Case Law Details
Albany Molecular Research Hyderabad Research Centre Pvt Ltd Vs Commissioner of Customs (CESTAT Chennai)
CESTAT Chennai held that enhancement of transaction value solely on the basis of NIDB data, without determining how imported goods are comparable and contemporaneous, not justified. Hence, order set aside.
Facts- The Appellant, an 100% EOU, was importing Diethylaminosulfer Trifluoride and Magnetic resonance from their parent company situated overseas, by availing benefit under Customs Notification no.52/2003 without payment of duty. Upon examination of the values of imports, the department issued an Order-in-Original holding that the declared transaction value of imports was accepted in terms of Rule 3(3)(a) of CVR. Aggrieved, the department filed an appeal before Commissioner (Appeals) citing that the value discussed by the authority in the impugned order was much lower than the contemporary price reflected in NIDB data of Diethylaminosulfer Trifluoride. The appellate authority set aside the impugned order and remanded the case to the original authority for fresh consideration.
The Appellant herein, assailing the said order, appealed before Hon’ble CESTAT, the same was remanded back to the lower appellate authority for denovo proceedings directing therein to follow the principles of natural justice. Accordingly, the Commissioner (Appeals) set aside the Order-in-Original after rejecting the declared transaction value and remanded the matter to the lower authority for issuance of orders after ascertaining the appropriate value in terms of the Customs Valuation Rules, 2007. Aggrieved, the appellant has filed the present appeal before this forum.
Conclusion- This bench in the case of M/s. Shah B Impex v. Commissioner of Customs (Imports) has held that the NIDB data alone cannot be the basis for rejection of the transaction value.
Held that there is no justification for enhancement of the transaction value basing solely on the NIDB Data, that too without determining how the imported goods are comparable and contemporaneous in terms of quality, quantity and country of origin and other commercial factors which affect the transaction value. Neither there was any communication of the reasons to the Appellant as to how the declared transaction value is doubted in terms of the Customs Valuation Rules, 2007.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Customs Appeal No. C/40767/2015 has been filed by the Appellant assailing the Order-in-Appeal No. 372/2014 dated 24.12.2014 passed by the Commissioner of Customs (Appeals-II), Chennai setting aside the impugned Order-in-Original dated 04.07.2011 passed by the Assistant Commissioner of Customs (SVB) and directing the lower authority to issue orders after determining the value in terms of Customs Valuation Rules, 2007 (CVR).
1.2 Facts briefly stated are that the Appellant, an 100% EOU, was importing Diethylaminosulfer Trifluoride and Magnetic resonance from their parent company situated overseas, by availing benefit under Customs Notification no.52/2003 without payment of duty. Upon examination of the values of imports, the department issued an Order-in-Original No. 16526 dated 04.07.2011 holding that the declared transaction value of imports was accepted in terms of Rule 3(3)(a) of CVR. Aggrieved, the department filed an appeal before Commissioner (Appeals) citing that the value discussed by the authority in the impugned order was much lower than the contemporary price reflected in NIDB data of Diethylaminosulfer Trifluoride and vide order in C.Cus. No. 67/2014 dated 23.01.2014, the appellate authority set aside the impugned order and remanded the case to the original authority for fresh consideration.
1.3 The Appellant herein, assailing the said order, appealed before Hon’ble CESTAT, which vide order No. 40520 dated 11.08.2014 remanded the case back to the lower appellate authority for denovo proceedings directing therein to follow the principles of natural justice. Accordingly, vide Order-in-Appeal No. 372/2014 dated 24.12.2014, the Commissioner (Appeals) set aside the Order-in-Original dated 04.07.2011 after rejecting the declared transaction value and remanded the matter to the lower authority for issuance of orders after ascertaining the appropriate value in terms of the Customs Valuation Rules, 2007. Aggrieved, the appellant has filed the present appeal before this forum.
2. The contentions of the appellant as evident from the Grounds of Appeal are that: –
i. The Original Adjudicating Authority has clearly held that the relationship has not influenced the price and accepted the declared value after comparing the purchasing price and selling price of the foreign related supplier.
ii. In respect of glass tubes, the importers have submitted the invoice of an unrelated supplier from Switzerland and also the invoice of the related supplier which would show that the price of the related supplier is higher than the price of the unrelated supplier.
iii. The price of Diethylaminosulfer Trifluoride varies depending upon the quality and arriving at the transaction value depending upon the NIDB Data without comparing the quantity and quality is not in accordance with the Customs Valuation Rules, 2007, and in the absence of any details about the import of similar or identical products from the same county of export, any grounds raised on the basis of NIDB Data would not be sustainable.
iv. In support of their contentions, the Appellant has placed reliance on the following decisions:
a. Anushka Overseas [2011 (274) ELT 546]
b. Marble Art [2013 (289) ELT 346]
3. The Ld. Counsel for the Appellant while reiterating the grounds of appeal has put forth that various fora have repeatedly held that in the absence of cogent evidence, mere NIDB data is not sufficient to prove allegations on undervaluation and in this regard relied on the ratio of the decisions in (a) M/s. Atlantis Trading Company [2023 (11 )TMI 178-CESTAT Chennai] and (b) M/s. Shah B Impex [2023(10)TMI541-CESTAT Chennai].
4. The Ld. Authorised representative, Shri Anoop Singh, appearing for the department, stressed that the valuation of imports from related supplier is required to be determined in terms of Rule 3(b) of CVR for which value reflected in NIDB data was relevant as a contemporary price data and therefore raised a plea for the dismissal of the appeal filed by the Appellant.
5. Heard both sides and carefully considered the submissions and evidences on record.
6. The issue which arises for decision in this appeal is whether the Revenue is justified in re-valuing the imported goods by adopting contemporary value of imports as per NIDB data after rejecting the declared values?
7 We find that there is no dispute regarding the relationship between the Appellant and supplier abroad. We find that the Appellant is a 100% EOU rendering research activities for Customers abroad and for this purpose are sourcing raw materials / equipment through imports from related supplier abroad and also from the domestic market. We also find that the Appellant is a R & D centre as an EOU and not a manufacturer. All import goods are cleared under EOU scheme by claiming benefit under Customs Notification No. 52/2003 without payment of Customs duty. Since the imports are exempt from payment of Customs duty there appears to be no implication for the revenue by enhancement of value of the imported goods.
8. The main contention of the Appellant is that the impugned order had not adopted the computed value as per Rule 8 of CVR and that the contemporary value of glass tubes through an unrelated supplier was ignored. The department on the other hand insisted on the adoption of contemporary price reflected in NIDB data.
9. When the importer and its supplier are related, provisions of Rule 3(3) of Customs Valuation Rules, 2007 is applicable which read as follows: –
(3) (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price.
(b) In a sale between related persons, the transaction value shall be accepted, whenever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) the transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; (ii) the deductive value for identical goods or similar goods; (iii) the computed value for identical goods or similar goods: Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of rule 10 and cost incurred by the seller in sales in which he and the buyer are not related;
(c) substitute values shall not be established under the provisions of clause (b) of this sub-rule.
It is incumbent on the Department to show as to how the relation between the appellants and their overseas sellers has influenced and affected the prices. There is no evidence on the record to show that the values agreed upon between the importer and the exporter are not correct transaction values. This fact shows that there is no independent evidence with the Revenue to first reject the transaction values. Further, we find that the original authority has clearly recorded the examination of the circumstances indicating that the relationship has not influenced the invoice price of the goods imported by the Appellant.
10. It is a well-settled law that the transaction value has to be admitted as the assessable value unless proved to be incorrect. For such purpose, proving the value to be wrong, independent evidence is required and mere reference to NIDB data is not sufficient. It is held by various Courts that NIDB data cannot be made the sole basis for enhancement of the value. Tribunal has also considered similar issues in a number of earlier decisions and has held that adoption of NIDB Data, without any other evidence on record to establish the transaction value as incorrect, is not proper and justified. For the above proposition, the Ld. Advocate has drawn our attention to various decisions of the Tribunal which have been reproduced below for convenience: –
(i) Commissioner of Central Excise, Delhi-IV Vs. Anushka Overseas [2011 (274) ELT 546]: –
“5.— Further, the reliance on the NIDB data by the original adjudicating authority cannot be held to be in accordance with declaration of law and the Tribunal’s decision in the case of M/s. Gaitri Export refers (supra) would be fully applicable to the facts of the case. Furthermore, we also find that there is no allegation, much less any allegation to the effect that any additional payments were made by the respondent to their foreign supplier. In the absence of the same and in view of our foregoing discussion, we find no infirmity in the order of Commissioner (Appeals), in respect of the valuation aspect. We find that the Commissioner (Appeals) has rightly applied the precedent decisions to the facts of the case and has rightly rejected the Revenue’s stand on the assessable value of the goods. Accordingly, we reject the appeal filed by the Revenue”.
ii. In Commissioner of Customs, New Delhi vs. Marble Art [2013 (289) E.L.T. 346 (Tri. – Del.)] it was held as given below: –
“3. On going through the order of Commissioner (Appeals), we find that he has set aside the order of the original adjudicating authority enhancing the value of the imported rough marble blocks from different countries. The said enhancement was done by the Assistant Commissioner on bill of entry itself. The appellate authority had observed that no reasons stands given by the Assistant Commissioner for enhancing the value and no reasons stand given by him for rejection of the transaction value as such, by following the Tribunal’s decision in the case of M/s. Prasad Enterprises, Order Nos. 132936/04-NB dated 21-11-2004 also by following the Supreme Court decision in the case of Eicher Tractors, 2004 (41) RLT 621 = 2000 (122) E.L.T. 321 (S.C.), he has held that transaction value has to be accepted in the absence of any other evidence to show that the said transaction value was not correct and there existed special relationship between the supplier of the goods and the importer. As such, he has held that the department had discarded the transaction value without any basis which is contrary to provisions of law.
4. Revenue in their memorandum of appeal have submitted that enhancement was done on the basis of NIDB data of contemporaneous imports of identical goods. However, we find no merits in the above plea of the Revenue. First of all, to adopt the value of the contemporaneous imports, the transaction value is required to be rejected as incorrect/false on the basis of same evidence. Secondly, the contemporaneous imports value is required to be picked up after establishing that the goods match in the quality, quantity and country of origin and time period. There is nothing on record to reflect upon such facts and as such we find no merit in the Revenue’s appeal and same is accordingly rejected.”
iii. In the case of M/s. Atlantis Trading Company Vs. Commissioner of Customs, Tuticorin [2023 (11) TMI 178-CESTAT Chennai] it has been ruled that: –
“7.1 It is the settled position of law that NIDB data cannot be the only basis for rejection of the declared value, which has been reiterated by various CESTAT Benches, including the Chennai Bench, in the case of M/s. Almaa Traders v. Commissioner of Customs (Export), Chennai [Final Order No. 40898 of 2023 dated 11.10.2023 in Customs Appeal No. 40935 of 2014 – CESTAT, Chennai], wherein it was held as under: –
“7.3 Moreover, the officer has relied on alleged contemporaneous imports which were never put across to the appellant for rebuttal, but however, that such reliance on the contemporaneous imports itself has been doubted by the adjudicating authority when he holds that the value of the imported goods could not be determined under Rule 4 and Rule 5 due to variable factors like numerable types of descriptions, grades, country of origin, etc.; Rules 7 and 8 also could not be applied for want of quantifiable data at the place of exportation and importation respectively. By this, the approach of the assessing officer in comparing the import value with that of the contemporaneous imports stood diluted. In other words, on the one hand the officer says that the value of contemporaneous imports were higher, but on the other hand he refers to various factors like numerable types of descriptions, grades, country of origin, place of exportation and importation, etc., which would apply in equal force in respect of the value of the imported goods as well.
7.4 The quantity of import is much higher than the quantity of import in respect of the contemporaneous imports. Hence, so-called contemporaneous imports were in fact in comparables, due to which the rejection of the value of import as declared by the appellant is without any basis.
8. In view of the above, we are satisfied that the re-determination of the import value by the Revenue is without any basis and certainly not in accordance with the spirits of law, for which reasons the same deserves to be set aside.”
7.2 A similar view was also expressed by this Bench in the case of M/s. Shah B Impex v. Commissioner of Customs (Imports), Chennai [Final Order No. 40917 of 2023 dated 12.10.2023 in Customs Appeal No. 40823 of 2014 – CESTAT, Chennai], the relevant portion of which is reproduced below: –
“4.1 We have perused the table reproduced by the original authority at paragraph 6 of her order, but however, what is conspicuously missing is as to why and how the appellant had under-valued its imports. There is also no discussion as to the quantity of import, commercial level and other data insofar as the NIDB data referred to is concerned, nor do we find anywhere as to any discussion by the original authority as to how the same were comparable with the impugned goods on hand, imported by the appellant. There is no discussion also as to the quality, thickness, etc., in the goods referred to in the NIDB data.
4.2 We find that the Tribunal Benches across India have held that the NIDB data alone cannot be the basis for rejection of the transaction value. There is a reference to undervaluation way back in 2000, no specific reference to the appellant’s case, no reference ever made to the price being at arm’s length, nor is there any allegation that the transaction was between related parties. In the case on hand, the Revenue has not alleged anything other than relying on NIDB data.
4.3 Also, the Revenue has nowhere held that the transaction value declared by the appellant was incorrect or unbelievable, to reject the same. It is also the settled position of law that the transaction value cannot be rejected just because identical goods are imported at a higher price. For this, the Revenue has to first establish that the goods imported and contemporaneous goods are identical in the first place before proceeding further, which exercise has not at all been done by the Revenue in the case on hand. The Hon’ble Apex Court in its latest judgement in the case of Commissioner of Customs (Imports), Mumbai v. M/s. Ganpati Overseas [Civil Appeal Nos. 4735-4736 of 2009 dated 06.10.2023] has held that the legal position is that transaction value can be rejected if the invoice price is not found to be correct but it is for the Department to prove that the invoice price is not correct.”
8. We are therefore prima facie satisfied that the Revenue has not made out a case firstly, for the rejection of the declared value and secondly, no case is either made out justifying re-determination of the same. We find that the decisions/orders relied upon by the appellant support our above view, and hence, we hold that the adjudicating authority was clearly in error in rejecting the declared value and then re-determining the same; and hence, the impugned order is clearly unsustainable for the above reasons. Hence, we set aside the impugned order.”
11. After appreciating the facts and following the judicial discipline laid down in the above decisions, we are of the considered view that there is no justification for enhancement of the transaction value basing solely on the NIDB Data, that too without determining how the imported goods are comparable and contemporaneous in terms of quality, quantity and country of origin and other commercial factors which affect the transaction value. Neither there was any communication of the reasons to the Appellant as to how the declared transaction value is doubted in terms of the Customs Valuation Rules, 2007.
12. In view of the above findings, the impugned order dated 24.12.2014 is set aside. Thus, the appeal is allowed with consequential relief, if any, as per the law.
(Order pronounced in open court on 09.10.2024)
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