Customs | Import Duty Must Be Determined At Time Of Import, Not On Later Sale Price: CESTAT Chennai

The Chennai Bench of Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) held that customs duty is required to be assessed on the transaction value declared at the time of import, as reflected in the supplier's invoice. Any subsequent sale or higher remittance made after the import cannot be relied upon to reject the declared value. P. Dinesha (Judicial Member) and Vasa Seshagiri Rao (Technical Member) examined whether the addition under the guise of short-payment of duty, which related to the actual remittances made by the assessee/HDFC Bank to its foreign suppliers as compared to the declared/transaction value at the time of import, is justified or not. In the case at hand, HDFC Bank Ltd./assessee (appellant) had, during the relevant period under dispute, imported gold bars through their CHA, and in the Bills of Entry, they had declared a certain value therein. The Revenue, under the pretext that due to a change in rate of duty from specific duty to ad valorem as per Customs Notification No.02/2012 dated 16.01.2012, wanted to ascertain the correct transaction value, as the Bills of Entry were assessed based on the declared value only. Accordingly, the Importer-Appellant was asked to furnish a statement of sale of imported goods (Bills of Entry-wise) to the buyers, indicating the details of sale price, actual remittances made to the suppliers, apart from Customs Duty recovered, local tax, including the contracts entered into with the foreign supplier of gold bars. The Importer-Appellant furnished details, and upon scrutiny of the same, it was ascertained that the amount actually remitted was higher than the value declared in the Bills of Entry in respect of gold bars covered under 7 Bills of Entry. The Revenue issued a Show Cause Notice under Section 28 (1) of the Customs Act, 1962, proposing to demand differential duty in respect of the 7 Bills of Entry along with applicable interest. The Adjudicating Authority confirmed the demand made in the show cause notice. Aggrieved by the same, the Importer filed an appeal before the First Appellate Authority, which was dismissed. The assessee argued that the authorities below have grossly erred in not appreciating the vital fact that there was no “sale” at the time of import of goods vide Bills of Entry since the transaction value was on a consignment basis; the property i.e. gold bars in question continued to vest with the foreign supplier, the sale actually took place on a later date after the import of the gold bars into India. The revenue submitted that whole exercise was required due to the change in rate of duty from specific duty to ad valorem duty in terms of Customs Notification No.02/2012 ibid and, in any case, the assessee has not denied the fact of remitting higher amount than what was declared at the time of import which admittedly was paid to the foreign supplier and hence, the same should be considered as correct transaction value. Regarding the correctness of rejection by the Revenue of the declared transaction value by the assessee, on which duty stood paid at the time of import, the Tribunal opined that any postponement of duty payment cannot have any impact on transaction value since the same is the one admittedly paid at the time of import. The Tribunal questioned that when the assessee claimed that there was no sale at the time of import, but was only on consignment basis, then why no duty was paid when sale took place, and the supplier was paid the consideration? Therefore, the so-called sale at a later date only determined the actual value which created the liability to the supplier whereas for the purpose of Customs duty, the duty remitted based on the invoice of foreign supplier tantamount to 'import' which is the key stage to determine transaction value, stated the bench. In view of the above, the Tribunal, while allowing the appeal, stated that the rejection of transaction value was uncalled for and the demand for alleged short-payment made by the Revenue is unjustified. Case Title: M/s. HDFC Bank Ltd. v. The Commissioner of Customs Case Number: Customs Appeal No. 41046 of 2016 Counsel for Appellant/ Assessee: Dinesh Kumar Agarwal, consultant Counsel for Respondent/ Department: Rajni Menon Click Here To Read/Download Order

Customs | Import Duty Must Be Determined At Time Of Import, Not On Later Sale Price: CESTAT Chennai

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