Transaction value cannot be rejected on mere doubt, without any reasonable & justifiable evidence

Mere doubt, without any reason or rhyme cannot be made the basis for rejection of the transaction value, without any reasonable and justifiable evidence

Kelvin Infotech Pvt. Ltd.(the Assessee) entered into a contract with Argain Company Ltd., Taiwan for purchasing stock lot of LCD TVsof 3600 PCs of Samsung, Sony and Sanyo brand of various assorted models/sizes (impugned goods) on ‘as is, where it is basis’ and at 15% discount subject to the condition that the Assessee importer accepts the offer within 3 days of the offer letter and picks up the entire lotby December, 2010. On concluding the sales contract, the Assessee intimated the Revenue about the said sales contract vide letter dated June 15, 2010 and furnished certain information as desired by the Revenue.

Thereafter, on import of the impugned goods, the Appellant filed two bills of entries dated July 13, 2010 and July 30,2010 with correct description, size and brand. The Revenue on enquiring from the local dealers of the Sony brand and scrutiny of the NIDB data found that the impugned goods were undervalued, hence assessed the impugned goods imported vide Bill of Entry dated July 13,2010 at enhanced value and issued a Show Cause Notice in that regard which culminated into order passed by the Additional Commissioner confirming the demand, confiscating the goods with an option to redeem the same on payment of redemption fine and imposing penalties.

Said order of the Additional Commissioner was challenged before the Commissioner (Appeals). The Commissioner (Appeals) vide two different Orders-In-Appeals rejected the appeals filed by the Assessee but reduced the amount of redemption fine and penalty. The Commissioner (Appeals) observed that the Assessee has not declared the brand/ size of the impugned goods, and has not obtained the brand name and model of the goods from the consigner as correct brand. Hence, there is mis-declaration and malafide intention on the part of the Assessee. Further, in terms of Section 14 of the Customs Act, 1962 (“the Customs Act”), the transaction value of the goods is the assessable value, in the ordinary course of business but where the said value is doubted by the Customs, the transaction value can be rejected and the assessable value can be determined under the provisions of the Customs Valuation (Determination of Price of imported Goods) Rules, 2007.

Thereafter,the Assessee preferred an appeal before the Hon’ble CESTAT, Delhi.The Revenue also filed an appeal against the reduction of the redemption fine and penalty.

The Hon’ble CESTAT, Delhi relying on the decisions made in the following cases:

• Eicher Tractors Ltd. Vs. CCE Mumbai [2000 (122) ELT 321 (SC)];
• Commissioner of Customs Raigadh [2005 (190). ELT 244 (Tri-Del)]; and
• Commissioner of Customs Vs. Bureau Varitas [2005 (1817) ELT 3 S.C.]

held that:

• Apart from contesting that the Assessee has not disclosed the model number, the country of origin of the LCD TVs, the Revenue has not produced any evidence to show that any money has flown back to the supplier of the impugned goods in Taiwan or the Assessee has paid higher amount to the supplier than the agreed amounts;
• Mere doubt, without any reason or rhyme cannot be made the basis for rejection of the transaction value, without any reasonable and justifiable evidence;
• The impugned goods being stock lot, it was neither possible nor practical for the Assessee to declare the country of origin or year of manufacture of each and every piece.
• This non possibility already stand intimated to the AC, even prior to the import of impugned goods.

Hence, the Hon’ble Tribunal vide common order allowed the appeals filed by the Assessee and rejected the Revenue appeal.