Lifestyle International Pvt Ltd. vs. Commissioner of Customs - (Customs, Excise and Service Tax Appellate Tribunal) (19 Jun 2024)

Onus to prove that the declared price did not reflect the true transaction value is always on the Department

MANU/CC/0207/2024

Customs

In facts of present case, Lifestyle International P. Ltd. filed Bill of Entry for clearance of full leather sofas and declared them as Bovine Leather Upholster Sofa. The adjudicating authority rejected the declared value under Rule 12 of the Valuation Rules and re-determined the value at USD 924/- for 3+2+1 sofas in terms of the Standing Order No. 40/2012-Gr. 6 dated 18th August, 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.

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 even Revenue did not canvas.

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.

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. Present Tribunal 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.

Apex Court in The State of Jharkhand and others v. Brahmaputra Metallics Ltd and others 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. Impugned order is set aside. Appeal disposed off accordingly.

Tags : ASSESSMENT VALUATION LEGALITY