No more arbitrary revaluation of imported goods by Customs

The Customs, Excises, Service Taxes Appellate Tribunal (CESTAT) has put a stop to the practise of arbitarary reassessment and enhancement of valuation of imported goods without thorough investigation and evidence.

This could come as a big relief to importers who not only faced higher incidence of taxes on imports due to frequent revaluation of goods by DGOV but al so a lot of paperwork and harassment t at the hands of officials.

The office of DGOV has been set up for assisting and advising the Central Board of Indirect Taxes and Customs (CBIC) in Policy matters concerning Valuation under Customs and erstwhile Central xcise Laws. But, the office off la te has been busy reevaluating and enhancing the value of several import consignment where it felt the declared value was incorrect.

CESTAT while setting aside an impugned order held that Directorate General of Valuation (DGOV) guideline is not above Customs Valuation Rules, so the value can only be enhanced on the basis of evidence.

It also said that such revaluation by DGOV without following the rules established by law cannot be justified merely on the basis of a consent secured f rom importers.

The order came on a plea made by unland Alloys. The appellant, imported Aluminium Scrap under various Bill of Entries and the price declared in the Bil l of Entry wad as per the invoice of the foreign supplier. But the department rejected the declared value and reassessed the Bill of Entry by enhancing t he declared value. This was challenged appellant in an appeal filed before t he Commissioner (Appeals). The Commissioner (Appeals) rejected appeals on the ground that the appellant has given a consent letter accepting the enhance d value of the Assessing Authority, therefore, the appellant is not an aggrieved party. After Hence, appeals are not maintainable.

The appellant filed a fresh appeal in CESTAT aggrieved by the Orders-In-Appeal. The tribunal held that revaluation done by DGOV did not take into account material evidence which showed that the appellant mis-declared the value. Also no fact checking was done on imports of similar goods and declared valuation on any earlier consignment.

The tribunal further said that revaluation was solely done on the basis of DGOV guidelines and not followed the principle laid down under the Customs Valuation Rules. It said that DGOV guideline is not above the statute, and the adjudicating authority has not followed the Customs Valuation Rules whereby, he was supposed to first reject the declared value and subsequently he was supposed to apply rules sequentially. Only thereafter, the value can be enhanced that too on the basis of evidence.

“This is a good development for importers as it could prevent them from unnecessary harassment at the hands of customs officials. It had established the supremacy of customs valuation rules for undertaking revaluation on the basis of evidence,” said an indirect tax expert of a leading consultancy firm asking not to be named.