By TIOL News Service

CHENNAI, MAY 06, 2016 : THE appellants are importers of Apples from USA. Consequent to the investigations conducted by the DRI on alleged undervaluation of the apples, Show Cause Notices were issued demanding differential duty by re-fixing the transaction value under Rule 8 of the Customs Valuation Rules, 1988. The demands were confirmed with penalties imposed. The appellant are before the CESTAT challenging the same.

The appellants contended inter alia that the adjudicating authority has not determined the value sequentially as per Valuation Rules and Rule 8 (2) (iii) of CVR has been applied in this case. To invoke Rule 8, the value should be determined as per data available in India, whereas in the present case, the entire case is based on copies of two sets of invoices, one showing higher rate and another with lower rate, recovered at USA. Rule 8 (2) (iii) clearly stipulates price of domestic market of country of exportation shall not be considered and the price of U.S.A cannot be taken for valuation in India. Whereas the adjudicating authority clearly held that since there is no contemporaneous imports, he adopted the price of country of exportation as the actual assessable value of the goods. The department is relying on the unsigned invoices and there is no evidence of excess payment or flow back to the supplier.

After hearing both sides, the Tribunal held:

+ The entire edifice of allegation of underinvoicing/misdeclaration of value of goods is based on the verification reports/documents received from the Consulate General of India (CGI), U.S.A. There is no incriminating internal records/documents recovered from the appellant's premises nor relied in the proceedings. Both in the SCN and in the impugned order, the main documents relied for enhancement of value is the parallel sets of invoices obtained from the overseas suppliers by US agent. The invoices were not signed by authorized persons of the supplier, but only authenticated by USA agent, and Indian Consulate at USA, whereas the customs import invoice of same number and date is a bank-attested invoice. The said Customs invoice is clearly attested by U.T.I Bank Ltd., Chennai; is duly signed by the authorized person of the supplier with his company seal, with name of the foreign Bank, with account number etc.; the foreign exchange remittances were made to the overseas buyers through the said U.T.I. Bank; and all the remittances were certified by the said bank clearly showing the exporter's name and bank details. Therefore, the remittances made by the appellants as per the invoices through the bank is a valid evidence. The e-mail copy recovered by the CGI USA from supplier's computer merely says that the invoice is to be prepared for USD 10.25/cartoon and that Advance receipts need not be mentioned . This does not reveal or indicate any request of undervaluation.

+ In the absence of any authentic evidence from suppliers end i.e. either in the form of letter or a statement from them explaining the reason for maintenance of two sets of invoices in their system and also confirming receipt of flow back of excess amount, the department's reliance on unsigned computer generated invoices cannot be relied on, as sole evidence of undervaluation. Mere authentication of a document by U.S. Agent or officers of OCGI, USA does not automatically become a valid evidence to reject the declared price in the customs invoice and to redetermine value under Rule 8 of CVR.

+ The lower authority failed to give any findings on the evidences of contemporary invoices of import of apples submitted but held that there are no contemporary import of similar or identical apples from USA to consider under Rule 5 and 6 of CVR straight away adopting Rule (8) for redetermination of value by relying on the existence of parallel invoices; taking the price of country of exportation (USA) as actual value of imported goods. Such findings are contrary to the facts on record. It is observed from 30 contemporaneous imports that a price band of USD 10.14-12.63 was accepted across major Custom Houses, and the lower authority erred in adopting the price on the basis of questionable parallel set of invoices, invoking Rule 8 of CVR.

+ The rejection of declared price of imported apples and determination of value under Rule (8) of Customs Valuation Rules in the impugned order is not sustainable; same is set aside. The Transaction value of imported goods as declared by the appellants in the Customs Invoices and Bills of Entry is accepted.

(See 2016-TIOL-1079-CESTAT-MAD)