Customs Act | CESTAT Mumbai Quashes Aluminium Metal Scrap Valuation Enhancement; Says Rule 12 Safeguards Mandatory
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside orders enhancing the value of scrap consignments merely on the basis of National Import Data Base (NIDB) data and a Directorate General of Valuation (DGoV) circular. A Bench comprising Mr. S.K. Mohanty (Judicial Member) and Mr. M.M. Parthiban (Technical Member) stated that the...
The Mumbai Bench of the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has set aside orders enhancing the value of scrap consignments merely on the basis of National Import Data Base (NIDB) data and a Directorate General of Valuation (DGoV) circular.
A Bench comprising Mr. S.K. Mohanty (Judicial Member) and Mr. M.M. Parthiban (Technical Member) stated that the customs authorities could not discard the declared transaction value without strictly following Rule 12 of the Customs Valuation Rules, 2007, and that mere comparison with NIDB data or reliance on the DGoV circular was insufficient to justify enhancement.
The Customs Tribunal in Mumbai has given relief to an aluminium scrap importer by ruling that Customs authorities cannot increase the declared value of imported scrap solely based on NIDB data or a valuation circular.
The importer/appellant imported several consignments of aluminium scrap in 2018 and filed Bills of Entry declaring the transaction value. During assessment, Customs compared these values with the National Import Data Base (NIDB) and found them to be lower.
On that basis, and relying on a Directorate General of Valuation (DGoV) circular dated 01.12.2016, Customs rejected the declared value under Rule 12 of the 2007 Valuation Rules and enhanced the assessable values under Section 17(5) of the Customs Act.
The Commissioner (Appeals) upheld the enhancement.
Aggrieved, the importer filed appeals before CESTAT, arguing that the department failed to follow the mandatory process under the Valuation Rules.
The CESTAT noted that the proper officer did not disclose the grounds for doubting the truth of the declared value before rejecting it, which is a mandatory requirement under Rule 12, and that the importer must first be put on notice and given a chance to respond.
The Bench also found that Department failed to produce contemporaneous evidence of similar or identical imports at higher prices as required under Rules 4 and 5, the department merely compared the values with averages in the NIDB database.
The Bench held that the DGoV circular is only a pricing guideline intended to alert officers to possible undervaluation. It cannot override Section 14 of the Customs Act or be used as the sole basis to enhance the value.
Relying on earlier rulings in Sushil Kumar Agarwal Vs. Commissioner of Customs (Export), Nhava Sheva in Final Order No. A/85177-85183/2020 and Guru Rajendra Metalloys India Pvt. Ltd. Vs. Commissioner of Customs, Ahmedabad in Final Order No. 12146-12153/2024, the Tribunal reiterated that enhancement of value of aluminum scrap on the basis of DGoV Circular dated 01.12.2016 have already been examined and found that there is no material evidence or proper basis for enhancement of the assessable value.
In view of the above, the CESTAT allowed the appeal filed by the importer and quashed the enhancement of the assessable value.
Case Title: Nico Extrusions Limited Vs. Commissioner of Customs (Preventive)
Case No.: Customs Appeal No. 85057 of 2020, Customs Appeal No. 85085 of 2020
Appearance for Appellants: Shri Mahesh Raichandani
Appearance for Respondent: Shri Jitesh Kumar Jain