Data from NIDB cannot be applied directly by Customs, unless value given therein falls within parameters of identical goods

While hearing an appeal against rejection of value of imported goods as declared by the Importer-Assessee and the recalculation of the value based on third party data, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Bench at Chennai, observed that data from the National Import Database (NIDB) could only be guidelines for Customs to arrive at value of goods & cannot be applied directly, unless value given therein falls within parameters of identical goods or similar goods.

A Division Bench of Ms. Sulekha Beevi C S, Member (J) and Vasa Seshagiri Rao, Member (T), observed that rejection of transaction value declared by importer, was not sustainable, where Department does not assign valid reasons for rejecting transaction value.

Formation of opinion regarding reasonable doubt as to truth or accuracy of valuation and communication of the grounds to the importer was a mandatory prerequisite for rejecting transaction value declared by importer, the Bench clarified.

The Appellant-Assessee was represented by Ms Hari Radhakrishnan Advocate, whereas the Respondent-Revenue was represented by Mr Harendra Singh Pal, AC (AR).

The Assessee filed bills of entry for import of polished porcelain tiles. The Directorate General of Valuation, Mumbai vide letter alerted the field formations about under valuation of import of ceramic tiles and consequently the consignments were provisionally assessed by taking the price as USD 10 per square meter.

Thus, the bills of entry were assessed provisionally pending verification of the declared values by taking bond and bank guarantee from the Assessee. Later based on the letter received from the Directorate General of Valuation, Mumbai, wherein it was intimated to finalize the provisional assessment by taking the contemporaneous value, prevalent during the period of importation of the goods, the adjudicating authority finalized the provisional assessments.

The value of the goods imported from Malaysia was enhanced under Rule 8 of the Customs Valuation Rules 1988 read with Section 14 of the Customs Act 1962, vide Order-in-Original. The Assessee contented that they did not receive the said Order-in-Original and had received the same much later after filing RTI application. 

On appeal, the Commissioner (Appeals) dismissed the importer’s appeal on grounds of limitation. On approaching the Tribunal, the case was remanded to the Commissioner (Appeals) with the direction to conduct enquiry as to whether the Order-in-Original was served on the importer, and to resolve the issue.

 In such remand proceedings the Commissioner (Appeals) directed the Department to produce evidence as to the proof of service of Order-in-Original upon the Assessee. No such evidence was produced by the Department and the Commissioner (Appeals) held that the contention of the importer that they had received the Order-in-Original only on 05.06.2015 pursuant to their application under RTI was acceptable.

The appeal was thus taken up for disposal on merits by the Commissioner (Appeals). The Commissioner (Appeals) passed the impugned order by which the enhancement of value was set aside in regard to three bills of entry accepting the declared value. However, in respect of five other bills of entry the Commissioner (Appeals) upheld the finalization of assessment passed by the original authority enhancing the declared value.

On considering the contentions of both sides, the Bench referred to Rule 10A of the Customs Valuation Rules Act 1988 which laid down the situations in which the the transaction value declared value could be rejected. The Bench noted that if the Proper Officer had reasons to doubt the truth or accuracy of the value declared by importer, he could proceed to re-determine the value of the goods after rejecting the transaction value.

In the present case, the Bench found there to be no evidence put forward by the Department to justify rejection of transaction value. The Order-in-Original merely stated that the provisional assessment was being finalized by taking NIDB data into consideration. The Department has failed to establish the grounds to reject the transaction value.

The Bench relied in the order passed in the case of Agarwal Foundries (P) Ltd. wherein the Tribunal held that NIDB data can only be a guideline to the Customs to arrive at the value of the goods and cannot be applied directly, unless the value given therein falls within the parameters of identical goods or similar goods. The said decision has been upheld by the Apex Court; the Bench noted.  

Hence the enhancement of value of imported goods without giving proper reasons to reject the transaction value could not be sustained, the Bench concluded.

Cause Title: M/s Vikram Trading Company vs Commissioner of Customs [Customs Appeal No. 40844 of 2017 / 2023-Enterslice-9-CESTAT-Chennai]

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