Decided on March 11,2015

Umrao Singh Pawan Kumar Appellant
Cce, Delhi -Iv Respondents


R.K. Singh, Member (T) - (1.)THE appeal has been filed against the Order -in -Appeal No. 27/Cus/Appl/DLH -IV/2010 dated 9.8.2010 which upheld the Order -in -Original dated 3.12.2009 in terms of which the transaction value declared by the appellants was rejected and re -determined to be USD 3000 per MT (CIF) and as a consequence differential duty demand of Rs. 3,93,981/ - along with interest was confirmed. The appellants had imported cloves describing them as Cloves FAQ Grade CG -3 (origin as Madagascar as per contract No. KT/USPK/CLV/MAD/21/04 dated 1.3.2005 for 25 MTS) and declared value of USD 2000 PMT CIF. The primary adjudicating authority held that no grade or quality has been mentioned in the contract and no prudent person will enter into a contract for supply of considerable quantity of goods without knowing its quality and that surprisingly invoice indicates grade which does not exist anywhere and further that so far as the grade CG -3 is concerned the same is neither available in Spice Board prices nor in prices circulated by the Directorate of Valuation/NIDB data and thus the primary adjudicating authority observed that the terminology was used by the importer to just hoodwink the department from assessing the goods at fair value.
(2.)HAVING thus observed, the primary adjudicating authority thus rejected the transaction value and assessed the value at USD 3000 PMT (CIF) on the basis of value of identical goods under Rule 5 of Custom Valuation (Determination of Valuation of Imported Goods) Rules, 2007. The exact sentence of the primary adjudicating authority is reproduced below:
Therefore I proceed to determine the value under Rule 5 of said Valuation Rules, which provide that 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 are being valued.

The primary adjudicating authority thus adopted the value of cloves of Zanzibar origin imported into India for the purpose of re -determining the value.

We have perused the impugned order -in -appeal also. It is seen that in its para 7, the Commissioner (Appeals) has noted as under:

I find that the Adjudicating Authority while finalizing the provisional assessment of the goods imported by the appellant under the above referred Bill of Entry, had arrived at the value of US$ 3000 per MT based on the contemporaneous imports as detailed in para 9 of the impugned Order -in -Original. These contemporaneous imports are of cloves of Zanzibar origin by different importers through Chennai Custom House on or about the same time the impugned imports were made by the appellant. In the instant case, though the appellant imported cloves of FAQ quality of Madagascar origin but the Adjudicating Authority had loaded the value of these goods based on the contemporaneous imports of cloves of Zanzibar origin because the international price of cloves of Madagascar/Zanzibar/Comoros/Indonesia origin, as prevalent at that relevant time, was the same as per the weekly bulletin of spices market, relied upon in the impugned Order -in -Original.

(3.)AS regards the observation of the primary adjudicating authority that there is no grade called CG -3 for cloves and that the grade has been mentioned to hoodwink to Revenue, we find that the appellants produced international Trade Centre (UNCTAD/WTO) Market Brief 2006 regarding market of clove in European Union wherein it is clearly stated that in the EU the most popular quality is CG -3 quality from Madagascar and Zanzibar. Obviously, the adjudicating authority has misguided himself into believing that there was no CG -3 grade cloves and so the appellants tried to hoodwink Revenue. It is also seen that the re -assessment has been done only on the ground of adopting the value of identical goods sold for export to India and imported at or about the same time as the goods being valued. In this regard, it is useful to refer to the definition of identical goods given in Rule 2(d) of the said Valuation Rules in terms of which one of the conditions for the goods to be called identical goods is that they should be produced in the country in which the goods being valued were produced. This condition is obviously not satisfied as it is an admitted fact that the impugned cloves are of Madagascar origin while the value adopted for re -assessment was in respect of cloves of Zanzibar origin. Indeed even the definition similar goods given in Rule 2(f) of the said Valuation Rules requires the goods to be of the same country of origin even for the purpose of being called similar goods. In the case of CC, Chennai vs. Forte Garments : 2002 (150) ELT 622 (Tri. -Chennai), the Tribunal noted that for the purpose of enhancing value, Revenue is required to produce contemporaneous imports from the same country pertaining to the same goods and the same time and quantity and quality in order to reject the transaction value. Thus, the reassessment under Rule 5 of the said Valuation Rules based on the value of cloves of different country of origin cannot be upheld.

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