Cus - Valuation - Imports from China - Department taking recourse to theory of preponderance of probability to prove their case - said theory cannot be a substitute for lack of investigation and absence of evidences - Order set aside: CESTAT
By TIOL News Service
MUMBAI, SEPT 23, 2013: THE appellants filed eleven Bills of Entry for import and clearance of PVC Coated Cloths of various thicknesses.
The department rejected the transactional value and enhanced the value on the following grounds:
(a) There was a DRI/MZU Alert dated 09.10.2012 suggesting gross undervaluation in PU and PVC coated fabrics covered under CTH 5903.
(b) There was a letter dated 23.01.2013 from the Chief Commissioner of Customs, JNCH, NhavaSheva suggesting minimum value of such goods to be not be less than Rs. 55/- per meter.
(c) On cost construction method, the unit value for goods of thickness 0.55 mm was Rs. 58.60/Kgs and for goods of 0.45 mm the declared value works out to Rs. 80.4/Kgs. For the cost construction method the material composition of previous test report was taken. On the basis of minimum value of polyester yarn @ 1.7 USD/kgs. USD 1/Kgs or PVC resin and USD 1.5/kgs.
(d) Although the consignments of the importer are sourced from China and its main Director, ShriPawan Kumar Kaushik is a NRI based in Taiwan since last 25 years.
Inasmuch as the lower adjudicating authority rejected the value by citing the provisions of Rule 12 and re-determined the value under Rule 5 read with Rule 9 of Customs Valuation Rules (Determination of value of imported goods) Rules, 2007. While doing so the adjudicating authority also held that “in a quasi-judicial proceedings, we are concerned more with a preponderance of probability rather than proof beyond reasonable doubt.” The Commissioner (Appeals) upheld the order by holding that all requisite ingredients of similar goods are present in the goods sought to be compared with that of appellant and the re-determined value is also in consonance with the value calculated on the basis of cost construction method.
The importer is before the CESTAT and inter alia submitted -
+ there is nothing to indicate that price as declared by the appellant has influenced or that it is under-invoiced.
+ it is not the case of the department that the transaction between the appellants and the foreign supplier is not genuine or that the appellants have paid to the foreign supplier over and over the invoice price. In other words, the genuineness of the transaction value is also not in doubt.
+ The observation that the proprietor of the appellant is a NRI of Taiwan and there is possibility that the appellant and the supplier are related partyis mere surmise and assumption. Reliance is placed in support on the decisions in Eicher Tractors Ltd. vs. Commissioner of Customs 2002-TIOL-06-SC-CUS, & Pushpanajali Silk Pvt. Ltd. vs. Commissioner of Customs 2009-TIOL-655-CESTAT-MAD.
The Bench after referring to the case laws cited by the appellant observed -
+ Rule 12 does not automatically empower the Assessing Officer to reject the transaction value. It does not per se provide method for determination of value. It only provides for mechanism and procedure for rejection of declared value which is clear from explanation to the Rule…
+ Similarly an Alert Circular is also only a guide to identify the target and is not a deciding factor in itself. The lower adjudicating authority dwelled the case on the basis that the one of their Director was a NRI and residing abroad for 25 years. The department failed to adduce or deduce any evidence, beyond the fact of his residing abroad.
+ The DRI's Circular relied upon by the department is issued with respect to the artificial leather and is not relevant to the appellant's case. Similar is the case with regard to Chief Commissioner's circular.
On the re-determination made of the value by applying rule 5 read with rule 9 of the Valuation Rules, the Bench noted -
“7.4.3 … Rule 9 cannot be resorted to unless the value cannot be re-determined under Rule 4 to 8. If value is determined under Rule 5 then there is no need to resort to Rule 9. even if value is determined under Rule 9 the same has to be done by reasonable means consistent with the principle and general provisions of these Rules on the basis of data available in India and if, the department has taken recourse to Rule 5 as reasonable means, that has not been spelled out.”
The Bench concluded thus -
“7.5 In the instant case the department could not show any evidence that the transaction value declared by the appellant was not price actually paid and that buyer and seller of the goods are related persons and the price was not a sole consideration. No investigation what so ever has been carried out beyond the point that director of the appellant a NRI was residing at Taiwan for 25 years. Further the rejection of transaction value is not supported by evidence of contemporaneous import. However the department took recourse to the theory of preponderance of probability to prove the case. The said theory cannot be a substitute for lack of investigation and absence of evidences.”
Holding that the rejection of the transaction value and enhancement of the same by the department is not sustainable in law, the order was set aside and the appeal was allowed.
(See 2013-TIOL-1405-CESTAT-MUM)
