Stray Evidence Or A Single Bill Of Entry Cannot Be The Basis For Revising The Assessable Value Of Imported Goods: CESTAT Mumbai

The Bench, consisting of members Ajay Sharma (Judicial Member) and CJ Mathew (Technical Member), held that stray evidence or a single bill of entry cannot be the basis for revising the assessable value of imported goods.

The assessable value of the goods imported by the appellant Acmechem Ltd. was enhanced by the Customs authorities. The appellant filed an appeal before the Commissioner of Customs (Appeals), who upheld the enhancement of the assessable value. Against this, the appellant filed an appeal before the CESTAT.

The appellant Acmechem Ltd. submitted before the CESTAT that the Customs authorities did not issue any show cause notice to the appellant before passing an order increasing the assessable value of the goods imported by it. The appellant added that the 'proper officer' under Section 17 of Customs Act, 1962 failed to issue a speaking order justifying the re-valuation of the imported goods. The appellant averred that stray evidence cannot be the basis for revising the assessable value of imported goods and that the invoice of the manufacturer, from whom the said goods were purchased by the appellant, was the best evidence for determining the 'transaction value'.

The appellant contended that the Commissioner of Customs (Appeals), while passing its order, had placed reliance on the value in a given bill of entry for determining the transaction value of 'contemporaneous' imports of identical or similar goods. The appellant averred that the said bill of entry was not brought on record by the Customs authorities.

The CESTAT held that the invoice of a manufacturer is one of the documents that can be relied upon for ascertaining the acceptability of the 'declared price' of goods. The CESTAT added that the invoice of the manufacturer was sufficient to establish the value specified therein to be the 'transaction value'. The CESTAT ruled that the credibility of the transaction between the manufacturer and the appellant/importer could not be called into question on the basis of a stray bill of entry alone, in the absence of any further evidence.

The CESTAT added that after the passing of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the 'declared value' of goods has been elevated to the 'gold standard. The CESTAT added that stray evidence or a single bill of entry relied upon by the authorities cannot be the basis for revising the assessable value.

The CESTAT observed that Rule 5 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 provides that the value of imported goods shall be the transaction value of similar goods that are sold for export to India and which are imported at or about the same time as the goods under consideration.

The CESTAT reiterated that in order to rely upon an evidence for determining the transaction value of contemporaneous imports, the said evidence or relevant assessment material should be furnished and its congruency with the goods imported by the importer should be established.

The CESTAT added that the Customs authorities had failed to provide the material on the basis of which the assessable value of the goods imported by the appellant was enhanced. The CESTAT observed that the Customs authorities had failed establish that the said similar goods contemporaneously imported had been so priced at the time of their import. Thus, the CESTAT held that the assessable value in the said bill of entry relied upon by the Customs authorities could not be adopted.

The CESTAT thus ruled that the order passed by the Customs authorities enhancing the assessable value of imported goods could not be upheld.

The revenue department submitted before the CESTAT that the assessing officer has the power under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 to reject the declared price of imported goods.

The CESTAT held that Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 empowers the assessing officer to reject the declared price if there is evidence to the contrary or if the importer fails to satisfy the queries raised by assessing officer.

The CESTAT ruled that the assessing officer under Rule 12, before rejecting the declare value, must require the importer to furnish evidence for the acceptance of the declared value as transaction value. The CESTAT added that if the declared value is discarded, the value as validated by the alternatives provided in the Rules must be adopted. The CESTAT held that the said pre-requisites under Rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 had not been followed.

The CESTAT held that the Customs authorities had failed to issue a show cause notice intending to reject the declared value of the imported goods and nor did the authorities pass a speaking order while enhancing the assessable value of the imported goods. Thus, the CESTAT ruled that the revenue authorities had failed to follow the principles of natural justice.

The CESTAT ruled that there was no evidence furnished by the Customs authorities to displace the declared value of the imported goods.

The CESTAT thus allowed the appeal and set aside the order of the Commissioner of Customs (Appeals).

Case Title: Acmechem Ltd. versus Commissioner of Customs (Import)

Dated: 09.06.2022 (CESTAT Mumbai)

Representative of the Appellant: Mr. J C Patel, Advocate

Representative of the Respondent: Mr. Manoj Das, Assistant Commissioner (AR)

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