COMMISSIONER OF CENTRAL EXCISE AND SERVICE TAX, NOIDA versus M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD.

Citation: [2018] 14 S.C.R. 1192 · Decided: 10-12-2018 · Supreme Court of India · Bench: A.K. SIKRI · Disposal: Dismissed

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Judgment (excerpt)

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1192                    SUPREME COURT REPORTS            [2018] 14 S.C.R.
COMMISSIONER OF CENTRAL EXCISE AND
SERVICE TAX, NOIDA
v.
M/S. SANJIVANI NON-FERROUS TRADING PVT. LTD.
(Civil Appeal Nos. 18300-18305 of 2017)
DECEMBER 10, 2018
[A. K. SIKRI AND S. ABDUL NAZEER, JJ.]
Customs Act, 1962 – s.14 – Valuation of goods for purposes
of assessment – Respondent imported various varieties of Aluminum
scrap and filed bills of entry along with invoices and purchase orders
in respect therein declaring the transaction value of the imported
goods for the purpose of paying customs duty – Declared value
was not accepted by the Assessing officer who found same to be
low and on re-assessment, increased the assessable value – Writ
petition by the respondent – Deputy Commissioner of Customs on
the direction of the High Court passed a speaking order rejecting
the transaction value declared by the respondent – Assessment order
passed by the Assessing Officer was challenged before the
Commissioner (Appeals), which was dismissed – However, appeals
of the respondent were allowed by the Tribunal thereby rejecting
the enhanced assessable value by the Revenue – On appeal, held:
The normal rule as provided by the s.14 of the Act is that the
assessable value has to be arrived at on the basis of the price actually
paid, and that was mentioned in the Bills of Entry – Tribunal had
clearly mentioned that this declared price could be rejected only
with cogent reasons by undertaking the exercise as to on what basis
the Assessing Authority could hold that the paid price was not the
sole consideration of the transaction value – Since, there was no
such exercise done by the Assessing Authority to reject the price
declared in the Bills of Entry, order-in-original was, therefore,
erroneous – The observations made by the Tribunal were correct.
Dismissing the appeals, the Court
HELD: 1. The law is clear,  as per Sections 14(1) and
14(1-A) of the Customs Act, 1962, the value of any goods
chargeable to ad valorem duty is deemed to be the price as
[2018] 14 S.C.R. 1192
1192
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1193
referred to in that provision.  Section 14(1) is a deeming provision
as it talks of ‘deemed value’ of such goods. Therefore, normally,
the Assessing Officer is supposed to act on the basis of price
which is actually paid and treat the same as assessable value/
transaction value of the goods.  This, ordinarily, is the course of
action which needs to be followed by the Assessing Officer.  This
principle of arriving at transaction value to be the assessable
value applies. That is also the effect of Rule 3(1) and Rule 4 (1) of
the Customs Valuation Rules, namely, the adjudicating authority
is bound to accept price actually paid or payable for goods as the
transaction value.  Exceptions are, however, carved out and
enumerated in Rule 4(2).  As per that provision, the transaction
value mentioned in the Bills of Entry can be discarded in case it
is found that there are any imports of identical goods or similar
goods at a higher price at around the same time or if the buyers
and sellers are related to each other. In order to invoke such a
provision it is incumbent upon the Assessing Officer to give
reasons as to why the transaction value declared in the Bills of
Entry was being rejected; to establish that the price is not the
sole consideration; and to give the reasons supported by material
on the basis of which the Assessing Officer arrives at his own
assessable value. [Para 10][1200-B-F]
2. The observations of the Tribunal made in the impugned
judgment are to be appreciated in the light of the principles of
law specified, inasmuch as the Tribunal has categorically remarked
that the normal rule is that assessable value has to be arrived at
on the basis of the price which is actually paid, as provided by
Section 14 of the Customs Act. [Para 12][1202-E-G]
3.  It is, therefore, rightly contended by the respondent
that the reason given for setting aside the order that the normal
rule was that the assessable value has to be arrived at on the
basis of the price which was actually paid, and that was mentioned
in the Bills of Entry.  The Tribunal has clearly mentioned that
this declared price could be rejected only with cogent reasons by
undertaking the exercise as to on what basis the Assessing
Authority could hold that the paid price was not the sole
consideration of the transaction value.  Since there is no such
COMMNR. OF CENTRAL EXCISE AND SERVICE TAX, NOIDA v.
M

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