Redetermination of Lesser Value Against Higher Transaction Value Impermissible by Customs Valuation Rules: CESTAT [Read Order]

The Customs, Excise and Service Tax AppellateTribunal (CESTAT), Mumbai Bench, held that redetermination of less value against higher transaction value was impermissible by Customs Valuation (Determinationof Value of Imported Goods) Rules, 2007.

The facts state that the reduction of assessable value of imported melamine from the declared value and the imposition of Anti-Dumping Duty (ADD) on the differential amount on the appellant-importer, Surbhit Impex Pvt. Ltd. (SIPL), is questioned as the order passed by the Commissioner confirms the rejection of assessable value, imposes ADD with penalties, redemption fines, etc.

Earlier, the investigators noticed that SIPL/appellants had declared the value of melamine marginally below the ADD to manipulate the international market, as per Independent Commodity Intelligence Services (ICIS).

The counsel for the appellant submitted that 27 out of the 38 consignments imported were purchased on High Sea Sale basis between 28.01.2013 and 30.06.2014 whose translation value of goods was rejected under Rule 12 by the Adjudicating Authority merely on suspicion of ICIS data that price of melamine had got a downward division since 2010. The Authority applied ADD on the differential amount considering the price noted in Notification No. 10/2010 without offering any reason as to why such products’ value would continue to be kept at the 2010 pricing in the said notification for imposition of ADD.

Further, it had been submitted that the Commissioner had relied on Bills of Entry which were taken under Advance Licence or EPCG scheme in which quality of goods were not compared to the Bills of Entry of the relevant period by various importers. The counsel also questioned the admissibility of electronic evidence and referred to the General Agreement on Tariff and Trade (GATT).

The Authorized Representative revealed involvement in artificial inflation of CIF value, fabrication of invoices and packing list, suppression of actual negotiated price and overvaluation to evade ADD. In a letter recovered during search and seizure operation, inflected invoices in name of a dummy company Sure Horizon Inc. Ltd. as well as email communication which establish negotiation of imported goods at a much lower price were recovered.

After thorough discussions, it appears to the tribunal that the appellant had adequately explained those allegations concerning unusual inflating of value of goods imported and it is not clear from the order which defences were not accepted by the Commissioner of Customs. It was observed that no cogent evidence is available on record to substantiate the allegations of overvaluation to escape ADD.

The CESTAT held, on the matter concerning the imposition of ADD by the Commissioner, that one price range published by ICIS can’t be taken as transaction value only for the purpose of levy of ADD, this would be contrary to the Rules. The duties, interests, penalties and redemption fines were set aside as they are unsustainable both in law and facts.

Conclusively, the appeal was allowed by Dr. Suvendu Kumar Pati (Judicial Member) and M. M. Parthiban (Technical Member).

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