Valuation - Enhancement

Valuation - Enhancement: Summary enhancement of value either as percentage or a lump sum, is not  permitted by law. "The principle is well settled that where any statutory provision provides a particular manner for doing a particular act, then, that thing or act must be done in accordance with the manner prescribed therefor in the Act."[Hon'ble Supreme Court] 

Para 4 (ii) of CBEC Circular 4/2008 dt 4.2.2008 says Rule 12 provides that when the proper officer has reason to doubt the truth or accuracy of the value declared, he may ask the importer to furnish further information or other evidence.  If he still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of the goods cannot be accepted.  It is therefore required to determine whether the evidences constitute reasonable doubt for the assessing officer to doubt the value of the goods.  Tribunal decision Sunny Enterprises [2004 (175) ELT 420]

 AC/DC is the proper officer / [re]assessing officer. – [In the EDI System all import BEs go to AC/DC from the AO screen].  alone can entertain the reason to doubt and the AO/ Superintendent who process the BE may be of assistance him. When the BE comes to the screen of the AO / Superintendent,  s/he does not have powers to enhance the value, where under-valuation is doubted.  The ONLY OPTION left to AO/Supt. is to  record a comment to that effect and forward the BE to AC/DC queue. Simultaneously Ao/Supt. has to open a file, put a print out of the comments and put up to the AC/DC who would take further action to accept or enhance the value as per law.  The present practice of AO/Supt. enhancing value in their screen is not supported by law and as such it is colourable exercise of power.  

  • Rule 12 (iii) (a) to (f) are a few grounds to entertain doubt and not exhaustive or conclusive.
  • The proper officer may have reasonable doubt on the basis of Intelligence gathered even over a period, in bits and pieces, Information recorded etc.
  • A quick and meaningful investigation to ask the importer to furnish further information including documents or other evidence.
  •  Where files or documents demanded are not forthcoming in full within the barest minimum time required to bring them, swift action to be taken to secure them without giving time for the importer to destroy or fabricate the documentary evidence.
  • Fit cases to be transferred to SIIB or DIU for conducting the investigation.
  • The importer should provide all the information or documents required by the officer.
  • The officer still deems that the transaction value of such imported goods cannot be determined under rule 3(1). 
  • Only after that the importer may make a  request, and  the importer shall be intimated in writing the grounds for doubting the truth or accuracy of the value declared – that is issue of SCN after  giving a reasonable opportunity of being heard i.e. recording the statement of the importer by issuing a summons.
  • The provisions of the Customs Act, 1962 relating to confiscation, penalty and prosecution shall apply to cases where wrong declaration, information, statement or documents are furnished under the Valuation Rules. [Rule 11 (3)]
  • By an Order-in-Original, the declared value is rejected and the value shall be determined by proceeding sequentially in accordance with rules 4 to 9. [Rule 12(2)(i)]. 
  • Factors for Customs to reject value declared – Supreme Court

    Commissioner of Customs, Vishakhapatnam Vs. M/s. Aggarwal Industries Ltd. JUDGMENT D.K. JAIN, J.: SC October 17, 2011.

    ·        Supplier and importer being in collusion - Actual amount paid to the supplier?

    ·        transaction entered into by the respondent was not genuine or under-valued.

    ·        mis-description of the goods imported.

    ·        subject imports fell within any of the situations enumerated in Rule 4(2) of CVR 1988.