Improper Procedure for Re-determination of Transaction Value of Power Banks: CESTAT Notes Lack of Evidence against Flipkart, Allows Appeal [Read Order]

The Customs, Excise and Service Tax Appellate Tribunal (CESTAT), Mumbai Bench was recently presented with a case concerning whether the assessable value of “Power Bank 5200mAH” imported by the Flipkart had been re-determined improperly.

The Tribunal noted that there was a lack of evidence against the appellant - Flipkart India Private Limited, and allowed the appeal.

The appellant filed two Bills of Entry (B/E) in 2014 for the clearance of 28,600 numbers of power banks that were imported from Singapore which were supplied by M/s Xiaomi Singapore PTE Limited. In the said B/E, the unit value was declared at USD 3.64/- The original authority enhanced the assessable value at INR 454.50/- based on contemporaneous import data of similar goods.

The department interpreted that there was certain variation in International Commercial (INCO) terms between proforma invoice and final invoice and there was undervaluation of import consignment by mis-declaration. The goods were accordingly confiscated and redemption fine along with penalty was imposed on the appellants.

On appeal, the Commissioner confirmed the order of the original authority. The appellants now approached the CESTAT.

The counsel for the appellants submitted that they had properly declared the assessable value and the customs authorities should have accepted the transaction value under Rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. Further, he also submitted that the re-determination of value upheld by the first appellate authority has no force of law.

It was also claimed that there is no ground for deliberate mis-declaration of value or INCO terms for treating the goods liable to confiscation and imposition of fine and penalty to the appellants.

The tribunal opined that the value determined under Rule 5 is liable to be set aside as it is not in conformity with the legal provisions of Rule 4 and 5 of CVR which mandate that the goods are to be valued on the basis of transaction value of identical or similar goods. CESTAT observed that there is no mis-declaration as the department has not produced any evidence to prove its allegations.

The two member bench of S.K. Mohanty (Judicial Member) and M.M. Parthiban (Technical Member) allowed the appeal and set aside the order which had confirmed the demands on the basis of enhanced valuation of goods and dismissed the matter noting several judicial precedents.

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