The Ahmedabad Bench of Customs, Excise and Service Tax Appellate Tribunal (CESTAT) has allowed the declared transaction cost and redetermination of assessable value under Customs Act accepting the explanation that prices of O-Chloro Benzonitrile sky-rocketed, prices cooled down.
The bench of Ramesh Nair (Judicial Member) and Raju (Technical Member) has observed that the appellant has also submitted some literature from the internet indicating the explosion in Xiangshui Industrial Park in Yancheng, Jiangsu. There was a brief period from August 2019 to April 2020 when the prices of the product skyrocketed however the prices cooled down.
The appellant/assessee has filed the Lanxess (India) Private Limited against rejection of the declared transaction cost and redetermination of assessable value under Section 17(5) of the Customs Act, 1962.
The appellant contended that they had filed bill of entry No. 8616203 dated 28.08.2020 for clearance of 8000 Kgs of 1.2 Benzisothiazolin-3-ONE 85% (BIT PASTE 85%) China origin. The price of goods was declared as USD 8.50 PKG on CIF basis. The system raised a query regarding the price on the basis of an earlier import vide Bill of Entry in which the price declared was USD 28 PKG.
The appellant contended before the lower authorities that the commodities need not to be traded at uniform price all along. The appellant had imported the goods whereas the comparative price taken was of 22.04.2020. There are varying commercial parameters which result in variation in cost. There has been significant variation in the price in the appellant’s own imports over the past two years from different manufacturers.
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The appellant had stated before the first appellate authority that the price of key raw material namely O-chloro benzonitrile (OCBN) had dropped drastically during this period and therefore the supplier had passed on the benefit to the appellant.
The appellant-supplier had explained that the prices of raw material OCBN shot up five-fold after March 2019. The prices shot up from CNY 20/KG to CNY 100/KG following the explosion in the main manufacturing unit. He argued that the deputy commissioner had ignored this explanation given in the certificate of the manufacturer’s supplier wrongly. The original adjudicating authority had unfairly and without any reason discarded the said certificate solely for the reason that there were no supporting documents from any regulating/governing international price agency/ institute, weekly/quarterly Price Bulletins. T
he original adjudicating authority had not appreciated the certificate dated 14.09.2020 from the supplier specifically stating that the price of raw material OCBN dropped from RMB 110/KG (USD 15.70 PKG) to RMB 23 PKG (USD 3.29 PKG). The evidence has not been examined in Order-in-Original or in Order-in-Appeal. The appellant submitted some data of imports made between February 2018 to August 2020, in support of their claim about temporary increase of price.
The tribunal found that the case relates to rejection of the declared assessable value and enhancement of the assessable value on the basis of contemporaneous import prices. The appellant had imported ‘1,2-Benzisothiazolin-3-ONE 85% (BIT PASTE 85%) China origin’ at USD 8.5 PKG for a quantity of 8000 Kgs. The revenue has rejected the declared value on the strength of the bill of entry which had a declared value of USD 28 PKG.
The CESTAT found that the explanation given by the appellant is reasonable and therefore, the order is set aside and appeal is allowed.
Case Title: M/s Lanxess India Private Limited Versus C.C. Ahmedabad
Case No.: Customs Appeal No. 10257 of 2022- DB
Date: 04.09.2024
Counsel For Appellant: Prashant Patankar
Counsel For Respondent: R.R. Kurup
