Valuation of Imported Goods

PJ/Case Laws/2011-12/1577

Valuation of Imported Goods - Norms

Case:GANESH AGRO VERSUS UNION OF INDIA

Citation: 2012 (276) E.L.T. 459 (P&H)

Issue:- Valuation – Import of Zinc Ash & Zinc Skimming - Whether assessment can be done solely on the basis of London Metal Exchange by the Commissioner of Customs by ignoring genuine transaction value or the provisions of the Rules?

Brief fact: - The Petitioner import Zinc Ash and Zinc Skimming fro manufacture of fertilizer. In the year 2006, when it filed bills of entry for clearance of the imported goods, the Department did not allow clearance on declared value and vide order dated 30-5-2006, goods were released on provisional assessment at the rate of US$ 1000 per metric ton. As per the interim order of this court dated 15-6-2006 in CWP No. 9341 of 2006, considering the contention of the petitioner that the provisional valuation was exorbitant, the goods were allowed to be cleared at the value of US$ 1000 per M.T. The dispute being of recurring nature, CWP No.16037 of 2008 was filed in this court seeking regular assessment by speaking order as required under Section 17(5) and Section 18 of the Customs Act, 1962. The stand of the respondents was that the issue of fixation of norms was pending consideration and final assessment was made as per the norms which may be fixed by the Commissioner of Customs, Nhava Sheva. The Deputy Commissioner of Customs, Ludhiana, Respondent no. 2 carried out a study and gave report dated 10-12-2008 stating that the value of material is linked to London Metal Exchange (LME) Rules and also depend upon the percentage of metallic content. Base price of Zinc skimming/Zinc ash may be taken to be 25% of LME if the same has no metallic content. The said price could be loaded further depending upon the extent of metallic contents. Inspite of the said report, the Commissioner of Customs, Nhava Sheva vide order dated 12-12-2008 fixed the price equal to 40% of LME if metallic content was nil. On the basis of said parameters, order of final assessment dated 5-2-2009 was passed by the Commissioner of Customs, Ludhiana raising a demand against the petitioner over and above the provisional duty earlier paid. Against the said order, appeal of the petitioner was dismissed vide impugned order dated 11-01-2010 by the Commissioner (Appeal), Customs and Central Excise. The petitioner filed CWP No. 6292 of 2010 challenging parameters laid down in order dated 12-12-2008 by the Commissioner of Customs, Nhava Sheva on the ground that the base price equal to 40 % of LME was arbitrary and ignored report dated 10-12-2008, Annexure P.5 to the effect that the base price should be taken to be 25% of the LME. Vide order dated 7-4-2010, the petition was disposed of directing Chief Commissioner, Customs and Central Excise to look into this aspect and to review the order of Assessment dated 5-2-2009 as affirmed in appeal in case parameters for value were found to be erroneous. In pursuance of the said order of this Court, Impugned order dated 7-5-2010 has been passed holding that the parameter laid down in order dated 12-12-2008 by the Commissioner of Customs Nhava Sheva were Valid

Appellant contention: - The Petitioner contended that under the customs valuation (Determination of value of Imported goods) Rules, 2007, framed with reference to Section 14 of the Act, valuation has to be taken up either equal to the value of the transaction or the lowest value in one of the transaction of identical goods and even under Rule 9, valuation has to be reasonable. Contrary to the said provision, The Assessing Authority i.e. Assistant Commissioner of Customs has mechanically acted on the parameters laid down by the Commissioner of Customs, Nhava Sheva for taking base value equal to 40% of LME. In the said order, there is no reference to lowest value in the transaction of identical goods. Report dated 10-12-2008, prepared by the Deputy Commissioner of Customs, Ludhiana, recommending value based on transactions of identical goods was 25% of the LME, has not been taken into account. The parameter laid down by the Commissioner of Customs, Nhava Sheva were beyond the Rules and could not be mechanically accepted, ignoring the transaction value of identical goods and other material.

Respondent Contention :- The stand of respondent was that the issue of fixation of norms was pending consideration and final assessment was to be made as per the norms which may be fixed by the Commissioner of Customs, Nhava Sheva. The Learned Counsel for the respondent submits that the issue is considered by the commissioner of Customs, Nhava Sheva for laying down parameters. The Respondent have defended the impugned order. As regard report Annexure P.5, it has been stated that the Commissioner of Customs, Nhava Sheva has not accepted the said report and held that valuation be taken to be 40% of LME and the order of assessment and appellate order based on the said norms were valid.

Reasoning of Judgment:- The high court has contended that the said norm cannot be mechanically applied , irrespective of the genuineness of transaction value or value as may be arrived at as per statutory requirements. Normally, it is not for this court to lay down the value in this individual cases or interfere with an order of assessment or appellate order on the issue of assessment of value but when valuation has not been fixed as per the statutory provision, the same has to be set aside and matter remanded for fresh assessment . Accordingly the petitions were allowed and quashes the impugned order and remand the matter to the Assessing officer to pass a fresh order in the matter in accordance with law

Decision: - Petition allowed.

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PJ/Case Laws/2011-12/1577

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