value were against the provisions of Section 14 of the Customs Act read with Rule 8 of the Valuation rules. 

The two-member bench comprising Anil Choudhary (Judicial) and A K Jyotishi (Technical) held that the excess lumps the same were to be charged at 10% ad-valorem, and not 15% ad-valorem and directed to re-calculate the duty payable in terms of the order. 

To Read the full text of the Order CLICK HERE

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