When two or more values of contemporaneous imports are available, the lowest of such value has to be adopted

CA Bimal Jain

Facts:

Rico Gems Corporation and others (“the Appellants”) imported certain goods which were thereafter sold to Telebrand India Pvt. Ltd., who is engaged in business of selling of goods through telemarketing. On the basis of information gathered by the Commissionerate of Custom (Preventive), Mumbai, it was alleged that the Appellants are engaged in evading Customs duty by resorting to under valuation and mis-declaration of imported goods. The under valuations was alleged on the basis of difference between the value declared to the Customs and the sales price of the importer to Telebrand & further the difference between the sales price of Telebrand and the ultimate Consumer.

Held:

The Hon’ble CESTAT, Mumbai held that the Department could not establish the undervaluation with tangible evidence. Accordingly, the valuation of the imported goods in the present case shall be governed by Section 14 of the Customs Act i.e. the transaction value is the price actually paid or payable for the goods. Further, in terms of Rule 5 and 6 of the erstwhile Customs Valuation (Determination of Price of Imported Goods) Rules, 1988, where there are two or more values of contemporaneous imports are available, the lowest of such value has to be adopted for assessable value. Furthermore, enhancement in value of the imported goods is not possible.

The Hon’ble CESTAT also held that if there is difference between import price and sale price of the goods in the domestic market, the difference cannot be made the basis for holding that the price of the imported goods has been undervalued.

Our Comments:

Rule 5 and 6 of the erstwhile Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 are now governed by Rule 4 and 5 of the existing Customs Valuation Rules.

(Author can be reached at Email: bimaljain@hotmail.com)

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