The Kolkata Bench of the Customs, Excise & Service Tax Appellate Tribunal ( CESTAT ) has held that valuation of import goods based on the value of prime material is not valid in absence of cogent evidence and set aside the computation based on LME prices.
M/s Karan International, the appellant challenged the orders passed by the Commissioner (Port), Kolkata vide Order-in-Original dated 10.03.2010by which enhanced the value of the imported goods i.e. “Enamelled Aluminum Wire” of various imported vide Bill of Entry Nos.436074 dated 13.10.2008 and 441097 dated 10.11.2008 weighing of 14859.42 kgs and 14550 kgs. of the same respectively consigned from China.
The Commissioner while rejecting the transaction value declared in terms of Section 14 of the Customs Act, 1962 read with Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, has re-determined the assessable value thereof under Rule 5 read with Rule 8 of the Customs Valuation Rules, 2007 demanding payment of differential duty, confiscating the said goods under Section 111 (m) of the Customs Act, 1962, releasing them on redemption fine under Section 125 of the Customs Act, 1962 and also imposing a penalty on the importer under Section 112 (a) of the Customs Act, 1962.
The Importer was of the view that the said re-determination of the transaction value based on the LME price has resulted in excess payment of duty as was paid by them at the time of the provisional release of the goods
The goods were subjected to a chemical test and the appellants also submitted the test certificate in respect of the imported goods. The impugned goods were also got tested by Shri Ram Institute for Industrial Research, Delhi, wherein the copper content was found to be less than 0.01 per cent by weight and it substantiated the appellants’ contention that the goods imported were Enamelled Aluminum Wire.
A Coram comprising of Shri P.K Choudhary, Member (Judicial) and Mr Rajeev Tandon, Member (Technical) observed that the Department’s contention of taking LME prices as the benchmark price is not on a sound footing given the certification from the manufacturers that the import goods were produced out of scrap.
Further viewed that imported goods viz. Enamelled Aluminium Wire is not the product of virgin material but manufactured out of scrap and the enhancement of value based on computation by the Commissioner based on the LME prices is not tenable given the unambiguous Certificates from the manufacturers of the impugned goods, tendered by the appellants. In light of the precedents, the Tribunal set aside both the impugned orders and allowed the appeal.
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