Case: COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX NOIDA Vs. M/S SANJIVANI NON FERROUS TRADING PVT LTD

In a writ petition filed by the respondent in the High Court of Allahabad, on the directions of the High Court directed the Deputy Commissioner of Customs, NOIDA passed a speaking order dated 25 th March, 2015, giving his reasons to reject the transaction value as declared by the respondent and enhancing the same by taking into consideration the value of imported goods, namely, grades of scrap Aluminum contents therein as well as quantum of presence of other metals.The assessment order dated 25 th March, 2015 passed by the Assessing Officer was challenged by filing appeals before the Commissioner (Appeals), Central Excise and Customs, NOIDA. All these appeals were dismissed. Challenging the order of the Commissioner (Appeals), the respondent approached the Customs, Excise and Service Tax Appellate Tribunal (hereinafter referred to as the?Tribunal?). By the impugned common judgment dated 17 th January, 2017, the appeals of the respondent were allowed thereby rejecting the enhancement of assessable value by the Revenue.It is the said order of the Tribunal, which is the subject matter of these appeals.The entire basis of the order of the Tribunal is contained in paragraph 7 of the impugned judgment and since that paragraph contains the reasons which persuaded the Tribunal to set aside the order of the authorities below, we reproduce thisalong with paragraph 8 which disclosed the outcome of the appeals, in entirety.Having considered the rival contentions and on perusal of record, we find that the Original Authority was directed by the Hon?ble High Court to pass speaking order on theenhancement of assessable value.We find that the Original Authority in itsdated 25/03/2015 passed comments on the ground of writ petition and did not properly examine the evidence available with the department required to be examined forenhancement of assessable value.Further, we find that as held in the case laws stated above and as provided by Section 14 of Customs Act, 1962, the assessable value has to be arrived at on the basis ofthe price which is actually paid and in a case the price is not sole consideration or if the buyers and sellers are related persons then after establishing that the price is not sole consideration the transaction value can be rejected and taking the other evidences into consideration the assessable value can be arrived at. Such exercise has not been done in these cases on hand.Therefore, we reject the enhancement of assessable value in respect of the Bills of Entry which are involved in all the appeals being decided and we restore the assessable value as declared by the appellant in said Bills of Entry.In result, we set aside all the impugnedand allow all the appeals.The appellant shall be entitled for consequential relief, if any, in accordance with

Reasoning:
This argument may seem to be attractive, but only when there is a cursory look at the aforesaid observations of the Tribunal that the Assessing Officer did not examine the evidence available with the Department which was necessitated for such a purpose. However, the observations of the Tribunal have to be understood in their entirety and in the context in which these are made.The Tribunal has categorically mentioned that as per the provisions of Section 14 of the Customs Act and the principles laid down in the case law (which it referred to in the earlier part of the judgment) interpreting this provision, the assessable value has to be arrived at on the basis of the price which is actually paid. It is the basic principle enshrined in the aforesaid provision, i.e., Section 14, which can be culled out from the catena of judgments pronounced by this Court.To the same effect, are other judgments, reiterating the aforesaid principle, such as, Commissioner of Customs, Calcutta vs. South India Television (P) Ltd.(2007) 6 SCC 373  , Chaudhary Ship Breakers vs. Commissioner of Customs, Ahmedabad(2010) 10 SCC 576  and Commissioner of Customs, Vishakhapatnam vs. Aggarwal Industries Ltd.The law, thus, is clear.As per Sections 14(1) andthe value of any goods chargeable to ad valorem duty is deemed to be the price as referred to in that provision.Section 14(1) is a deeming provision as it talks ofvalue? of such goods. Therefore, normally, the Assessing Officer is supposed to act on the basis of price which is actually paid and treat the same as assessable value/transaction value of the goods.This, ordinarily, is the course of action which needs to be followed by the Assessing Officer.This principle of arriving at transactionvalue to be the assessable value applies. That is also the effect of Rule 3(1) and Rule 4 (1) of the Customs Valuation Rules, namely, the adjudicating authority is bound to accept price actually paid or payable for goods as the transaction value.Exceptions are, however, carved out and enumerated in Rule 4(2).As per that provision, the transaction value mentioned in the Bills of Entry can be discarded in case it is found that there are any imports of identical goods or similar goods at a higher price at around the same time or if the buyers and sellers are related to each other. In order to invoke such a provision it is incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected; to establish that the price is not the sole consideration; and to give the reasons supported by material on the basis of which the Assessing Officer arrives at his own assessable value.The observations of the Tribunal made in the impugned judgment are to be appreciated in the light of the principles of law specified in the aforesaid judgment, inasmuch as the Tribunal has categorically remarkedthat the normal rule is that assessable value has to be arrived at on the basis of the price which is actually paid, as provided by Section 14 of the Customs Act and the case law referred to by it (In paragraph 5, the Tribunal referred to its own judgments which follow the aforesaid principle laid down by this Court).It is, therefore, rightly contended by Mr. Dushyant A. Dave, learned senior counsel appearing for the respondent that the reason given for setting aside the order that the normal rule was that the assessable value has to be arrived at on the basis of the price which was actually paid, and that was mentioned in the Bills of Entry.The Tribunal has clearly mentioned that this declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the Assessing Authority could hold that the paid price was not the sole consideration of the transaction value.Since there is no such exercise done by the Assessing Authority to reject the price declared in the Bills of Entry,was, therefore, clearly erroneous.In Commissioner of Customs vs. Prabhu Dayal Prem Chand 5 , this Court was confronted with almost same kind of fact situation.On the basis of the information received subsequently from the London Metal Exchange (for short,to the effect that the price of the two metals, viz., brass scrap and copper scrap, in LME as on the date of import was more than the price declared by the respondent, demanded additional duty amounting tond Rs. 1,94,035 respectively, from the assessee on the said two Bills of Entry.This order was set aside by the Tribunal and appeals there against by the Customs were dismissed by this Court.The Court noted, while accepting the plea of the assessee, that they were not confronted with any contemporaneous material relied upon by the Revenue for enhancing the price declared by them in the Bills of Entry.It also noted the following remarks of thethe present case as mentioned above, even though there is a reference to contemporaneous import in the order passed by the Deputy Commissioner no material regarding such import has been placed before us or made available by the appellant at any point of time. Therefore, assessment in this case has to be taken as having been made purely on the basis of LME bulletin without any corroborative evidence of imports at or near that price which 5(2010) 13 SCC 535   is not permissible under law. We, therefore, set aside the impugned order and allow thethe appeals, this Court observed asis manifest from the aforeextracted order of the Tribunal that no details of any contemporaneous imports or any other material indicating the price notified by LME had either been referred to by the adjudicating officer in the adjudication order or such material was placed before the Tribunal at the time of hearing of the appeal. The learned counsel for the Revenue has not been able to controvert the said observations by the Tribunal. In that view of the matter no fault can be found with the order passed by the Tribunal setting aside the additional demand created against the assessee.?