Recently, the Supreme Court in the case of Commissioner of Central Excise and Service Tax Noida vs. Sanjivni Non-Ferrous Trading Pvt. Ltd. has passed an Order dated 10.12.2018, whereby it held that the assessable value has to be determined on the basis of the price actually paid and declared in the bills of entry, in accordance with the Customs Act, 1962 (the Act).
assessable value means the value upon which duties and taxes are levied and it is determined based on price actually paid by buyer;
transaction value means the price paid or payable by buyer to the assessee upon sale of goods, etc;
whereas, declared value means the value declared by the assessee in the bill of entry for the purpose of paying duty or tax. In most cases, the transaction value is declared in the bill of entry.
Herein, Sanjivni Non-Ferrous Trading Pvt. Ltd (the Respondent) had declared certain value in a Bill of Entry pertaining to goods imported for the purpose of paying custom duty (Declared Value). But the Assessing Officer had set aside the Declared Value and increased the assessable value based on which the tax/duty would be paid (Assessable Value).
Therefore, the Respondent had approached various authorities including the Commissioner (Appeals), Central Excise and Service Tax Noida to challenge the reassessment of the Assessing Officer, but all such appeals were dismissed. Thereafter, the Respondent approached the Customs, Excise and Service Tax Appellate Tribunal (the Tribunal) which allowed the appeal and rejected the reassessment done by the Assessing Officer (the Order).
The Petitioner, then, filed an appeal before the Supreme Court challenging the Order of the Tribunal. The Bench comprising of Justice AK Sikri and Justice S Abdul Nazeer of the Supreme Court held that:
The Assessing Officer had to consider the price actually paid for determining the normal assessable value under the Act.
With reference to the Act, the Supreme Court held that “…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.”
The Declared Value could be rejected by the Assessing Officer only with cogent reasons and further held 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 exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, Order-in-Original was, therefore, clearly erroneous.”
The Assessing Officer had to give proper justification in arriving at his own assessable value.
Therefore, based on the aforesaid reasons, the Supreme Court rejected the appeal of the Petitioner and upheld the Order passed by the Tribunal as the Assessing Officer failed to properly examine the evidence while rejecting the Declared Value and while arriving at his own Assessable Value.
Satyam Singh Pal
The Indian Lawyer
The Indian Lawyer