Full Judgment
3. We have heard both sides represented by Shri R. Pardeshi, ld. JDR and Shri D.B. Shroff, ld. Advocate for the respondent.
4. For better appreciation, we are reproducing the finding of the Appellate authority on all the grounds taken by him for arriving at his decision :- "If the Adjudicating Authority had rejected the invoice value, it was incumbent upon him to follow the procedure laid down under Rule 3 of the Valuation Rules. The said rule stipulates that if the value cannot be determined under Sub Rule 4, the same shall be determined by proceeding sequentially though Rules 5 to 8 ibid. There is no provision in the aforesaid rule to proceed to Rule 11 for determination of value under the said rules. Instead of going though from Rule 5 to 8, the Adjudicating Authority has jumped to Rule 11.
Such reliance on Rule 11 is against the law and the Adjudication Order could be set aside on this ground alone".
"The reasons for enhancement of value by the Adjudicating Authority are incorporated in para 9 of his order. He has relied upon a single import of the Crude Piperazine Amine mixture by M/s Neo Medichem vide Bill of Entry No. 368809 dated - 26.12.2001 through Chennai Custom House. He has further supported the enhancement of value on the basis of deductive method as provided under Rule 7 of the Valuation Rules in para 9.4 of the order. It is not understood as to which rule the Adjudicating Authority has applied for determining the value. I, therefore, will have to examine the applicability of the appropriate rule by examining Rules 5 to 8, proceeding sequentially. Rules 5 and 6 apply to cases where the values of identical/similar goods are available. Both identical and similar goods have been define in Rule 2(c) and Rule 2(c) of the Customs Valiation Rules respecively. In both the definitions, the comparable goods should be produced in the same country as the goods for which the value is to be ascertained. In the instant case, it is admitted fact that the relied upon invoice is for goods which were manufactured in Netherlands whereas the impugned goods was manufactured in USA. The appellant has also informed that the quantity imported by the importer in Chennai was only approx. 19 MTs whereas the quantity contracted by them was approx. 4000 MTs and they had already imported approx. 1000 MTs. Through plethora of judgments, the settled position of law is that for enhancing the value, the contemporaneous invoice relied upon should be approximately for the same quantity. In the instant case, there is a vast difference between quantity imported by the appellant and the quantity mentioned in the relied upon Bill of Entry. I, therefore, hold that both Rules 5 and 6 of the Valuation Rules are not applicable in the instant case for enhancement of value based on invoice of M/s Neo Medichem is not sustainable in law".
"The aforesaid extract of past clearances shows that the identical goods were being cleared from various ports at a price which was comparable with the price of the goods declared by the appellant in the disputed Bill of Entry. In such situation, was it legally permissible for the department to rely on a stray import of goods which was comparable neither in respect of quantity nor Country of Origin nor the mode of transport? It is undisputed fact that in the relied upon Bill of Entry, the goods were brought by ISO containers where the freight per unit will be much more compared to the freight per unit if the goods are brought in bulk by the ship".
"Both the calculations show that even when the price of impugned goods is taken as US $ 225 - 320 PMT, the cost of Anhydrous Piperazine would be in the range of US $ 2900 PMT. The aforesaid calculation has been certified by a registered Chartered Accountant and has to prefer compared to the assumption of the Adjudicating Authority. The conclusion of the Adjudicating Authority regarding assessable value of the impugned goods based on Rule 7(3) of the Valuation Rules, 1988 is also not sustainable".
Commissioner (Appeals) has also observed that the appellant before him has produced sufficient correspondence between the manufacturer and the appellant to show that the price was negotiated after prolonged correspondence.
5. As against the above, the Revenue, in their memo of appeal, has not pleaded anything to controvert the findings of the appellate authority.
Nothing has been produced to rebut the evidence of import of identical product at a cost either equivalent to the importer cost or even lower than that. There is no reference to the correspondence with the supplier resulting in negotiated price. The Revenue's only grievance is that the declared value was rejected under Rule 10A of Customs Valuation Rules, 1988 and as the importer had not submitted the cost of recovery of 'Piperazine Anhydrous' from the imported goods, the rejection of transaction value was justified. We do not find any justification in the above pleas of the Revenue. Commissioner (Appeals) has passed a detailed order (portions reproduced above) on each and every point and we find ourselves in agreement with the same. There is no counter to all his findings in the Revenue's appeal. The contemporaneous imports having been noted on a lower price were rightly made the basis for accepting the declared value instead of adopting the value of stray import of lessor quantity. As such we do not find any infirmity in the view taken by the appellate authority and reject the appeal filed by the Revenue.