The customs authorities cannot raise the taxable value by adding to the transaction value unless they are able to produce contemporaneous imports of same materials from the same country at a higher price. The Customs, excise and service tax appellate tribunal in Commissioner of Excise vs. Nath International reiterated and reaffirmed this salutary principle of law laid down by the Supreme Court in a catena of cases.

According to facts on record, the respondents filed Bill of Entry for clearance of ball bearings imported from China. The declared unit price was Rs 2.59 and Rs 3.36 a piece respectively, as the bearings were of two different sizes. Accordingly, the total assessable value was declared as Rs 14, 86,836/-.

The Assistant Commissioner loaded the value by $0.09 (Rs. 4.085) and $0.105 (Rs. 4.77) a piece on the two types of ball bearings respectively, and accordingly raised the consequential higher demand of import duty. The Tribunal had no hesitation in upholding the stand of the Respondent that such additions cannot be made in vacuum and have to be borne out by contemporaneous transactions of import anywhere in India. The department perhaps will have to have a computer system networking all the customs stations in order to be able to access such vital information on a real time basis.

(The author is a New Delhi-based chartered accountant.)

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