Per: P.R. Chandrasekharan: There are 40 appeals C/931-970/10 filed by the Revenue against the Order in Appeal Nos. 217 to 256 (GR-IV)/2010/(JNCH)/ IMP-205 to 244 dated 09/09/2010 passed by the Commissioner of Customs (Appeals), Jawaharlal Nehru Custom House, Nhava Sheva, Mumbai. As the issue involved is common and arise out of a single order, they are taken up together for disposal.

2. For the purpose of reference and decision, we take up appeal No. C/931/2010 and the facts are identical in other cases also (except for the quantity and price and the quality of scrap). The facts arising for consideration in the said appeal are as follows:- 2.1. The importer M/s Bharati Rubber Lining & Allied services Pvt. Ltd., Thane filed a bill of entry No.747223 dated 19/02/2006 for import of 126 MT of aluminium scrap of grade Twang and declaring a value of US$1639 per MT. The assessment was done provisionally under bond pending determination of value and submission of documentary evidence by the importer in support of the claim of the declared value. However, in spite of the expiry of time-period of the bond, the importer did not submit the letter of credit or other documentary evidence in support of the declared value. On carrying out a detailed study of the imports of similar commodities, it was noticed that the contemporaneous price of the said scrap approximated to or higher than the declared value. It was further observed that there was a steep increase of prime metal prices in the international market during the contemporaneous period. The London Metal Exchange (LME) price on the date of filing the bill of entry was noticed higher than the declared value. Therefore, a show cause notice dated 30/05/2008 was issued to the importer rejecting the value declared under rule 10A of the Customs Valuation Rules, 1988 (CVR in short). The show cause notice made the following allegation. 2.2. Since the declared value was not acceptable under Rule 4 read with Rule 10A of the CVR, the valuation was required to be done sequentially through Rules 5 to 8 of the said Rules in terms of Rule 3(ii) of the said Rules. However, in the case of scrap, it is not possible to have any identical or similar consignment of metal scraps and there are bound to be variations as these metal scraps are collected from different materials and sources before being graded. Therefore valuation of metal scrap can not be done under the provisions of rule 5 to 7A by proceeding sequentially. Hence the value was required to be determined under rule 8 (residual method), using reasonable means consistent with the principles and general provisions of these Rules and on the basis of the data available in India. The following methodology was adopted for valuation of the impugned goods. There are 34 types of Aluminium scrap as per Institute of Scrap Recycling Industries (ISRI) which provides guidelines and definitions of all types of non-ferrous and ferrous scrap. Analysis of the import data revealed that 15 types of scrap accounted for more than 90% of the total volume of aluminium scrap. Prices of all the 15 grades of scrap have been linked to the price of the prime metal as traded in LME in the form of discount from the price of the prime metal. The international price of aluminium scrap of different grades, namely, twitch, tread, trump, taint/tabor, talk, tale, tense, taldon, twang, tassel, throb, testy, telic, talon, tablet are 30%, 20%, 30%, 32%, 5%, 25%, 30%, 35%, 15%, 15%, 30%, 35%, 35%, 7% and 9% respectively less from the price of prime Aluminium ingots. On this basis, the price of the scrap under import was arrived at from the LME price of prime metal less 15% discount which worked out US $ 1977 per MT as against the declared price of US $1639 per MT as declared by the importer and a differential duty of Rs. 5,99,698/- was demanded. Annexure A to the notice gives the basis for re-determination of value under Rule 10A and Annexure B to the show cause is supposed to give list of Bills of Entry indicating values of contemporaneous imports. In the instant case, annexure B is blank with no details. As no reply was received from the importer and none appeared during the personal hearing, the show cause notice was adjudicated ex-parte. 2.3. The adjudicating authority observed that metal scrap is a unique commodity and is collected from different materials and sources before being sorted into different types and grades. The procurement is either for stock and sale or it is procured immediately after receipt of orders from buyers. Different methods of sorting are resorted to. Metal scrap is not a branded manufactured product but a waste/bye-product generated during the course of manufacturing and the price of the scrap is dependent on various factors. Metallic content in the scrap affects the price of scrap and the country of origin, port of shipment and the supplier become immaterial in pricing and rather the metallic content and the impurities in the scrap influence the price/negotiations of valuation purpose in the case of scrap. Therefore, he came to the conclusion the value of the scrap in the present case can not be determined under rules 5 to 7a of the CVR and the value has to be determined under Rule 8. He then relied on the Directorate General of Valuation Alert Circular No. 14/2005 dated 16-12-2005 which stated that the value of Aluminium scrap was linked to the price of the prime metal as traded in LME and the transactions of metal scrap depend upon the prevailing price of prime metal less the percentage of discount for the impurities found in the scrap. On this basis, he confirmed the re-determination of price as proposed in annexure A to the show cause notice and confirmed the differential duty demand. 2.4. The importer preferred an appeal before the lower Appellate Authority. The learned appellate authority observed that the DGOV Circular No. 14/2005 was nor relied upon in the show cause notice but has been referred to in the order-in-original. On the basis of honble apex Court judgment in the case of Varsha Plastics vs. Union of India 2009 (235) ELT 193 (SC), he concluded that the circular cannot be interpreted to mean that transaction value has to be rejected if it is not conforming to the value arrived at on the basis of LME bulletin after allowing the discounts prescribed therein and the said circular does not override the express provisions of Section 14 of the Customs Act or the CVR. Inasmuch as the transaction value has been rejected under Rule 10A, the assessing officer was required to determine the same by proceeding sequentially under rules 5 to 7a and thereafter, invoke Rule 8 if the preceding rules are not applicable. He observed that in the instant case, the invoice value produced by the importers have been rejected and the value has been loaded on the basis of DGOV circular on a uniform basis which is not permissible in law as per the decision of this Tribunal in the case of Commissioner of Customs vs. FPS (India) Pvt. Ltd. 2009 (234) ELT 268 (Tri.Mum) and the honble apex Court in the case of Eicher Tractors Ltd. vs. Commissioner of Central Excise 2000 (122) ELT 321 (SC). On this basis the learned appellate authority held that, rejecting the transaction value in the instant case was not justified. As regards reliance placed on the LME prices of the prime metal to arrive at the value of the metal scrap by giving discounts from the price of the prime metal, the lower appellate authority noted that even if one want to apply Rule 8, the facts which are relevant for determining the value under Rules 4 to 7A continue to remain relevant with greater flexibility and adjustments in the transaction value will have to be made taking into account the facts involved in each relevant case which has not been done in the instant case. He noted that the principle of determining truth and accuracy under Rule 10A on case to case basis equally applies to the determination of value under Rule 8. Accordingly, he held that summary rejection of the transaction value and following arbitrary method of valuation under Rule 8 cannot be justified. He also found that, as per the show cause notice the contemporaneous price of the scrap approximates to or higher than the declared value and therefore, as per the provisions of Rule 6(2) read with Rule 5(3), the lower of such values had to be adopted to arrive at the transaction value and in a case the contemporaneous imports approximate the value of the goods declared, the question of re-determination may not arise at all. The appellate authority also noted that the impugned order has been passed mechanically without verification of the facts and records of the case and the orders have been passed without even disclosing the number and date of the Bills of Entry pertaining to individual order-in-originals. The impugned order also failed to take into account the defence replies, the correspondences, relied upon documents, annexure to show cause notice and request for adjournments of personal hearing received by the adjudicating authority. The defence replies were completely ignored and the assessment orders recorded untrue facts that no reply was submitted and no response to notice of personal hearing was received. Therefore, he held that there was denial of natural justice and miscarriage of justice. On the basis of these observations, he set aside the assessment orders and allowed the appeals filed by the importers. Against this order of the appellate authority, the Revenue is in appeal before us.

3. The learned AR appearing for Revenue contends that if there was denial of natural justice to the importers while passing the assessment orders, then the remedy was for remanding the case back to the original adjudicating authority which has not been done in the instant case. He further contended that as has been held by the honble apex Court in the case of Commissioner of Customs, Vishakhapatnam vs. Aggarwal Industries Ltd. 2011 (272) ELT 641 (SC) the department could invoke Rule 10A where they had reason to doubt the truth and accuracy of declared transaction value. In the instant case, the importers were asked to submit letters of credit and other documents relating to the transactions which they failed to do and, therefore, invocation of Rule 10A for rejection of transaction value was justified. He also argued that once the Revenue discharges the burden of proof of producing evidence of contemporaneous import at a higher price, then the onus shifts to the importer to prove that the price indicated in the invoice relied upon by him is correct. He also relied on judgment of the honble apex Court in the case of Radhey Shyam Ratanlal vs. Commissioner of Customs (Adj.), Mumbai 2009 (238) ELT 14 (SC) wherein the honble apex Court held that contemporaneous documents like weekly bulletin of spices market and public ledger documents indicating higher prices can be relied upon by the department when the transaction value claimed by the assessee is not supported by original contract/invoices and, therefore, reliance placed on the LME values of the prime metal to arrive at the price of scrap cannot be faulted. Even if it is held that the adjudicating authority failed to follow principles of natural justice, the matter should go back to the adjudicating authority to decide the matter afresh after following the principles of natural justice.

4. The learned advocates for the appellants submits that the learned appellate authority has passed a very detailed order rebutting each and every point made in the order of the assessing officer and the findings made by the lower appellate authority are supported by various decisions of the honble apex court and of this Tribunal in similar situations. Therefore, the findings of the lower appellate authority are correct in law and hence, the said order has to be sustained on all counts.

5. We have carefully considered the rival submissions and perused the records and also the submissions made by both the sides. 5.1. We notice that there has been denial of natural justice inasmuch as the submissions made by the importer in reply to the show cause notices have not been considered in many cases. A sweeping statement has been made saying that the appellants did not reply to the show cause notices nor did they avail opportunities of personal hearing whereas the fact remains that in a number of cases, the appellants have filed replies to the show cause notices and also requested for relied upon documents listed in the show cause notices. On that ground alone the orders of the original adjudicating authority needs to be set aside and the findings of the appellate Commissioner needs to be upheld. 5.2. We also find that there is an inherent contradiction in the show cause notice as well as the findings of the original authority. The show cause notice, in para 4 thereof, clearly states as follows: On carrying out a detailed study of the imports of the similar commodity/commodities, it was observed that as the contemporaneous price of the said scrap during relevant period was noticed at the rates indicated in the enclosed Annexure B which approximate or higher than the declared value. 5.3. But in the show cause notice as well as the assessment order, resort has been made to Rule 8 of the CVR read with Rule 10A. If value of similar goods were available, as stated in the show cause notice, that should have been the basis for determining the value of the goods under Rule 6 as it stood at the relevant time subject to making necessary adjustments, taking into account the quantum of import, country of origin, quality of the scrap received and other relevant factors. That has not been done in the instant case. The assessing officer has straightaway adopted the value given in the DGOV circular based on the LME prices of prime metal minus discounts. While resorting to Rule 8, the assessing officer has stated that Rule 5 to 7A could not be applied for want of prices of contemporaneous imports. In other words, the findings completely contradict the proposition in the show cause notice that contemporaneous imports were noticed at same or higher prices. If contemporaneous imports were not noticed on the basis of which Rules 5 and 6 could not be applied, the question of rejecting the transaction value under Rule 10A does not arise at all. Thus, we see that the proposition in the show cause notice and the conclusions drawn in the assessment order are completely at variance with each other. 5.4. The lower appellate authority has rejected the reliance place on the DGOV circular on the ground that in terms of the honble apex Court judgment in the case of Varsha Plastics (cited supra), the assessment under the provisions of Customs Valuation Rules cannot be given a go-by and the Valuation Rules will prevail over the departmental instructions on the subject matter. The honble apex Court in the said case held as follows: The valuation of the imported goods where the transaction value in the opinion of Assessing Authority is liable to be rejected because of invoice manipulation or under-invoicing or un-realistic price or misdeclaration in respect of valuation of goods or description or where transaction value of the goods declared is ridiculously low, which of course the Assessing Authority has to justify, he must proceed to determine valuation of goods by following Customs Valuation Rules. The availability of evidence of contemporaneous import of the same goods obviously provides the best guide for determination of value of the import of goods but in the absence of evidence of contemporaneous import, reference to foreign journal for finding out correct international price of imported goods may not be irrelevant. 5.5. In the instant case, the proposition in the show cause notice is that the value of the contemporaneous imports indicated a higher price. If that be so, that should have been the starting point for determination of value of the imported goods and not some other basis. Further even when we take the values of the contemporaneous imports, the lowest of such value has to be adopted as provided for in Rule 6 and not the highest. In the instant case no such thing has been done by the assessing officer. 5.6. In view of the above, we do not find any infirmity in the observation of the Commissioner (Appeals) that the DGOV circular cannot override the provisions of Valuation Rules. The honble apex Court in the case of Commissioner of Customs, Calcutta vs. South India Television 2007 (214) ELT 3 (SC) had held that casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value. The invoice price is not sacrosanct but before rejecting the invoice price, the department has to give cogent reasons for such rejection. The assessing authority has to examine each and every case on merits for deciding its validity and he cannot form a view to reject all transaction values on the basis of some general criteria based on DGOV circular and on that basis load the value of imports uniformly across board. This Tribunal in the case of FPS (India) Pvt. Ltd. (cited supra) held that uniform loading based on general criteria is not permissible.

6. In the light of the above, we find that the order of the appellate authority is on sound footing and there is no merit in the departmental appeals. Accordingly, we dismiss the appeals as devoid of merits. (Operative Part Pronounced in Court) (Ashok Jindal) Member (Judicial) (P.R. Chandrasekharan) Member (Technical) */as