1988. Rule 3(i)1 stipulates that for the purpose of the rules, the value of the imported goods shall be the transaction value. Rule 3(ii)2 provides that where the value of the imported goods cannot be determined under Rule 3(i) then the same is to be determined in accordance with the various methods of determination (of the value 1 3. Determination of the method of valuation – For the purpose of these rules- (i) the value of imported goods shall be the transaction value. (ii) if the value cannot be determined under the provisions of clause (i) above, the value shall be determined by proceeding sequentially through Rules 5 to 8 of these Rules. of the goods) provided under Rules 5 to 8 sequentially.
15.The expression “transaction value” is defined under the Rule 2(f) of the Customs Valuation(Determination of Price of Imported Goods) Rules, 1988 as follows:- 2(f) “transaction value” means the value determined in accordance with Rule 4 of these rules.”
16.Rule 4(1) stipulates as follows:-
“The transaction value of imported goods shall be the price
actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9.”
17.Sub-rule (2)3 stipulates that the transaction value of the imported goods shall be accepted subject to the various exceptions specified in the said Section, the details of which many not be necessary for the present purpose.
3 (2) The transaction value of imported goods under sub-rule(1) above shall be accepted: JUDGMENT Provided that- (a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which -- (i) are imposed or required by law or by the public authorities in India; Or (ii) limit the geographical area in which the goods may be resold; or (iii) do not substantially affect the value of the goods; (b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued.
(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule(3) below.
18.In substance, Rule 5 stipulates the next alternative procedure for determining the value of the imported goods and it reads as follows:-
5.Transaction value of identical goods – (1)(a) Subject to the provisions of Rule 3 of these rules, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued.
(b) In applying this rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods.
(c) Where no sale referred to in clause (b) of sub-rule (1) of this rule, is found, the transaction value of identical goods sold at a different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both shall be used, provided that such adjustments shall be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value.
(2) Where the costs and changes referred to in sub-rule(2) of Rule 9 of these rules are included in the transaction value of identical goods, an adjustment shall be made, if there are significant differences in such costs and charges between the goods being valued and the identical goods in question arising from differences in distances and means of transport.
(3) In applying this rule, if more than one transaction value of identical goods is found; the lowest such value shall be used to determine the value of imported goods.”
19.In substance, Rule 5 enables the Revenue to determine the value of the imported goods on the basis of the identical imported goods of comparable import transaction. Such a procedure/course of action is authorized notwithstanding the mandate of Rule 4(2) that the transaction value shall be accepted. Obviously, such an alternative mode of valuation is authorized as Rule 4 declares that the transaction value of the imported goods shall be the “price actually paid or payable”. Necessarily the rule implies the need of determination of the price actually paid or payable.
20.It is not necessary that in every case of import the importer declares the price actually paid by him or payable by him. Therefore, if in a given case the Revenue notices identical goods have been imported by other importers in comparable transactions at a different rate (normally higher rate) then Revenue is enabled by Rules 5 to reject the valuation made by the importer and determine the “price actually paid or payable” by the importer.
21.In the case at hand, no doubt the revenue claims to have some JUDGMENTinformation based on certain alleged imports made at the Bombay port at the relevant point of time that the import in question took place. According to the revenue, those imports at Bombay were declared and valued at a much higher rate than the value declared by the appellants herein. Therefore, the valuation of the goods imported by the appellant was found unacceptable. Hence, the procedure under Rule 5 was resorted to.
22.However, the respondent(revenue) did not supply the information (alleged computer print out) which formed the basis of the conclusion that the appellants herein under-valued the goods imported. In such a situation, the appellants obviously cannot and did not have any opportunity of establishing that the claim of the revenue is unsustainable in law. If the information which formed the basis for the Revenue to reject the appellant’s valuation is supplied to the appellants, the appellants perhaps will have an opportunity to dispute the comparability of the import transactions allegedly contained in the computer printout on various counts may not be possible to catalogue.
23.The appellants, of course, admit that the goods imported by them are known commercially as ‘Cyanuric Chloride’ as specified in the show cause. Whether Cyanuric Chloride was imported at the JUDGMENTrelevant point of time by others in comparable transactions, i.e., is “a sale at the same commercial level and in substantially the same quantity” etc. is a matter to be considered on the examination of the material relied upon by the Revenue. A reasonable opportunity must be given to the appellant to demonstrate (if at all) that the transactions relied upon by the Revenue are not comparable transactions.
24.In the absence of any material produced by the Revenue in proof of the alleged comparable imports at a higher value, the impugned order which eventually confirmed the original order of assessment by the Assistant Commissioner of Customs dated 31.3.2001 cannot be sustained for two reasons – (1) the mere existence of an alleged computer printout is not proof of the existence of comparable imports; (2) assuming such a printout exists and the contents thereof are true, the question still remains whether the transaction evidenced by the said computer printout are comparable to the transaction of the appellant. The appellant will have to be given reasonable opportunity to establish (if he can) that the transactions are not comparable.
25.The impugned order and the original assessment order are therefore, set aside. However, it will be open to the JUDGMENTrespondent(revenue) to proceed against the appellants herein pursuant to the show cause notice dated 25.9.2000 in accordance with law.
26.The appeals are allowed accordingly. (J. Chelameswar) (A.K. Sikri) New Delhi; August 21, 2014