M. Ajit Kumar DECISION
M. Ajit Kumar, Member (T)
1. This appeal is filed by the appellant against Order in Appeal C. Cus. No. 1584/2014 dated 28.8.2014 passed by the Commissioner of Customs (Appeals), Chennai.
2. Brief facts of the case are that M/s. Lifestyle International P. Ltd. the appellant herein, filed Bill of Entry for clearance of full leather sofas in the patterns of 3 seater, 2 seater, 1 seater and declared them as Bovine Leather Upholster Sofa. The adjudicating authority rejected the declared value under Rule 12 of the Valuation Rules and redetermined the value at USD 924/- for 3+2+1 sofas in terms of the Standing Order No. 40/2012-Gr. 6 dated 18.8.2013. Aggrieved by the adjudication order, the appellant preferred appeal before Commissioner of Customs (Appeals) who vide order impugned enhanced the value to USD 2112 per set as against USD 924/- per set and directed the department to reassess the bills of entry accordingly for recovery for differential duty. The appellate authority also ordered for recovery of all their bills of entry for the past five years by invoking section 28(4) of the Customs Act, 1962 for suppressing the correct values by the appellant. Aggrieved, the appellant is before this Tribunal.
2.1. No cross-objection has been filed by the department.
3.0. Shri Ganesh Aravindh, learned counsel appeared for the appellant and learned AR Shri M. Ambe, Deputy Commissioner appeared for the department.
3.1. Shri Ganesh Aravindh, learned counsel submitted that the Appellant is engaged in the trading of imported Apparels, footwear, furniture etc. through their retail outlets situated in various locations in India. During the period July 2013 the Appellant filed 3 Bills of Entry wherein, they imported Full Leather Sofas in the patterns of 3-seater, 2-seater and 1 seater. In this regard, the invoice value was considered as the assessable value. The following values were declared:
The learned Assistant Commissioner of Customs, Chennai passed an order rejecting the transaction value adopted by the Appellant and revalued the goods at USD 924/- as per Rule 9 of the Customs Valuation Rules, 2007 (valuation rules) read with Rule 12 based on the instructions contained in Standing Order No. 40/2012-Group-6 dated 16.08.2012: Aggrieved by the said Order, the Appellants filed an appeal before the Commissioner (Appeals) who without taking into consideration the submissions made by the Appellant, passed the impugned order enhancing the assessable value from USD 924 to USD 2112. Being aggrieved by the impugned Order the Appellant is before us. The Appellant submits that as per Section 14 of Customs Act, 1962, the value of imported goods shall be the transaction value being the price actually paid or payable for the goods in the course of international trade. In this regard, the Appellants rely on the decision of the Hon'ble Supreme Court in the case of Eicher Tractors Vs. Commissioner of Customs - MANU/SC/0699/2000 : 2000:INSC:524 : 2000 (122) ELT 321(SC) wherein, it is held that transaction value cannot be rejected unless any of the exceptions noted in Rule 4(2) of the Valuation Rules was attracted. The Appellant submits that transaction value cannot be rejected on the basis of prices ascertained through local market enquiry/survey. The Appellant also submits that they have imported the same goods at the same price from the same supplier which has not been disputed by the Department. Therefore, the rejection of transaction value must be held to be illegal.
3.2. The learned AR Shri M. Ambe, Deputy Commissioner has reiterated the points given in the impugned order.
4. We find that the dispute involves the action of the learned Commissioner (Appeals) in revaluation by enhancement of the transaction value declared by the Appellant which was already enhanced by the Original Authority, for imported Full Leather Sofas as per Rule 9 of the Customs Valuation Rules, 2007 (valuation rules) read with Rule 12. It is ironic that the appellant who approached the Commissioner (Appeals) for relief from the re-assessed transaction value by the Original Authority was left worse off after having approached the Commissioner Appeals, without any notice being given for enhancing the value. The general principles is that the Commissioner (Appeals) should not travel outside the record of the lower authority and make out a case which eve Revenue did not canvas.
5. In M/s. Trojan & Co. Vs. RM.N.N. Nagappa Chettiar MANU/SC/0005/1953 : 1953:INSC:26 : AIR 1953 SC 235, the Hon'ble Supreme Court considered the issue as to whether relief not asked for by a party could be granted and that too without having proper pleadings. The Court held as under:
"It is well settled that the decision of a case cannot be based on grounds outside the pleadings of the parties and it is the case pleaded that has to be found. Without an amendment of the plaint, the Court was not entitled to grant the relief not asked for and no prayer was ever made to amend the plaint so as to incorporate in it an alternative case."[Para No. 29]
The impugned order hence merits to be set aside on this elementary principle of law itself.
6. Coming to the merits of the assessment, we find that as per Section 14 of the Customs Act, 1962 as well as Customs Valuation Rules the transaction value is required to be accepted unless there are valid reasons for rejection of such value as provided in the said Act and Rules. Basing the value of impugned goods on a circular issued by the department or on the basis of a market survey is totally against the legal provisions cited above. The issue was examined by a Coordinate Bench of this Tribunal in Vidya Enterprises v. Commissioner of Customs (Seaport-Export), [MANU/CC/0094/2017 : 2017 (6) TMI 990 - CESTAT CHENNAI] wherein it was held as under;
"5. ...During the course of the assessment and adjudication proceedings, the Customs authorities have arrived at the value of the imported goods by deduction method from the market price. It is settled position of law that in terms of Section 14 of the Customs Act, 1962, the transaction value is required to be accepted as above. The value can be determined by resorting to Customs Valuation Rules only in those cases when the transaction value is rejected for valid reasons. Only thereafter, the value shall be determined by proceeding sequentially through Valuation Rules. In the present case, the transaction value has been sought to be rejected only on the basis of the price list, catalogue, market enquiry as well as contemporaneous import of some of the items. All these grounds can at best raise a suspicion that value declared for assessment may be less. However, none of these can be considered as valid reasons for ignoring the transaction value as has been held by the Hon'ble Supreme Court in the case of Eicher Tractors (supra). Similar views have also been taken by the apex court in several other cases...
7. It is settled law that the onus to prove that the declared price did not reflect the true transaction value is always on the Department. It is also a settled law that the Department is bound to accept the transaction value entered between the two parties unless they are able to disturb it by the application of law as set out in the Customs Act 1962 and the Rules framed there under. We find that taking recourse to extraneous evidence like instructions contained in Standing Order No. 40/2012-Group-6 dated 16.08.2012 is not permissible. The Department having failed to discharge its burden the impugned order is set aside on merits also.
8. We would like to bring to notice the Hon'ble Apex Court observations in The State of Jharkhand and others v. Brahmaputra Metallics Ltd. and others [MANU/SC/0906/2020 : 2021 (1) SCJ 131] wherein it was held that a decision taken in an arbitrary manner contradicts the principle of legitimate expectation. An authority is under a legal obligation to exercise the power reasonably and in good faith to effectuate the purpose for which power stood conferred.
9. We hence set aside the impugned order. The Appellant is eligible for consequential relief, if any, as per law. The appeal is disposed of accordingly.
(Pronounced in open court on 19.06.2024)
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