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Eicher Tractors Ltd v. Commissioner Of Customs
Case Summary: C/41550/2014 (CESTAT South Zonal Bench, Chennai)
Factual and Procedural Background
The appellants (M/s. Topsia Estates Pvt. Ltd.) imported PU coated fabrics of various thicknesses from China and filed 24 Bills of Entry during the period November 2012 to July 2013. The assessing officer enhanced the declared transaction value; the appellant paid duty under protest and filed appeals before the Commissioner (Appeals). The Commissioner (Appeals) remanded the matter to the adjudicating authority for issuance of a speaking order after complying with principles of natural justice.
In de novo proceedings the adjudicating authority rejected the declared value for all 24 Bills of Entry and enhanced the value. The appellant again appealed to the Commissioner (Appeals), and the Commissioner (Appeals) rejected the appeal by the impugned order. The matter was then taken to the Customs, Excise & Service Tax Appellate Tribunal (CESTAT), South Zonal Bench, Chennai.
Legal Issues Presented
- Whether press reporters may be allowed to see the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
- Whether the Order should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report?
- Whether the Members wish to see the fair copy of the Order?
- Whether the Order is to be circulated to the Departmental authorities?
- Whether the enhancement of transaction value on the basis of NIDB data alone is legally sustainable, and whether Rule 9 of the Customs Valuation Rules can be invoked in the present factual matrix?
Arguments of the Parties
Appellant's Arguments
- The appellant's counsel submitted that the value of PU coated fabrics varies by country of origin, quality, size, quantity and that the appellant had imported the same goods at different times and through various ports (including Kolkata and Chennai).
- It was argued that the adjudicating authority enhanced value solely on the basis of NIDB data, and it is well settled by the Hon'ble Supreme Court and the Tribunal that transaction value cannot be rejected merely on the basis of NIDB data (several authorities cited).
- The appellant pointed out that in some instances the same goods imported through Kolkata Port had their declared value accepted by the Department and refunds obtained; they relied on written submissions and orders passed by Commissioner (Appeals) in which declared value was accepted.
- The appellant contended that because the adjudicating authority considered the Bills of Entry as "live" and noted paucity of time for applying Rules 4 & 5 (and could not apply Rules 7 & 8), Rule 9 of the Customs Valuation Rules could not properly be invoked in the circumstances.
Respondent's (Revenue) Arguments
- The learned AR for Revenue submitted a written submission that the value of PU coated fabrics is a contentious issue and that the Department considered the declared value to be low compared to NIDB data.
- The Revenue relied on the adjudicating authority's detailed finding invoking Rule 9 of the Valuation Rules and contended that the case laws relied upon by the appellant were not applicable to the present facts.
- The Revenue asserted it had produced evidence in the form of NIDB data relating to goods of the same description, same country of origin and similar quality.
- The Revenue relied upon Tribunal authority in Auto Stores v. Commissioner (2013 (298) ELT 290) in support of its position.
Table of Precedents Cited
| Precedent | Rule or Principle Cited For | Application by the Court |
|---|---|---|
| Eicher Tractors Ltd. v. Commissioner of Customs, Mumbai, 2000 (122) ELT 321 (SC) | The principle that under Section 14(1) of the Customs Act, 1962 the transaction value shall be taken to be the price actually paid or payable in international trade unless exceptions in the Customs Valuation Rules apply; transaction value cannot be rejected without statutory/specified grounds. | The Tribunal relied on Eicher to emphasize that transaction value cannot be rejected without clear and cogent evidence and that statutory exceptions in the Valuation Rules must be satisfied before rejecting transaction value. |
| Rabindra Chandra Paul v. Commissioner of Customs, Shillong, 2007 (209) ELT 326 (SC) | Cited as authority in support of the settled proposition that transaction value cannot be rejected merely on the basis of NIDB data. | The case was cited alongside other authorities to support the proposition that NIDB data alone is insufficient to reject transaction value. |
| Commissioner of Customs, New Delhi v. DM International, 2013 (289) ELT 169 (Tri. Del.) | Held that rejection of transaction value and enhancement of assessable value must be based on evidence on record; contemporaneous imports must be compared with regard to quality, quantity and country of origin; NIDB data cannot be made the sole basis. | The Tribunal followed DM International to hold that enhancement based solely on NIDB data is improper; the decision was used to support requirement of clear evidence as to comparability. |
| Commissioner of Central Excise, Delhi III v. Om Sairam Trading Co., 2009 (241) ELT 536 (Tri. Del.) | Affirmed that transaction value cannot be rejected without clear and cogent departmental evidence regarding import of identical or similar goods with reference to quantity, quality, country of origin, place and time of import; enhancement cannot be made merely on benchmark/NIDB price. | The Tribunal referred to Om Sairam to illustrate that NIDB or benchmark prices alone do not justify rejection of transaction value; the decision influenced the Tribunal's conclusion to set aside enhancement based on NIDB. |
| Auto Stores v. Commissioner, 2013 (298) ELT 290 (Tri. Mumbai) | This authority was relied upon by the Revenue in support of its position (specific rule/principle as relied upon by Revenue is not expanded in the provided opinion). | The Tribunal noted that Revenue placed reliance on Auto Stores but the opinion does not elaborate any further on the decision's content beyond noting the Revenue's reliance. |
Court's Reasoning and Analysis
The Tribunal examined the adjudication order and records and recorded that the adjudicating authority enhanced the declared unit price because it appeared very low compared to contemporaneous import values available in NIDB data. The Tribunal noted the following factual findings from the record:
- The appellant had imported PU coated fabrics of various thicknesses and qualities from China, across 24 Bills of Entry, with declared unit prices varying from 0.90 per MT to 1.60 per MT, and the value enhancements ranged from 1.24 per MT to 2.04 per MT as reflected in the adjudication order.
- The appellant had also imported the same goods through Kolkata Port and had instances where declared value was accepted by the Department (with refunds obtained), as indicated in written submissions before the Commissioner (Appeals).
- There was no evidence on record of higher values for contemporaneous imports from the same sources, and there was no allegation of mis-declaration of the goods.
Legally, the Tribunal turned to binding and persuasive authority. It reiterated the Supreme Court's holding in Eicher Tractors Ltd. that Section 14(1) presumes the transaction value as the price actually paid or payable and that statutory exceptions in the Valuation Rules particularize special circumstances allowing rejection. The Tribunal also relied on DM International and Om Sairam Trading Co. where it was held that rejection/enhancement must be supported by clear evidence on record, and that NIDB data cannot be the sole basis for enhancing declared transaction value without considering quality, quantity, country of origin, place and time of import.
Applying those principles to the present facts, the Tribunal concluded that the adjudicating authority's enhancement was premised primarily on NIDB data without adequate supporting material demonstrating comparability (quality, quantity, country of origin, place and time). The Tribunal agreed with the appellant's submission that, on the facts of this case, Rule 9 of the Valuation Rules could not be invoked to justify the enhancement. Consequently, because the sole or primary basis for enhancement was NIDB data and other requisite comparability evidence was absent, the Tribunal found the enhancement unsustainable.
Holding and Implications
HOLDING: The Tribunal set aside the impugned orders of enhancement and allowed the appeal.
Implications: The direct consequence of the decision is that the enhancement of transaction value based on NIDB data alone in this case was declared unsustainable and the appellant's appeal was allowed with consequential relief, if any. The Tribunal expressly followed the precedent of the Hon'ble Supreme Court and earlier Tribunal decisions; the opinion does not purport to lay down any new legal principle beyond those authorities relied upon.
IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH, CHENNAI C/41550/2014 (Arising out of Order-in-Appeal C. Cus. No. 543/2014 dated 1.4.2014 passed by the Commissioner of Customs (Appeals), Chennai) For approval and signature: Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member
1. Whether Press Reporters may be allowed to see the Order for Publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?
2. Whether it should be released under Rule 27 of the CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?
3. Whether the Members wish to see the fair copy of the Order?
4. Whether order is to be circulated to the Departmental authorities? M/s. Topsia Estates Pvt. Ltd. Appellant Commissioner of Customs, Chennai Respondent (Import Seaport) Appearance Shri Sudhir Kumar Mehta, Advocate, for the Appellant Shri M. Rammohan Rao, DC (AR) for the Respondent CORAM Honble Shri P.K. Das, Judicial Member Honble Shri R. Periasami, Technical Member Date of Hearing: 29.10.2014 Date of Decision: 29.10.2014 Final Order No.40850/2014 Per R. Periasami The relevant facts of the case, in brief, are that the appellants imported PU Coated Fabrics of various thicknesses from China and filed 24 Bills of Entry during the period from November 2012 to July 2013. The assessing officer enhanced the declared value and the appellant paid duty under-protest. The appellant filed appeals before the Commissioner (Appeals) against the assessment orders. Commissioner (Appeals) remanded the matter to the adjudicating authority for issuing a speaking order after complying the principles of natural justice.
2. In denovo proceedings, the adjudicating authority rejected the declared value of the goods in question under cover of 24 Bills of Entry and enhanced the value. The appellant filed appeal before the Commissioner (Appeals). By the impugned order, the Commissioner (Appeals) rejected the appeal filed by the appellant.
3. The learned counsel on behalf of the appellant submits that they have been importing the said goods in different times through various ports such as Chennai, Kolkata etc. It is submitted that the value of PU Coated Fabrics varies depending upon the country of origin, quality, size, quantity etc. In the present case, the adjudicating authority enhanced the value on the basis of NIDB data. It is well settled by the Honble Supreme Court and Tribunal that the transaction value cannot be rejected merely on the basis of NIDB data as under:- (a) Eicher Tractors Ltd. Vs. Commissioner of Customs, Mumbai 2000 (122) ELT 321 (SC) (b) Rabindra Chandra Paul Vs. Commissioner of Customs, Shillong 2007 (209) ELT 326 (SC) (c) Commissioner of Customs, New Delhi Vs. DM International 2013 (289) ELT 169 (Tri. Del.) (d) Commissioner of Central Excise, Delhi III Vs. Om Sairam Trading Co. 2009 (241) ELT 536 (Tri. Del.)
4. He further submits that the adjudicating authority observed that as it is a live Bill of Entry, paucity of time rules out application Rules 4 & 5 of Valuation Rules, 2007 with regard to exact comparing data of identical/similar goods. It is also observed that deductive and computed method under Rules 7 & 8 of the Customs Valuation Rules cannot be applied in the absence of quantifiable data. The learned Advocate submits that in this situation Rule 9 of the Customs Valuation Rules cannot be invoked.
5. He further submits that the appellant imported the same goods from Kolkata Port and the adjudicating authority enhanced the value. The Commissioner (Appeals) set aside the adjudication order and no appeal was filed by the Department. They have also got the refund. In this context, the learned counsel drew the attention of the Bench the relevant portion of the written submission filed before the lower authorities.
6. The learned AR for Revenue submitted a written submission. He submits that the value of PU Coated Fabrics is a contentious issue for a long time. The Department was of the view that the value declared by the appellant is on the lower side in comparison to NIDB data. The adjudicating authority had given a detail finding for invoking Rule 9 of the Valuation Rules. The case laws relied upon by the learned counsel is not applicable to the present case. He submits that in this case the Department produced the evidence in terms of NIDB data relating to the goods of same description, same country of origin and similar quality. He relied upon the decision of the Tribunal in the case of Auto Stores Vs. Commissioner 2013 (298) ELT 290 (Tri. Mumbai).
7. After hearing both sides and on perusal of the records, we find from the adjudication order that the adjudicating authority observed that the unit price declared appears to be very low compared to the contemporaneous import value available in NIDB data. The appellant imported PU Coated Fabrics of various thickness and different qualities from China. It is seen from the Table as reproduced in the adjudication order that the declared unit price varies from 0.90 MT to 1.60 MT and the value was enhanced from1.24 per MT to 2.04 per MT. We have also noticed that the appellant imported the same goods from Kolkata Port also. The appellant in the written submission before the Commissioner (Appeals) submitted copies of the various orders passed by the Commissioner (Appeals) under which it was accepted. There is no evidence of higher value of contemporaneous import from same sources. There is no allegation of mis-declaration of the goods.
8. The Honble Supreme Court in the case of Eicher Tractors Ltd. (supra) held that the value, according to Section 14(1) of the Customs Act, 1962, shall be taken to be the price at which such or like goods are originally sold, or offered for sale, for delivery at the time and place of importation in the course of international trade. The special circumstances have been statutorily particularized in the Customs Valuation Rules and in the absence of these exceptions, it is mandatory for customs to accept the price actually paid or payable for the goods in the particular transaction.
9. The Tribunal in the case of DM International (supra), respectfully following the decision of the Honble Supreme Court in the case of Eicher Tractors Ltd. (supra), held as under:- 5. We find that? there is no dispute that the customs has power to reject the transaction value and enhance the assessable value in terms of Customs Valuation Rules. However, such rejection of transaction value and enhancement of assessable value has to be on the basis of some evidences on record. Contemporaneous imports have to be considered with reference to quality, quantity and country of origin with the imports under consideration. It has been held in a number of decisions that NIDB data cannot be made the basis for enhancement of value. Commissioner (Appeals) has relied upon various decisions of the Tribunal for holding that any enhancement in assessment value, the transaction value has to be first rejected based on legal permissible ground as indicated in the Valuation Rules. He has also referred to Honble Supreme Court decision in the case of Eicher Tractors Ltd. v. CC - 2000 (122) E.L.T. 321 (S.C.) in support of his finding that transaction value cannot be rejected without clear and cogent evidence produced by the department with regard to quality, import of origin and place and time of import.
10. In the case of Om Sairam Trading (supra), held as under:- 5. After hearing both sides and on perusal of the record, we find that the respondents paid duty under protest as evident from the TR-6 challan produced by the respondents. This fact was also recorded in the impugned order. Commissioner (Appeals) passed the order following the decision of the Honble Supreme Court in the case of Eicher Tractors Ltd. v. Commissioner of Customs - 2000 (122) E.L.T. 321 (S.C.), wherein it is held that transaction value cannot be rejected without clear and cogent evidence produced by the department in respect of import of identical or similar goods with regard to quantity, quality, country of origin and place and time of import. The learned DR relied upon letter dated 30-9-2005 of Assistant Commissioner (SIIB), ICD, TKD, addressed to Assistant Commissioner (Import Processing), ICD, Tughlakabad whereby it is stated that benchmark price for knitted polyester fabrics is arrived at US $ 2.50 per kg. We find that the price cannot be enhanced merely on the basis of benchmark price without stating any reason for rejecting transaction value. It appears that NIDB data placed by the learned DR has followed the benchmark price. Accordingly, we do not find any reason to interfere with the order of the Commissioner (Appeals). The appeal filed by Revenue is rejected.
11. We find that in the present case, the adjudicating authority enhanced the value as the declared value appears to be very low compared to value available in NIDB data, otherwise, there is no material available. The Tribunal consistently observed that the declared value cannot be enhanced merely on the basis of NIDB data. It is noticed that the value of impugned goods varies widely on the basis of quality, size, quantity etc. and it is contended by the appellant before the lower appellate authority that the declared value of the same goods were accepted by the Department at Kolkata Port. We also find force in the submission of the learned Advocate that in this particular situation, Rule 9 of the Valuation Rules would not be invoked.
12. In view of the discussions above and respectfully following the decision of the Honble Supreme Court which was followed by the Tribunal in various decisions, we hold that in the present case, the enhancement of value on the basis of NIDB data cannot be accepted. Accordingly, the impugned orders are set aside and the appeal is allowed with consequential relief, if any. (Operative portion of the order was pronounced in open court) (R. PERIASAMI) (P.K. DAS) Technical Member Judicial Member
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