NOVEMBER 11, 2024

By S K Rahman, IRS, working as Principal Commissioner (AR) at CESTAT Delhi

RECENTLY, in the month of October 2024, the Hon'ble CESTAT Principal Bench Delhi has passed the following two Final Orders on Departmental appeals against Orders- in-Appeal on under-valued imports of Aluminium scrap. In this part 4 which is last part, cases covered are those where importer disagrees with enhancement; O-I-O issued, appeals lead to O-I-A favoring party, on Departmental appeal, Hon'ble CESTAT considers O-I-A, orders that O-I-A is set aside upholds value enhancement by assessing officer:

Each of these Orders is discussed as below:

1ST SET OF 50 APPEALS -COMMISSIONER OF CUSTOMS (JAIPUR) vs GRAVITA INDIA

2024-TIOL-1036-CESTAT-DEL

1. BRIEF FACTS OF CASES :

1.1 M/s Gravita India imported aluminium scrap of various grades and filed 50 Bills of Entry for clearing the consignment on the basis of self-assessment of duty on the transaction value. The Assessing Officer doubted the truth and accuracy of declared value and a letter dated 01.10.2020 was sent by the Joint Commissioner to Gravita India to submit justification regarding value. The Bs/E were provisionally assessed. A SCN dt 02.01.2021 was issued to the party stating that, the officers doubt the truth and accuracy of the declared Transaction value on the basis of (a) DGoV Alert dt 15.11.2018 (b) LME Price (c) NIDB data; why the declared value shall not be rejected under Rule 12 of CVR'07; proceeding sequentially why the declared value shall not be enhanced as per Rule 9 of CVR'07. On the basis of written reply, the Deputy commissioner issued a detailed OIO order dt. 26.03.2021. Party filed appeal against this OIO to the Commissioner (Appeals). The Commissioner (Appeals) issued OIA dt 27.04.2022 in favour of the party. These fifty appeals have been filed by the department to assail the OIA passed by the Commissioner (Appeals), Jaipur.

1.2 Rejection of declared value: The rejection of declared value was done on the basis of (a) DGoV Alert dt 15.11.2018 (b) LME Price (c) NIDB data, under Rule 12 of CVR'07.

1.3 Enhancement of the value: Proceeding sequentially, the re-determination of the value was done on the basis of Rule 9 of CVR'07. As per under rule 9 given in explanatory notes (rule 13), there is flexibility that can be adopted to the extent of "similar imported goods produced in a country other than the country of exportation". In the instant case, as contemporaneous imports are not available, value of similar goods of a different country of origin are adopted for enhancement of declared value.

2. The Hon'ble CESTAT has upheld the rejection of value done by the Officers under Rule 12 of CVR'07 and stated that the Deputy Commissioner has given good and cogent reasons for rejecting the transaction value declared by the importers in the Bills of Entry The Hon'ble CESTAT has found that the Commissioner (Appeals) was, therefore, not justified in holding that the transaction value declared by the importers in the Bills of Entry could not be rejected. (Ref para 68)

3. The Hon'ble CESTAT has upheld the re-determination of value on the Rule 9 of CVR'07. The contention advanced by the learned counsel for the respondents that it was absolutely necessary that the goods should have been imported from the same country cannot be accepted because if that was the position, resort to rule 9 would not have been taken. The Hon'ble CESTAT has held that the Interpretative Note to rule 9 clearly permits such a mode to be adopted by the Deputy Commissioner.

4. The Hon'ble CESTAT has concluded that no error in the order passed by the Deputy Commissioner re-determining the value of the imported goods. The order passed by the Commissioner (Appeals) in 50 appeals setting aside the order passed by the Deputy Commissioner would, therefore, have to be set aside. Thus, for the reasons stated above, all the 50 appeals filed by the department were allowed. The orders passed by the Commissioner (Appeals) in these 50 appeals were set aside and the orders passed by the Deputy Commissioner are restored. (Ref 81 and 82)

2ND SET OF 359 APPEALS -COMMISSIONER OF CUSTOMS (PREVENTIVE), JAIPUR vs CMR NIKKEI INDIA PVT LTD, SANJIVANI NON-FERROUS, CMR GREEN TECHNOLOGIES, and CENTURY METAL RECYCLING

2024-TIOL-1037-CESTAT-DEL

5. BRIEF FACTS OF THE CASE: (i) M/s CMR Nikkei India Pvt. Ltd.; (ii) Sanjivani Non-Ferrous Trading Pvt. Ltd.; (iii) CMR Green Technologies Ltd.; and (iv) Century Metal Recycling Pvt. Ltd.India imported aluminum scrap of various grades and filed 359 Bills of Entry for clearing the consignment on the basis of self-assessment of duty on the transaction value. The Assessing Officer doubted the truth and accuracy of declared value and a letters were was sent to the importers to submit justification regarding value. The Bs/E were provisionally assessed. SCNs were issued to the party stating that, the officers doubt the truth and accuracy of the declared Transaction value on the basis of (a) DGoV Alert dt 15.11.2018 (b) LME Price (c) NIDB data; why the declared value shall not be rejected under Rule 12 of CVR'07; proceeding sequentially why the declared value shall not be enhanced as per Rule 9 of CVR'07. On the basis of written reply, detailed Os-i-O were issued. Parties filed appeal against these Os-i-O to the Commissioner (Appeals). The Commissioner (Appeals) issued Os-i-A in favour of the parties. These 359 appeals have been filed by the Department to assail the Os-I-A passed by the Commissioner (Appeals), Jaipur.

5.2 Rejection of declared value: The rejection of declared value was done on the basis of (a) DGoV Alert dt 15.11.2018 (b) LME Price (c) NIDB data, under Rule 12 of CVR'07.

5.3 Enhancement of the value: Proceeding sequentially, the re-determination of the value was done on the basis of Rule 9 of CVR'07. As per under rule 9 given in explanatory notes (rule 13), there is flexibility that can be adopted to the extent of "similar imported goods produced in a country other than the country of exportation". In the instant case, as contemporaneous imports are not available, value of similar goods of a different country of origin are adopted for enhancement of declared value.

6. The Hon'ble CESTAT has upheld the rejection of value done by the Officers under Rule 12 of CVR'07 and stated that the reason assigned by the Deputy Commissioner for rejection of the transaction value was not based on mere suspicion but was based on proper and objective consideration of the facts. The reasons were also communicated to the importers. The Commissioner (Appeals) was, therefore, not justified in holding that the transaction value declared by the importers in the Bills of Entry could not be rejected. The Deputy Commissioner has given good and cogent reasons for rejecting the transaction value declared by the importers in the Bills of Entry. (Ref para 69 and 70).

7. The Hon'ble CESTAT has upheld the re-determination of value on Rule 9 of CVR'07and held that no error in the order passed by the Deputy Commissioner re-determining the value of the imported goods. The order passed by the Commissioner (Appeals) in 359 appeals setting aside the order passed by the Deputy Commissioner would, therefore, have to be set aside. (para 83)

8. The Hon'ble CESTAT has concluded that for the reasons stated above, all the appeals filed by the department are allowed. The orders passed by the Commissioner (Appeals) in 359 appeals are set aside and the orders passed by the Deputy Commissioner are restored. (Ref para 86).

3RD SET OF 3 APPEALS -COMMISSIONER OF CUSTOMS (PREVENTIVE), JAIPUR vs CMR NIKKEI INDIA PVT LTD pertaining to appeal nos. C/51942/2022, C/51943/2022, and C/51944/2022

2024-TIOL-1037-CESTAT-DEL

9. BRIEF FACTS OF THE CASE: Facts of the case are same as above.

10. REJECTION OF DECLARED VALUE: Same as above.

11. RE-DETERMINATION OF VALUE: The contention advanced by the learned counsel for the respondents in connection with three appeals bearing Customs Appeal No. 51942 of 2022, Customs Appeal No. 51943 of 2022 and Customs Appeal No. 51944 of 2022 on enhancement of value was that the Deputy Commissioner re-determined the value in these three appeals under rule 5 of the Valuation Rules. Rule 5 deals with "transaction value of similar goods" and provides that the value of imported goods shall be the transaction value of "similar goods" sold for export to India and imported at or about the same time as the goods being valued. The Deputy Commissioner, after nothing that rule 4 would not be applicable proceeded to re-determine the value under rule 5 holding that "the data for similar goods, with near identical/similar description for grade/type/specification were found in NIDB for the contemporary times against various Bills of Entry" was available which is contradictory. The Hon'ble CESTAT has held that a very cryptic finding has been given by the Deputy Commissioner for applying 5 of the Valuation Rules for re-determination of the value. (ref para 85)

12. The Hon'ble CESTAT has held that even though the Deputy Commissioner has re-determined the value on the basis of Rule 5 of CVR'07, the Commissioner (Appeals) in his findings has observed that the Deputy Commissioner had resorted to rule 9 of the Valuation Rules for re-determination of the value. The Hon'ble CESTAT has commented that the Commissioner (Appeals) has not examined under what Rule of CVR'07 the enhancement of value has been done by the Deputy Commissioner. Hence, the Hon'ble CESTAT felt that it would be appropriate to remit the matter to the Deputy Commissioner only in respect of these three appeals bearing Customs Appeal No. 51942 of 2022, Customs Appeal No. 51943 of 2022 and Customs Appeal No. 51944 of 2022 for re-determining the value of the goods in accordance with the provisions of the Customs Act and the Valuation Rules. (ref para 84 & 85)

13. The Hon'ble CESTAT has ordered that the issue relating to re-determination of the value of the imported goods in Customs Appeal No. 51942 of 2022, Customs Appeal No. 51943 of 2022 and Customs Appeal No. 51944 of 2022 is remitted to the Deputy Commissioner. The order dated 01.06.2022 passed by the Commissioner (Appeals) in all these three appeals is, accordingly, set aside and the order dated 24.11.2021 passed by the Deputy Commissioner in connection with these three appeals is restored only to the extent it rejects the value mentioned by the importers in the Bills of Entry. The Deputy Commissioner shall now re-determine the value of the imported goods involved in these three appeals in accordance with the provisions of the Customs Act and Valuation Rules. (para 87)

14. The Take aways from the above two Final Orders of Hon'ble CESTAT are :

a) In case the officers found that the truth and accuracy declared value is doubtful, the right method to reject transaction value under Rule 12 of CVR'07 is to, what has been done in this case i.e. to issue letter and then a Showcase Notice giving clearly the reasons for doubting the truth and accuracy of declared value and asking the importer why the declared transaction value cannot be rejected.

b) In valuation cases whenever declared transaction value is being rejected and the value is being redetermined, the suggested coarse of action is, what has been done in this case i.e. to pass a detailed speaking order giving reasons as to why the declared transaction value was rejected and also explaining the methods adapted for redetermination of value. Such kind of detailed Orders by original adjudicating authority with stand judicial scrutiny at appellate forums, like the one which has been upheld by Hon'ble CESTAT.

c) Most important takeaway is the enhancement of value that was done in this case under Rule 9 of CVR'07. The Rule 9 of CVR'07 gives flexibility in terms of Interpretive Notes (Rule 13) for taking a referral value of Bills of Entry of a country other than the country of origin of the impugned goods provided that the other factors such as commercially comparable quantities and is within three months of import are satisfied. In the instant case, such re determination value under Rule 9 read with Interpretive Notes (Rule 13) has been done and it is upheld by Hon'ble CESTAT.

14. CONCLUSION : The concluding remarks at the end of 4 series of articles on under valuation of aluminium scrap is that here is an example to prove and sustain enhancement of declared value. If the Section 14 of Customs Act 1962 read with Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 are followed it is not difficult to withstand judicial scrutiny of such rejection of declared value and re determination of value. In these aluminium scrap cases, almost all the Departmental appeals are upheld by Hon'ble CESTAT except few as shown below:

Final orders have been issued during July- Oct 2024.

(The views expressed are personal and not in official capacity)