Customs | Importer Cannot Be Penalised For Misdeclaration Merely Because Other Importers Declared High Prices For Similar Goods: CESTAT

Justice Dilip Gupta (President) and P.V. Subba Rao (Technical Member) opined that the mere fact that another importer had imported identical goods from the same overseas exporter at different prices does not prove that the assessee had mis-declared anything in the Bill of Entry.

The Tribunal stated that a proper officer can reject the transaction value under Valuation Rule 12 if he has a reasonable doubt about the truth or accuracy of the transaction value and can re-determine the value following other methods of valuation. There is no provision in the Valuation Rules for the importer to reject his own transaction value nor is it feasible for the importer to know the transaction values of others in their imports.

In this case, the assessee/appellant had filed a Bill of Entry in which the values declared were lower than the values declared by another importer, for the same goods imported from the same supplier.

Thus, the value declared by the assessee was 17% less than the value declared by another importer.

The differences had given the officer reason to doubt the declared value under Rule 12. The Commissioner rejected the transaction value under Valuation Rule 12 and redetermined the value not only in this Bill of Entry but also in 44 past Bills of Entry filed by the assessee.

As per the revenue, the rejection of the declared transaction value under Valuation Rule 12 was correct and proper because it was found that the values declared by the assessee were much lower than the values declared by other importers for imports from the same overseas supplier.

As per the assessee, the assessee is an old customer of the overseas supplier and hence signed an agreement, which is possibly the reason that his prices were lower than the prices at which others imported goods. The mere fact that others imported the goods at higher values does not justify the rejection of transaction value.

The Commissioner confirmed the demand of duty in respect of the past Bills of Entry under section 28(4) of the Act and imposed an equal amount as a penalty under section 114A of the Customs Act.

Even if the assessee was aware that another importer was importing the goods at different prices, he does not and cannot declare such values in its Bill of Entry. The assessee had to file the Bill of Entry declaring its transaction value, which it did. Therefore, the penalty imposed on the assessee under section 114AA cannot be sustained, opined the bench.

The bench noted that there was no satisfactory explanation as to why its values were so much lower. One of the grounds on which the transaction value can be rejected under Rule 12 is “the significantly higher value at which identical or similar goods imported at or about the same time in comparable commercial transactions were assessed.”

In view of the above, the Tribunal partly allowed the appeal and upheld the rejection of the transaction value under Valuation Rule 12 and its re-determination under Valuation Rule 4 in respect of the one Bill of Entry and the consequential demand of duty along with interest.

The Tribunal set aside the rejection of the transaction value under Valuation Rule 12 and its re-determination under Valuation Rule 9 in respect of the other Bills of Entry and confirmation of demand of duty under Section 28(4) of the Act with interest.

Case Title: Continental Trading Co. v. Principal Commissioner, Customs-New Delhi

Case Number: CUSTOMS APPEAL NO. 51966 OF 2022

Counsel for Appellant/ Assessee: Shri Priyadarshi Manish and Shri Kunal Sharma

Counsel for Respondent/ Department: Shri Girijesh Kumar

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