Transaction value of Silk Yarn can't be  Rejected without Cogent Reason: CESTAT set aside Demand of Excise Duty [Read Order]

The Chennai bench of the Customs, Excise & Service Tax Appellate Tribunal (CESTAT) has held that the transaction value of silk yarn can't be rejected without cogent reason and set aside the demand of excise duty on the enhanced value.                              

M/s. Hanuman Weaving Factory, the appellants filed a Bill of Entry for clearance of goods declared as raw silk yarn in Hanks. For both the consignments, invoices were raised by M/s. Bedeil General Trading LLC, Dubai, UAE at a unit price of USD 15 per kilogram. The assessment group did not accept the unit price declared by the appellant and sought to enhance the same. Based on the directions of the higher courts, Bills of Entry were assessed provisionally at the value determined by the department and the goods were released to the appellant on the strength of 50% of the differential duty covered by the bank guarantee and the rest by personal bond.

The department issued a Show Cause Notice dated alleging that the goods have been undervalued and the same has to be enhanced based on contemporaneous imports. After due process of law, the original authority rejected the transaction value and confirmed the differential duty, ordered for confiscation of the goods and imposed a redemption fine under section 125 of the Customs Act, 1962. The Commissioner (Appeals) upheld the same.

Shri M.A. Mudiamman appeared and submitted that the imports had taken place in July 2010 and the price was fixed after negotiations with the foreign supplier for supply of about 6500 kilograms of raw silk yarn. The price fixed agreed upon after negotiations between the appellant and the foreign supplier has been declared in the Bill of Entry. The department has rejected the declared value (transaction value) of 15 USD per kg without any legal or factual basis.

The department has erroneously relied upon the imports vide a single Bill of Entry imported on 25.11.2010 of similar goods. The appellant had furnished details of various bills of entry for import of raw silk yarn in hank, from Uzbekistan through Chennai Port from 12.4.2010 to 30.11.2010. The value declared for these imports was between 13 to 15 USD per kilogram.

The appellant has declared the value as 15 USD per kilogram which reconciles with the imports during the relevant time. However, without giving any cogent reasons department has rejected the transaction value relying upon the single bill of entry dated 25.11.2010.

It was ruled in the case of Sree Rajendra Textiles that the value cannot be enhanced unless the department has put forward reasons to reject the transaction value. Shri Harendra Singh Pal supported the findings in the impugned order.

A two-member bench comprising Ms Sulekha Beevi C.S., Member (Judicial) and Shri Vasa Seshagiri Rao Kumar, Member (Technical) observed that there aren’t any proper reasons given by the department to reject the transaction value. It was also not brought out in evidence as to the comparison of the various parameters about quality, and quantity of the goods imported.

“Merely because the value declared for the goods in a single Bill of Entry dated 25.11.2010 is 28 USD, the department has rejected the transaction value. It is not established that the commercial parameters as to the quality, quantity, and manufacturer are similar.”, bench viewed.

The CESTAT held that “the demand of duty, confiscation, imposition of redemption fine and penalty imposed cannot sustain and requires to be set aside, which we hereby do.” 

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates