Customs Act, 1962 – s.14 – Valuation of goods for purposes of assessment – Respondent imported various varieties of Aluminum scrap and filed bills of entry along with invoices and purchase orders in respect therein declaring the transaction value of the imported goods for the purpose of paying customs duty – Declared value was not accepted by the Assessing officer who found same to be low and on re-assessment, increased the assessable value – Writ petition by the respondent – Deputy Commissioner of Customs on the direction of the High Court passed a speaking order rejecting the transaction value declared by the respondent – Assessment order passed by the Assessing Officer was challenged before the Commissioner (Appeals), which was dismissed – However, appeals of the respondent were allowed by the Tribunal thereby rejecting the enhanced assessable value by the Revenue – On appeal, held: The normal rule as provided by the s.14 of the Act is that the assessable value has to be arrived at on the basis of the price actually paid, and that was mentioned in the Bills of Entry – Tribunal had clearly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value – Since, there was no such exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, order-in-original was, therefore, erroneous – The observations made by the Tribunal were correct. Dismissing the appeals, the Court
HELD: 1. The law is clear, as per Sections 14(1) and 14(1-A) of the Customs Act, 1962, the value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision. Section 14(1) is a deeming provision as it talks of ‘deemed value’ of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods. This, ordinarily, is the course of action which needs to be followed by the Assessing Officer. This principle of arriving at transaction value to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4 (1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value. Exceptions are, however, carved out and enumerated in Rule 4(2). As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value. [Para 10][1200-B-F]
2. The observations of the Tribunal made in the impugned judgment are to be appreciated in the light of the principles of law specified, inasmuch as the Tribunal has categorically remarked that the normal rule is that assessable value has to be arrived at on the basis of the price which is actually paid, as provided by Section 14 of the Customs Act. [Para 12][1202-E-G]
3. It is, therefore, rightly contended by the respondent that the reason given for setting aside the order that the normal rule was that the assessable value has to be arrived at on the basis of the price which was actually paid, and that was mentioned in the Bills of Entry. The Tribunal has clearly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value. Since there is no such exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, Order-in-Original was, therefore, clearly erroneous. [Para 13][1202-G-H; 1203-A-B] Eisher Tractors Ltd., Haryana v. Commissioner of Customs, Mumbai (2001) 1 SCC 315 : [2000] 4 Suppl. SCR 597 ; Commissioner of Customs, Calcutta v. South India Television (P) Ltd. (2007) 6 SCC 373 : [2007] 8 SCR 95 – relied on.
Chaudhary Ship Breakers v. Commissioner of Customs, Ahmedabad (2010) 10 SCC 576 : [2010] 12 SCR
854 ; Commissioner of Customs, Vishakhapatnam v. Aggarwal Industries Ltd. (2012) 1 SCC 186 : [2011] 12 SCR 1128 ; Commissioner of Customs v. Prabhu Dayal Prem Chand (2010) 13 SCC 535 – referred to.
As published in the Supreme Court Reports, Supreme Court of India. Text from the Indian Supreme Court Judgments open data set (Dattam Labs), CC BY 4.0.
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