1. Whether after giving consent by the importer, the Import value can be enhanced? 2. Whether enhancement can be made on the basis of DGOV circular only?

PJ/Case Law/2019-2020/3605

Guru Rajendra Metalloys India Pvt Ltd Vs. C.C.-Ahmedabad Final order no. FINAL ORDER NO. A/10889-11025/2020
Issue:-
1. Whether after giving consent by the importer, the Import value can be enhanced?
2. Whether enhancement can be made on the basis of DGOV circular only?
Brief Facts:-The Appellant filed various appeal for the identical issue of valuation of various types of aluminum scrap namely Taint Tabor, Tread, Tense, Zorba, Talk, Troma, terse, Twitch, Telic, etc. imported from various countries during the period August 2018 to May 2019. The appellant uses these scrap as raw material for self consumption in the manufacture of Aluminum Ingots, Aluminium Alloy Ingots, etc. The case of the department is that the appellant have given a consent letter to the proposal of the enhancement of the value from USD 990 PMT as per invoice value to USD 1587PMT. In the consent letter it was stated that the appellant have gone through the contemporaneous data of import of similar/identical goods and the appellant has agreed to enhance the assessable value from the declared value of USD 990/- PMT to enhanced value of USD 1587/- PMT. The appellant challenged the assessment of Bills of Entry before the Commissioner (Appeals) who has dismissed the appeal. Hence appellant has filed appeal before Tribunal.
Appellant’s Contention:-The appellants submits that the enhancement was made on the basis of DGOV circular dated 01/12/2016. Therefore, though it is mentioned in the consent letter that the appellant have gone through the contemporaneous import data but the price is not on the basis of any contemporaneous import but in fact it is on the basis of DGOV Circular. As regard the application of price arrived at on the basis of DGOV Circular, this Tribunal in various cases held that the notional value on the basis of DGOV circular is not correct and legal. The appellant further submits that since the enhancement is solely based on DGOV circular and no contemporaneous data was relied upon the enhancement is illegal and on this ground itself the appeal needs to be allowed. The Appellant further submits that even if the appellant has given a consent letter, the enhancement of the value must be done in accordance with the law by applying rules of Customs Valuation Rules sequentially which was not done in the present case. The appellant submits that even though the consent was given by the importer, the Bills of Entry assessment can be challenged by the assessee. This has been held in various judgments. The Appellant further submits that in the present case, since the enhancement has no basis except the DGOV circular, there is no need to remand the matter and this Tribunal being a final fact finding authority, is competent to decide the appeal finally. In support of this submission, the appellant placed reliance on various cases before tribunal.
Respondent’s Contention:-The Revenue reiterates the findings of the order of the Commissioner (Appeal). The Revenue also relied on the decision of the Tribunal in the case of Saraswati Sales Corp. 2011 (266) ELT 237 (Tri- Del.).
Reasoning of Judgment:- The Tribunal have heard both sides and perused the records. The Tribunal finds that the enhancement of the Customs Valuation is on the basis that the appellant have given consent letter wherein they have mentioned that they have gone through contemporaneous import data and agreed the enhancement of the value. The Tribunal also finds that as per the submission made by the appellant, in one particular case, i.e. Bill of Entry of Appeal of Guru Rajendra Metalloys Pvt Ltd. It is for import of 21.50 MT of Taint/Tabor aluminium scrap. The appellant showed the invoice valued at USD 990 PMT. Assessing Officer has enhanced value to USD 1587/- PMT. This enhancement of the value as explained by the appellant in their additional submission filed is as under:-
The value of Taint/Tabor as per DGOV alert/circular comes to $2035- (22% of $2035)+ $1587/- PMT.
The Tribunal further finds that this clearly shows that the enhanced value is exactly the value arrived at on the basis of LME price of prime metal minus discount given in DGOV circular. This clearly shows that the enhancement of value is not on the basis of contemporaneous import data but it is based on DGOV circular irrespective of the mention made in the consent letter that the appellant have gone through the contemporaneous import data. Therefore, it is clear that contemporaneous import data was neither available nor relied upon for enhancement of the value. Therefore, the enhancement of value is absolutely illegal and incorrect. We are of the clear view that merely based on DGOV circular also, value cannot be enhanced which is without authority of law.
The Tribunal further finds that both the lower authorities, they have not accepted that the prices are based on DGOV circular. However, the calculations shown by the appellant, it is clear that the enhancement of the value is not on the basis of contemporaneous imports data but clearly on the basis of DGOV circular. This Tribunal dealing with identical case in the case of Bharathi Rubber Lining & Allied Services P. Ltd. clearly held that DGOV circular cannot override the provisions of Valuation Rules. Invoice price is not sacrosanct but before rejecting the invoice price the department has to give cogent reasons for such rejection. Assessing Authority has to examine each and every case on merit for deciding its validity. He could not form the view to reject all transaction only on the basis of same general criteria based on DGOV circular. It was, however, held that if contemporaneous import were not noticed, Rules 5 and 6 of Customs Valuation Rules 1988 could not be applied, the question of rejecting the transaction valued under the Rule 10(A) does not arise at all.
The Tribunal finds that In view of various judgments presented by the appellant , particularly, in respect of the identical cases, and on the various issues, such as whether after giving consent by the importer, the value can be enhanced, whether enhancement can be made on the basis of DGOV circular have been considered and conclusively held that in such circumstances invoice prices cannot be disputed and enhancement of the value cannot be made. Considering the above judgments and the observations made by us hereinabove, we are of the view that enhancement of the value made by assessing authority and upheld by Commissioner (Appeals) is absolutely illegal and incorrect. Therefore, impugned orders are set aside, appeals are allowed with consequential relief, if any.
Comment:- The crux of the case is that the Hon’ble Tribunal rightly decided that the that DGOV circular cannot override the provisions of Valuation Rules. The Assessing Authority has to examine each and every case on merit for deciding its validity. They could not form the view to reject all transaction only on the basis of same general criteria based on DGOV circular. It was, however, the tribunal held that if contemporaneous import were not noticed, Rules 5 and 6 of Customs Valuation Rules 1988 could not be applied.

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PJ/Case Law/2019-2020/3605

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