Importer’s Declared Value Accepted, Contemporaneous Import Value Not Conclusive

Commissioner of Customs Vs Kaveri Silks & Jute Private Limited (CESTAT Chennai)

CESTAT Chennai held that transaction value declared by the importer duly accepted as earlier imports cleared accepting the declared value and also value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority.

Facts- The Respondents have filed seven Bills-of-Entry for clearance of Raw Silk Yarn in hanks, classifying the imported goods under CTH 5002 0010 at the declared unit price of USD 13.75 (CIF) per kg. and the country of origin of the goods being Uzbekistan.

Suspecting under-valuation of the imported goods, considering contemporaneous import prices of similar goods of same description, the importer was asked to justify the declared value. In both the above appeals, the invoices were raised by M/s. Bedeil General Trading LLC., Dubai.

Being aggrieved, the importer had filed Writ Petition before the Hon’ble High Court at Madras for the acceptance of the contract value / declared value for the Bills-of-Entry filed. The Hon’ble High Court directed the Revenue to release the imported goods on furnishing of a Bank Guarantee for 50% of the differential duty and further, a personal bond for the remaining 50% of the differential duty. In compliance with the above directions, the imported goods were assessed provisionally and cleared on the above terms.

As the Department noticed contemporaneous prices of imports of Raw Silk Yarn of Uzbekistan origin at USD 28.50 (CIF) per kg. vide Bill-of-Entry No. 699388 dated 25.11.2010, Show Cause Notices consequently came to be issued to the importer proposing final assessment after enhancement of the transaction value u/s. 18(2) of the Customs Act, 1962 and demanding differential duty along with interest thereon u/s. 18(3) read with Section 28AB of the Customs Act, 1962, while also proposing confiscation of the impugned goods for deliberate under-valuation u/s. 111(m) of the Customs Act, 1962 apart from imposition of penalty u/s. 112(a) of the Customs Act, 1962.

Commissioner (A) allowed the appeal. Being aggrieved, revenue has preferred the present appeal.

Conclusion- Held that we are inclined to accept the transaction value, as declared by the importer-respondent. As earlier imports of the respondent were cleared accepting the values declared and also since the value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority, the declared transaction value has to be accepted. Hence, there is no need to pass any order in respect of confiscability of the goods or on imposition of penalty.

FULL TEXT OF THE CESTAT CHENNAI ORDER

M/s. Kaveri Silks & Jute Private Limited, Bangalore are the Respondent herein in the above two appeals filed by the Revenue against the Order-in-Appeal C.Cus. No. 628 to 634/2013 dated 18.04.2013 passed by the Commissioner of Customs (Appeals), Custom House, Chennai.

2.1 Brief facts of these appeals indicate that the Respondents have filed seven Bills-of-Entry for clearance of Raw Silk Yarn in hanks, classifying the imported goods under CTH 5002 0010 at the declared unit price of USD 13.75 (CIF) per kg. and the country of origin of the goods being Uzbekistan.

 2.2 Suspecting under-valuation of the imported goods, considering contemporaneous import prices of similar goods of same description, the importer was asked to justify the declared value. In both the above appeals, the invoices were raised by M/s. Bedeil General Trading LLC., P.O. Box – 52018, Dubai, U.A.E.

 2.3 Being aggrieved, the importer had filed Writ Petition No. 30153 of 2010 before the Hon’ble High Court at Madras for the acceptance of the contract value / declared value for the Bills-of-Entry filed. The Hon’ble High Court directed the Revenue to release the imported goods on furnishing of a Bank Guarantee for 50% of the differential duty and further, a personal bond for the remaining 50% of the differential duty. In compliance with the above directions, the imported goods were assessed provisionally and cleared on the above terms.

3. As the Department noticed contemporaneous prices of imports of Raw Silk Yarn of Uzbekistan origin at USD 28.50 (CIF) per kg. vide Bill-of-Entry No. 699388 dated 25.11.2010, Show Cause Notices consequently came to be issued to the importer proposing final assessment after enhancement of the transaction value under Section 18(2) of the Customs Act, 1962 and demanding differential duty along with interest thereon under Section 18(3) read with Section 28 AB of the Customs Act, 1962, while also proposing confiscation of the impugned goods for deliberate under-valuation under Section 111(m) of the Customs Act, 1962 apart from imposition of penalty under Section 112(a) of the Customs Act, 1962.

4. In reply to the above notices, the noticee-importer inter alia submitted that: –

• They are a major and bulk importer of various varieties of silk through Chennai Port from various
• The price of silk varies daily due to market fluctuation, being a sensitive commodity.
• The price was negotiated with the foreign supplier for supply of the subject goods in bulk quantity; that a contract was entered into between the supplier and the noticee on 02.08.2010 for supply of 1,50,000 kg. of Raw Silk of Uzbekistan origin and the price declared therein was at 13.75 USD per kg.; that the importer made advance payment of 5% of the contract value and in view of the bulk purchase and advance payment, approximately 2% discount from normal market price (market price during the relevant time being USD 15.50 per kg.) was offered.
• A sum of USD 103175, equivalent to INR 46,42,875.00/- was paid as advance.
• The Department accepted the declared value in three earlier consignments imported by them against Bills-of-Entry Nos. 521894 dated 26.05.2010, 6171918 dated 03.09.2010 and 63393 dated 20.09.2010, at a declared value of USD 14.10 per kg., which were cleared.

So, the importer had requested for dropping the proceedings.

5.1 After due process of adjudication of these two Show Cause Notices, Order-in-Original No. 18048/2012 dated 02.02.2012 was passed by the Additional Commissioner of Customs rejecting the declared value of Rs.45,44,007/- (@ USD 13.75 per kg.) for the imported Raw Silk Yarn in hanks imported vide Bill-of-Entry No.729629 dated 24.12.2010and re-determining the transaction value at Rs.94,18,487/- (@USD 28.50 per kg.) under Rule 4 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 and thus, ordered for re-assessment of the goods in the above terms. The imported goods were held to be liable for confiscation under Section 111(m) of the Customs Act, 1962 and a redemption fine of Rs.15,00,000/- was imposed under Section 125 of the Act. Further, a penalty of Rs.7,50,000/- was imposed on the respondent-importer under Section 112(a) of the Customs Act, 1962.

5.2 Similarly, Order-in-Original No. 18046A/2012 dated 05.03.2012 was passed by the Additional Commissioner of Customs thereby rejecting the declared value of Rs.44,17,699/- (@ USD 13.75 per kg.) for the imported Raw Silk Yarn in hanks imported vide Bill-of-Entry No.704225 dated 30.11.2010 and re-determining the transaction value at Rs.90,66,026/- (@USD 28.50 per kg.) under Rule 4 of the Customs Valuation Rules, 2007 read with Section 14 of the Customs Act, 1962 and thus, ordered for re-assessment of the goods in the above terms. The imported goods were held to be liable for confiscation under Section 111(m) of the Customs Act, 1962 and a redemption fine of Rs.2,50,000/- was imposed under Section 125 of the Act. Further, a penalty of Rs.1,00,000/- was imposed on the respondent-importer under Section 112(a) of the Customs Act, 1962.

6. Being aggrieved, the importer filed appeals before the Commissioner of Customs (Appeals), Custom House, Chennai, who has allowed their appeals with consequential relief. So, the Revenue has come in appeal before this forum against the above decision of the lower appellate authority.

7.1 Originally, the importer-assessee filed seven appeals before the Commissioner of Customs (Appeals), Chennai, as per the details given below, against which the Revenue had filed appeals before this forum: –

7.2 However, it is noticed from the records of the present appeals that the Revenue has withdrawn Customs Appeal Nos. 41613, 41614, 41615, 41616 and 41618 of 2013 that were filed before this forum against the above Order-in-Appeal, in compliance with the litigation policy of the Government.

8. As the issue involved in the remaining appeals is the rejection of transaction value declared by the importer, they are taken up together for disposal.

9. It is the stand of the Revenue that: –

(i) Provisions of Section 14 of the Customs Act and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 provide grounds for rejection of transaction value in terms of Rule 12. The scheme of valuation does not envisage the value entered into a long term contract as the transaction value. The contract period in these appeals is more than one year and silk being price sensitive, the price of which tends to vary from week to week and thus, the acceptance of the contract itself raises the legal question as to whether such contract value can be accepted.

(ii) The sale contract said to be entered into between the importer viz. M/s. Kaveri Silks & Jute Pvt. Ltd. and the seller viz. M/s. Bedeil General Trading LLC., U.A.E. for import of 15,00,000 kgs. of Raw Silk was only a proforma invoice, which cannot be regarded as a contract.

(iii) It has also been observed that the total quantity as per the said contract was not imported and only 53,177 kgs. of Raw Silk Yarn out of the contracted quantity of 15,00,000 kgs. was imported.

(iv) As the importer had not fulfilled the conditions of the contract, the value of the goods has to be based on contemporaneous values and not as per the contract price.

(v) When identical goods were imported at significantly higher prices, the price declared was USD 13.75 per kg, whereas the contemporaneous prices for these goods was noticed at USD 28.50 per kg. which needs to be taken as the assessable value in terms of Rule 4 of the Customs Valuation Rules, 2007.

(vi) The invoice raised cannot be considered as a commercial invoice, but a proforma invoice.

(vii) The impugned goods were imported from M/s. Bedeil General Trading LLC., Dubai whereas the goods actually originated in Uzbekistan, showing that he supplier is not the manufacturer of the imported goods.

(viii) The contract is found to be extraneous to the transaction between the supplier and the importer and so, the declared value is liable to be rejected as the same does not represent the actual transaction value as contemplated in Rule 3 of the Customs Valuation Rules, 2007.

10.1 On appeals being filed by the importer, the lower appellate authority has allowed the appeals filed by the importer relying on the decision of the Hon’ble Apex Court in the case of M/s. Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321 (S.C.)]. The decisions of CESTAT, Bangalore in the cases of M/s. Rajashree Packagers v. Commissioner of Customs, Mangalore [2006 (195) E.L.T 254 (Tri. – Bangalore)] and M/s. Agarwal Industries v. Commissioner of Customs, Vizag [2006 (193) E.L.T. 421 (Tri. – Bangalore)] were also referred to, wherein the imports were made at the contracted price, when the contract period was over or when the contractual obligation not fulfilled. In those cases, it was held that the declared transaction value had been arrived at purely based on the commercial consideration based on contracts; the supplier, in order to honour the contracts, supplied the goods at contract prices and there were no allegations that anything more than the contract value was paid to the supplier and as such, no ground existed for rejecting the transaction value. It was observed that the prices of the commodity when sold on contract, or to a distributor, or to an OE user, or to buyers of huge lot, or to a final consumer, etc., may differ and any attempt to standardize these values to one value stating the provisions of the Customs Valuation Rules, will fail.

10.2 The Commissioner (Appeals) has also referred to the judgement of the CESTAT in the case of Commissioner of Customs, Chennai v. M/s. Pushpanjali Silks Pvt. Ltd. [2006 (202) E.L.T. 80 (Tri. – Chennai)] wherein it was held basing on the judgement of the Hon’ble Supreme Court in M/s. Eicher Tractors Ltd. (supra), that as the Department had not alleged that the assessee had mis-declared the price actually paid, they had not mis-declared the description of the goods and there was no case that the particular import fell within any of the situations enumerated under Rule 4(2) of the Customs Valuation Rules and as the goods were imported in terms of the contract indicating USD 13.75 per kg. as the price agreed between the contracting parties, the Department had no case that any amount over and above the contract price was paid to the supplier or the price was influenced by any extra commercial considerations. Thus, the ratio of the judgement in M/s. Pushpanjali Silks Pvt. Ltd. (supra) was followed.

10.3 Further, it has been observed by the lower appellate authority that many more evidences of contemporaneous imports at the same price or a little higher price by other importers of identical goods were put forth by the assessee, but the Department was only relying on one odd import and that odd import was also not proved with documentary evidences that it is identical in all respects to the present imports.

11.1 During the hearing before the Tribunal, Ld. Authorized Representative Smt. K. Komathi (Additional Commissioner), representing the Revenue, has reiterated the grounds-of-appeal. She has relied on the decisions rendered in the cases of: –

a. Radhey Shyam Ratanlal v. Commr. of Cus. (Adjudication), Mumbai [2009 (238) E. L. T. 14 (S. C.)].

b. National Fruits Agency v. Commissioner of Cus. (Exports), Chennai [2016 (337) E.L.T. 232 (Tri. – Chennai)], the appeal against which was admitted by the Hon’ble Supreme Court in 2018 (359) E.L.T. A207 (S.C.).

11.2 She has also placed reliance on the decision of the Hon’ble Supreme Court in the case of M/s. Punjab Processors Pvt. Ltd. v. Collector of Customs [2003 (157) E.L.T. 625 (S.C.)] wherein it was held that Customs Authorities, while assessing the value of import, are not bound by the figure mentioned in the invoice and can rely on contemporaneous evidence to show that the invoice value is not the correct value, in terms of Section 14 of the Customs Act, 1962.

12.1 Shri M.A. Mudimannan, Ld. Advocate representing the respondent, has argued that no circumstances exist for rejection of the transaction value in these cases as the Revenue has relied on one odd import whereas similar Raw Silk Yarn was imported from Uzbekistan at the relevant time by many importers at around the declared value of USD 13.75 per kg.

12.2   He has relied on the following decisions in support of his contentions: –

a. Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai [2000 (122) E.L.T. 321 (S.C.)].

b. Commissioner of Customs, Chennai v. Push panjali Silks Pvt. Ltd. [2006 (202) E. L. T. 80 (Tri. – Chennai)].

c. Push panjali Silk Pvt. Ltd. v. Chief Commr. of Cus., Chennai [2007 (211) E.L.T. 206 (Mad.)]

13. We have considered the submissions made by both sides and also perused the records in these appeals.

14. The issues that are to be decided in these appeals, are as under: –

(i) The main issue that has to be decided is whether the re-determination of the transaction value is in accordance with the provisions of Section 14 of the Customs Act 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 or not.

(ii) Whether the allegation of mis-declaration against the importer is justifiable and order of confiscation of the imported Raw Silk Yarn under Section 111(m) of the Customs Act, 1962 is legally maintainable? and

(iii) Whether the importer is liable for penalty under Section 112(a) of the Customs Act, 1962?

15. In order to examine the issue of under-valuation of the imported goods, we find it enlightening to refer to the Hon’ble Supreme Court’s analysis of the statutory provisions relating to valuation under the Customs Act, 1962 in the case of M/s. Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E. L. T. 3 (S. C.)]: –

“9. As per Section 14(1) of the Act, value of the imported goods shall be the transactional value of such goods, which means the price actually paid or payable for the goods when sold for export to India where the buyers and sellers are not related and the price fixed is the sole consideration for sale. As per the first proviso to Section 14(1) of the Act, the transactional value for the purpose of Customs duty would include amounts paid or payable as costs and services like commission, brokerage, engineering, design work, cost of transportation, etc., as may be specified in the rules made in this behalf. These amounts are to be added to the declared transactional value. Accordingly, in terms of Rule 10 of the 2007 Rules, the value and price of costs and services are added to the price actually paid or payable for the imported goods for determining the transaction value.

10. Sub-section (2) of Section 14 is a non obstante provision, which applies notwithstanding sub-section (1), e. when the Board has issued a notification in the Official Gazette fixing tariff values for any class of imported or exported goods. The Board has been authorised to issue notifications under Section 14(2) of the Act when it is satisfied that it is necessary or expedient. Thus, whenever tariff has been fixed vide notification issued by the Board under Section 14(2) of the Act, then notwithstanding the transactional value of the imported goods under sub­section (1) to Section 14 of the Act, as per sub-section (2) to Section 14 of the Act the customs duty is payable as per the tariff value so fixed. In the present case, the Board has not considered it necessary and expedient to issue a notification under Section 14(2) of the Act to fix a tariff for the imported aluminium waste.

11. The second proviso to Section 14(1) deals with different situations, enumerated under the three clauses; (i) when buyers and sellers are deemed to be related; (ii) when there is no sale, or buyers and sellers are related or the price is not the sole consideration for sale, etc. and (iii) where the proper officer has reason to doubt the truth or accuracy of such value. When the conditions specified in the second proviso are satisfied, the transactional value for the purpose of charging of Customs duty is to be made as per rules framed in this behalf.

12. Rules 3 and 12 of the 2007 Rules i.e. Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 were enacted and enforced with effect from 10th October, 2007 replacing and superseding the 1988 Rules. Rule 3(1) of the 2007 Rules states that value of the imported goods shall be the transaction value adjusted in accordance with the provisions of Rule 10 of the 2007 Rules which Rule, as observed above, deals with the costs and services which are to be added to the price actually paid or payable for the imported goods for determining the transaction value. Sub-rule (1) to Rule 3 is however subject to Rule 12 and therefore give primacy to Rule 12 which we shall subsequently elaborate and explain. Sub-rule (2) to Rule 3 states that value of the imported goods under sub-rule (1) shall be accepted i.e. accepted by the Customs authorities. The proviso then vide different clauses sets out the pre-conditions for accepting value of the imported goods. Rule 11 provides for declaration to be given by the importer or his agent certifying that they had disclosed full and accurate details of the value of the imported goods and any other statement, information and document including invoice of the manufacturer or producer of the goods where the goods are imported from or through a person other than the manufacturer of goods, as considered necessary by the proper officer for valuation of the imported goods. Sub-rule (2) states that the declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after an enquiry in consultation with the importers.

13. Sub-rule (3) to Rule 3 deals with cases when the buyer and seller are related. We would not dilate on the said sub-rule for this is not required for the purpose of the present decision. As per sub-rule (4), where the value cannot be determined under sub-rule (1) to Rule 3, the transaction is to be valued by step wise applying Rules 4 to 9. Rule 4 deals with transaction value based on identical goods. Rule 5 deals with transaction value based on similar goods. Rule 6 deals with the determination of value where the transactional value cannot be determined under Rules 3, 4 and 5. Rules 7 and 8 deal with deductive value and computed value respectively. Rule 9 prescribes the residual method for computing the transaction value. What is important to note is that Rules 4 to 9 are subject to the provisions of Rule 3 thereby giving primacy to Rule 3 which in turn gives primacy to Rule 12 of the 2007 Rules.

14. Rule 12, which as noticed above enjoys primacy and pivotal position, applies where the proper officer has reason to doubt the truth or accuracy of the value declared for the imported goods. It envisages a two-step verification and examination exercise. At the first instance, the proper officer must ask and call upon the importer to furnish further information including documents to justify the declared transactional value. The proper officer may thereafter accept the transactional value as declared. However, where the proper officer is not satisfied and has reasonable doubt about the truth or accuracy of the value so declared, it is deemed that the transactional value of such imported goods cannot be determined under the provision of sub-rule (1) of Rule 3 of the 2007 Rules. Clause (iii) of Explanation to Rule 12 states that the proper officer can on ‘certain reasons’ raise doubts about the truth or accuracy of declared value. ‘Certain reasons’ would include conditions specified in clauses (a) to (f) i.e. higher value of identical similar goods of comparable quantities in a comparable transaction, abnormal discount or abnormal deduction from ordinary competitive prices, sales involving the special prices, misdeclaration on parameters such as description, quality, quantity, country of origin, year of manufacture or production, non-declaration of parameters such as brand and grade etc. and fraudulent or manipulated documents. Grounds mentioned in (a) to (f) however are not exhaustive of ‘certain reasons’ to raise doubt about the truth or accuracy of the declared value. Clause (ii) to Explanation states that the declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after enquiry in consultation with the importers. Clause (i) to the Explanation states that Rule 12 does not provide a method of determination of value but provides the procedure or mechanism in cases where declared value can be rejected when there is a reasonable doubt that the declared transaction value does not represent the actual transaction value. In such cases the transaction value is to be sequentially determined in accordance with Rules 4 to 9 of the 2007 Rules.

Sub-rule (2) of Rule 12 stipulates that on request of an importer, the proper officer shall intimate to the importer in writing the grounds, i.e. the reason for doubting the truth or accuracy of the value declared in relation to the imported goods. Further, the proper officer shall provide a reasonable opportunity of being heard to the importer before he makes the valuation in the form of final decision under sub-rule (1).

15. The requirements of Rule 12, therefore, can be summarised as under :

(a) The proper officer should have reasonable doubt as to the transactional value on account of truth or accuracy of the value declared in relation to the imported goods.

(b) Proper officer must ask the importer of such goods further information which may include documents or evidence;

(c) On receiving such information or in the absence of response from the importer, the proper officer has to apply his mind and decide whether or not reasonable doubt as to the truth or accuracy of the value so declared

(d) When the proper officer does not have reasonable doubt, the goods are cleared on the declared value.

(e) When the doubt persists, sub-rule (1) to Rule 3 is not applicable and transaction value is determined in terms of Rules 4 to 9 of the 2007 Rules.

(f) The proper officer can raise doubts as to the truth or accuracy of the declared value on ‘certain reasons’ which could include the grounds specified in clauses (a) to (f) in clause (iii) of the Explanation.

(g) The proper officer, on a request made by the importer, has to furnish and intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to the imported goods. Thus, the proper officer has to record reasons in writing which have to be communicated when requested.

(h) The importer has to be given opportunity of hearing before the proper officer finally decides the transactional value in terms of Rules 4 to 9 of the 2007 Rules.

16. Proper officer can therefore reject the declared transactional value based on ‘certain reasons’ to doubt the truth or accuracy of the declared value in which event the proper officer is entitled to make assessment as per Rules 4 to 9 of the 2007 Rules. What is meant by the expression “grounds for doubting the truth or accuracy of the value declared” has been explained and elucidated in clause (iii) of Explanation appended to Rule 12 which sets out some of the conditions when the ‘reason to doubt’ The instances mentioned in clauses (a) to (f) are not exhaustive but are inclusive for there could be other instances when the proper officer could reasonably doubt the accuracy or truth of the value declared.

17. The choice of words deployed in Rule 12 of the 2007 Rules are significant and of much consequence. The Legislature, we must agree, has not used the expression “reason to believe” or “satisfaction” or such other positive terms as a pre-condition on the part of the proper officer. The expression “reason to believe” which would have required the proper officer to refer to facts and figures to show existence of positive belief on the undervaluation or lower declaration of the transaction value. The expression “reason to doubt” as a sequitur would require a different threshold and examination. It cannot be equated with the requirements of positive reasons to believe, for the word ‘doubt’ refers to un-certainty and irresolution reflecting suspicion and apprehension. However, this doubt must be reasonable i.e. have a degree of objectivity and basis/foundation for the suspicion must be based on ‘certain reasons’.

18. The expression ‘proof beyond reasonable doubt’ in criminal law requires the prosecution to establish guilt and secure conviction of the accused by proving the charge ‘beyond reasonable doubt’. In Ramakant Rai v. Mad an Rai & Ors. – (2003) 12 SCC 395 referring to the expression ‘reasonable doubt’ in criminal law it was held as under :

“24. Doubts would be called reasonable if they are free from a zest for abstract speculation. Law cannot afford any favourite other than the truth. To constitute reasonable doubt, it must be free from an overemotional response. Doubts must be actual and substantial doubts as to the guilt of the accused persons arising from the evidence, or from the lack of it, as opposed to mere vague apprehensions. A reasonable doubt is not an imaginary, trivial or a merely possible doubt; but a fair doubt based upon reason and common sense. It must grow out of the evidence in the case.”

Proof beyond ‘reasonable doubt’ is certainly not the requirement under proviso to Section 14 of the Act and Rule 12 of the 2007 Rules, albeit the above quote draws a distinction between a simple doubt and a doubt which is reasonable. In the context of the proviso to Section 14 read with Rule 12 and clause (iii) of Explanation to the 2007 Rules, the doubt must be reasonable and based on ‘certain reasons’. The proper officer must record ‘certain reasons’ specified in (a) to (f) or similar grounds in writing at the second stage before he proceeds to discard the declared value and decides to determine the same by proceeding sequentially in accordance with Rules 4 to 9 of the 2007 Rules. It refers to a doubt which the proper officer possesses even after the importer has been asked to furnish further information including documents and evidence during the preliminary enquiry to clear his doubt about the truth and accuracy of the value declared. Therefore, there has to be a preliminary enquiry by the proper officer in which the importer must be given an opportunity for clarification of the doubts of the officer by furnishing of documents and evidence as to the accuracy or truth of the value declared. It is only in case where the doubt of the proper officer persists after conducting examination of information including documents or on account of non-furnishing of information that the procedure for further investigation and determination of value in terms of Rules 4 to 9 would come into operation and would be applicable. Reasonable doubt will exist if the doubt is reasonable and for ‘certain reasons’ and not fanciful and absurd. A doubt to justify detailed enquiry under the proviso to Section 14 read with Rule 12 should not be based on initial apprehension, be imaginary or a mere perception not founded on reasonable and ‘certain’ material. It should be based and predicated on grounds and material in the form of ‘certain reasons’ and not mere ipse dixit. Subjecting imports to detailed enquiry on mere suspicion because one is distrustful and unsure without reasonable and certain reasons would be contrary to the scheme and purpose behind the provisions which ensure quick and expeditious clearance of imported goods.”

16. The respondent viz. M/s. Kaveri Silks & Jute Pvt. , Bangalore has imported Raw Silk Yarns in hanks, from M/s. Bedeil General Trading LLC., Dubai, of Uzbekistan origin. The value declared by the importer was at USD 13.75 per kg. Basing on contemporaneous value of import of Raw Silk of Uzbekistan origin at USD 28.5 per kg., the Revenue has sought to enhance the transaction value of the imported goods. The importer has contested the enhancement on the plea that the Raw Silk Yarn was imported by them even earlier vide Bills-of-Entry Nos. 521894 dated 26.05.2010, 6171918 dated 03.09.2010 and 63393 dated 20.09.2010 at a similar rate, which were cleared by the Department, that the impugned imports were undertaken in terms of a contract entered with the seller viz. M/s. Bedeil General Trading LLC, Dubai, for which even advance payment was made and that evidence of similar imports of Raw Silk Yarn at around the same price was submitted before the lower appellate authority, which was favourably considered by him in allowing their appeals.

17. We find that the original adjudicating authority has rejected the declared transaction value in terms of Rule 12 of the Customs Valuation Rules, 2007 basing on the assessable value of identical goods imported vide Bill-of­Entry No. 699388 dated 25.11.2010, which was proposed to be adopted as the transaction value under Rule 4 of the Customs Valuation Rules, 2007. He also observed that the goods were imported from M/s. Bedeil General Trading LLC., U.A.E. where the goods were of Uzbekistan origin and that the seller was not the manufacturer of the goods. It was also observed that though the contracted quantity was 15,00,000 kgs., the respondent viz. M/s. Kaveri Silks & Jute Pvt. Ltd., had imported only around 53,177 kgs. of Raw Silk, contravening contractual conditions. The declared value of the impugned consignment, which was said to be based on the said contract, was rejected as not representing the actual transaction value contemplated in Rule 3 of the Customs Valuation Rules, 2007 and the contract was found to be extraneous to the transaction between the importer and the supplier on account of non-fulfilment of the conditions of the said contract.

18.1 We find that the Ld. adjudicating authority has communicated the basis for enhancement of the transaction value to the importer relying on the contemporaneous import of Silk Yarn of Uzbekistan origin vide Bill-of-Entry No. 699388 dated 25.11.2010 at USD 28.5 per kg., but it has to be commented that the crucial commercial details of this consignment as to the type, quality, quantity imported, whether under any contract, whether any advance paid, etc., are not ascertainable from the records in these appeals. There was no discussion either by the original adjudicating authority or by the lower appellate authority in this regard. Thus, there is no finding as to how this consignment was considered as contemporaneous import of identical goods in terms of Rule 4 of the Customs Valuation Rules, 2007.

18.2 We find that there were no allegations that the assessee had mis-declared the price actually paid or mis­described the goods or that the particular import fell within any of the situations enumerated under the Customs Valuation Rules. The subject goods were imported in terms of the contract indicating USD 13.75 as the unit price agreed upon between the contracting parties. The import was found to be made within the contract period. It is not the case of the Revenue that any amount over and above the contracted price was paid by the importer to the supplier, nor is it their case that the importer was related to the supplier or that the price paid was influenced by any extra commercial consideration.

19. As such, we find that there is no valid reason to reject the declared transaction value of the goods.

20. Further, we take note of the importer’s contentions that their earlier silk imports were cleared at around the same price as in the impugned consignment and the supplier has given a small percentage of discount on account of payment in advance. Enhancement of the transaction value without first establishing the prices of contemporaneous imports of identical or similar goods is not legally sustainable. The lower appellate authority has also given a finding that the appellant had put forth evidence of contemporaneous imports at around the same price by other importers of identical goods whereas the Department relied on only one odd import and the same odd import was also not proved with documentary evidences that it was identical in all respects to the impugned consignment.

21.1 The Ld. Departmental Representative has relied on the decisions of the Hon’ble Apex Court in the cases of M/s. Radhey Shyam Ratanlal v. Commr. of Cus. (Adjudication), Mumbai [2009 (238) E.L.T. 14 (S.C.)] and M/s. Punjab Processors Pvt. Ltd. v. Collector of Customs [2003 (157) E. L. T. 625 (S. C.)].

21.2 In the case of M/s. Radhey Shyam Ratanlal (supra), it was recorded that the declared value could not be supported by production of original contract or invoices relating to procurement of cloves; there was no valid contract between the importer and the supplier and it was found to be merely a certificate issued by the supplier. Therein, the Revenue had relied upon contemporaneous documents like Weekly Bulletin of Spices Market and also the Public Ledger relating to prices of spices and the supplier was found to be primarily dealing with sports goods and not the cloves which were imported therein. For the above reasons, the ratio of the above decision is not applicable to the facts of the present appeals.

21.3 In the case of M/s. Punjab Processors Pvt. Ltd. (supra), it was held that Customs authorities, while assessing the value of import, are not bound by the figure mentioned in the invoice and can rely on contemporaneous evidence to show that the invoice value is not the correct value. In these appeals, the issue involved is not pertaining to whether Customs authorities can rely on the values of contemporaneous imports. Whether the transaction value of impugned goods has been arrived at or not in terms of the mechanism as envisaged by the Customs Valuation Rules is to be seen. The statutory provisions governing valuation in Section 14 of the Customs Act, 1962 and the Customs Valuation Rules, 2007 clearly lay down the mechanism and method to arrive at the assessable value for determination of the duty payable on any import or export, as explained in paragraph 15 (supra) by the Hon’ble Apex Court in the case of M/s. Century Metal Recycling Pvt. Ltd.

22. On the issue of accepting the declared transaction value, we find it pertinent to refer to the decision rendered by the Tribunal, Bangalore in the case of M/s. Agarwal Industries v. Commissioner of Customs, Vizag [2006 (193) E.L.T. 421  (Tri. – Bangalore)] in the context of old Valuation Rules, wherein it has been observed as under: –

“2. …

…. In all the cases, we find that the transaction value has been arrived at purely on commercial considerations based on contracts. The supplier, in order to honour the contracts, supplied the goods at the contracted price. There is also no allegation that the appellants paid to the supplier more than the contracted value. Under these circumstances, there are actually no grounds to reject the transaction value….”

The above decision was affirmed by the Hon’ble Apex Court in its judgement as reported in 2011 (272) E.L.T. 641 (S. C.).

23. In view of the above detailed discussion, we are inclined to accept the transaction value, as declared by the importer-respondent. As earlier imports of the respondent were cleared accepting the values declared and also since the value of the contemporaneous import of identical goods has not been conclusively arrived at by the lower adjudicating authority, the declared transaction value has to be accepted. Hence, there is no need to pass any order in respect of confiscability of the goods or on imposition of

24. We uphold the order passed by the lower appellate authority.

25. Consequently, the appeals filed by the Revenue are rejected.

(Order pronounced in the open court on 14.07.2023)