R Kishan & Co vs Commissioner Of Customs (Export)

IN THE CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL,WEST ZONAL BENCH AT MUMBAI

COURT No. II

APPEAL No.C/88977/14

(Arising out of Order-in-Appeal No.2671 (SIIB)/Export)/2014 (JNCH)/Exp-136 dated 27/06/2014 passed by Commissioner of Customs (Appeals), Nhava Sheva)

For approval and signature:

Honble Mr.M.V. Ravindran, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

1. Whether Press Reporters may be allowed to see :No the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the :Yes CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy :Seen of the Order?

4. Whether Order is to be circulated to the Departmental :Yes authorities? ========================================

R Kishan & Co. Appellant Vs. Commissioner of Customs (Export), Nhava Sheva, Respondent

Appearance: Ms.Sparsh Prasad, Advocate for appellant Shri.S.J.Shahu, Asst. Comm. (AR) for respondent

CORAM: Honble Mr.M.V.Ravindran, Member (Judicial Honble Mr. P.S.Pruthi, Member (Technical)

Date of Hearing : 10/04/2015 Date of Decision : 10/04/2015

ORDER NO

Per: M.V. Ravindran

This appeal is directed against order-in-appeal number 2671 (SIIB/export)/2014 (JNCH)/Exp136 dated 27/06/2014.

2. The relevant facts that arise for consideration are the appellant herein had filed drawback shipping bills for export of goods declared to be football goalkeeper gloves of leather. The revenue authorities on the prima facie examination came to a conclusion that the goods were overvalued for claiming ineligible duty drawback from the government. Further investigation was taken up and on the request of the appellant consignment was cleared for export provisionally. Lower authorities redetermined the value of export under Rule 6 of Customs Valuation (Determination of Value of Export Goods) Rules, 2007 (hereinafter referred to as Valuation Rules); lower authorities also ascertained the value of the goods based on market enquiry in the wholesale market in the presence of appellants representative and rejected the declared FOB value and re-determined the F.O.B. value and restricted the duty drawback claim. The appellants were also imposed a penalty and were also directed to pay a redemption fine. Aggrieved by such an order an appeal was preferred before the first appellate authority. The first appellate authority also concurred with the views of the adjudicating authority and rejected the appeal.

3. Learned Counsel appearing for the appellant would take us through the records of the case as also the impugned order. It is submission that the appellant had declared the value of Rs.670/- while the value was re-determined by the lower authorities as Rs.455/- per pair of the football gloves exported. It is the submission that the appellant had produced tax invoices under which the said gloves were purchased by them and draws our attention to the same. It is also the submission that the lower authorities have not considered this crucial evidence in correct perspective which is favouring the appellant. She would also draw our attention to the provisions of valuation rules and submit that the lower authorities have not followed the procedure as laid down for valuation of goods for export. It is the submission that having not followed the procedure of valuation as mandated, and there being no other contrary evidence to discard the transaction value, the re-determination of value of goods for export by the lower authorities is incorrect.

4. Learned departmental representative on the other hand would draw our attention to the findings recorded by the lower authorities. He would submit that the lower authorities have ascertained the market value as per the valuation rules and the same was also endorsed by the appellant. He would submit that the appellant now cannot deny the acceptance of the market value by producing the invoices now.

5. We have considered the submissions made at length by both sides and perused the records.

6. The issue in hand is regarding the valuation of the goods for export which are football goalkeeper gloves. It is the case of the revenue that the value as claimed by the appellant is high and the correct value as per the market enquiry is less and the appellant has not evidenced the value claimed by him, hence as per the provisions of Rule 6 of the Valuation Rules the value was the re-determined domain using reasonable means consistent with the principles and general provisions of the valuation rules.

7. We find that the stand of the lower authorities as also the submissions of the learned departmental representative while defending the re-determination of the value of export goods, is incorrect and is liable to be rejected for more than one reason.

8. Firstly, the lower authorities have not considered the fact that the appellant had from the beginning claimed that the football goalkeeper gloves were procured by them from local vendors under tax invoices, whose names were given to the lower authorities. We find that both the lower authorities have blindly recorded that the appellant did not produce the documents even after the market enquiry. On perusal of invoice number 01 and 02 of the supplier First campaign we find that the said invoices satisfies all the criteria of a invoice. The said invoice indicates the VAT registration number of the supplier; complete address and an endorsement which reads sold under H form for Export. The said invoices cannot be discarded summarily by the lower authorities unless there is contrary evidence. For rejecting the declared value, the revenue has bring on record as to the incorrectness of declared value. In the case in hand, there is no contrary evidence except in the form of market enquiry.

9. Secondly, we find that on the market enquiry conducted by the revenue there could be at most a suspicion as to the declared value being erroneous, in that case, revenue can and surely proceed with the re-determination of the export value by adopting the procedures laid down in valuation rules. We find that the adjudicating authority has directly jumped to the provisions of Rule 6 of the Valuation Rules, without applying provisions of Rule 4 and 5 of the Valuation Rules. On perusal of the said valuation rules, we find that the appropriate rule that should have been applied by the revenue in this case is Rule 5 which we reproduce.

Computed value method  If the value cannot be determined under Rule 4, it shall be based on a computed value, which shall include the following:

a) cost of production, manufacture or processing of export goods;

b) charges, if any, for the design or brand;

c) an amount towards profit.

10. On perusal of the aforesaid rule it can be noticed that the value needs to be arrived based upon cost of production of manufacture or processing of export goods, charges for design and an amount towards profit. In the case in hand, the revenue authorities though being made aware of the supplier of the goods which were exported, did not bother to check with the supplier to ascertain the correct value of the goods. In our considered view, jumping directly to provisions of Rule 6 of the Valuation Rules for ascertain value by residual method is not in consonance of the law inasmuch as it is settled law that to determine value of goods sought to be exported, the provisions of Valuation Rules should be applied sequentially. To our mind, the appellant have a case in their favour as they have demonstrated that the goods which were exported were procured from a credible supplier whose name address and VAT number were available. In the absence of any contrary evidence, we hold that the transaction value as declared by the appellant for claiming duty drawback is the correct value.

11. In view of the foregoing in the facts and circumstances of this case, we find that the impugned order which upholds the re-determination of the value of the goods for export is incorrect and is liable to be set aside and we do so. Upholding the value declared by the appellant as correct, we set aside the impugned order and allow the appeal with consequential relief, if any.

(Pronounced in Court)

(P.S.Pruthi) Member (Technical) (M.V.Ravindran) Member (Judicial)

pj

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