- (1.) The respondent/assessee herein imported sixteen consignments of secondary/defective CRGO Electrical Steel in the form of Sheets, Coils, Strips and Cuttings, for which it filed different Bills of Entry. The unit price of the goods was declared as US$ 250 Per Metric Ton (PMT) for CRGO Electrical Steel Strips and US$ 300 PMT in respect of other variety of goods. The Directorate of Revenue Intelligence, Chennai Zonal Unit, received some information to the effect that the assessee was undervaluing the goods and violating the EXIM Policy as well as conditions of Customs Exemption Notifications. The goods were, thus, examined and seized under reasonable belief that they were undervalued. Four show cause notices were issued. In the show cause notice dated 26.11.2001, it was alleged that the country of origin in respect of the said goods imported were USA, Japan, U.K., Russia, Europe etc. and the value of these goods assessed ranging between US$ 475 (C&F) to US$ 750 PMT (C&F). On that basis, the show cause notice proceeded as under: "15. In terms of Rule 3 of the Customs Valuation Rules, 1988, the value for the purpose of assessment shall be the transaction value of the goods under Rule 4 of the said Rules, ibid, the transaction value of the imported goods shall be the price actually paid or payable for the goods when sold for export to Indian adjusted in accordance with the provisions of Rule 9 of these Rules. Section 14 of the Customs Act, 1962 inter alia, states that "... duty of customs is chargeable on any goods by reference to their value, the value of such goods shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale...". In the instant case, from the facts stated above and the tables showing the comparative declared/assessed values of other importers as well as M/s. Alfa & National for import of Secondary/Defective CRGO through the Port of Mumbai / Nhava Sheva as against the values declared by M/s. Alfa for their imports (currently under investigation) through Port of Chennai, have not declared are price/ value at which such or like goods are ordinarily sold or offered for sale as contemplated under Section 14 of the Customs Act, 1962 read with Rule 4 of the Customs Valuation Rules, 1988 in as much as they have declared much lower values for their imports through the Port of Chennai as compared to the values declared by them and other importers for imports through Mumbai/Nhava Sheva for their goods. The values declared by M/s. Alfa for their imports through Ports other than Chennai is very much in line with the values declared by the other Importers through the above said Ports, and thus it appears that the prices declared by M/s. Alfa, their sister concern M/s. National as well as the other Importers at the above said Ports are to be the values/prices at which such goods are ordinarily sold or offered for sale."
(2.) It is clear from the above that the main ground on the basis of which undervaluation of the goods was alleged was that the assessee had imported the same material declaring higher price which was cleared at Mumbai port. Order-in-Original was passed affirming the said show cause notice and the demand of differential duty, including interest contained therein. The assessee had taken up the defence that the goods imported at Mumbai port at a higher value were of better quality and that they had the warranty of the suppliers. In support, the assessee had filed photographs of coils, strips and cuttings and also full description and the sizes/specifications of the goods imported through Chennai port to substantiate the claim that these goods were of inferior quality compared to those imported through Mumbai port. However, this defence was brushed aside by the Adjudicating Authority on the ground that the plea was not supported by any documentary evidence.
(3.) The assessee filed appeal against this order before the Customs Excise & Service Tax Appellate Tribunal (in short 'CESTAT'). The CESTAT, vide impugned decision dated 18.07.2006, set aside the order of the Adjudicating Authority, by accepting the plea of the assessee and holding that the declared values representing the true and correct transaction value under Rule 4 of the Customs Valuation Rules and, therefore, was required to be accepted.;