Commissioner of Central Excise and Service Tax, Noida v. Sanjivani Non-Ferrous Trading Private Limited

On 10 December 2018, the Hon’ble Supreme Court dismissed Appeals filed by the Commissioner of Central Excise and Service Tax, Noida (Commissioner of Central Excise and Service Tax, Noida v. Sanjivani Non-Ferrous Trading Private Limited ) and held that assessable value has to be arrived at on the basis of the price which is actually paid, as mentioned in the Bills of Entry. The Court held that the Assessing Officer can reject the declared price only with cogent reasons and must explain the reasoning for the same. The Respondent imported aluminium scrap during the period between August 2013 and December 2014, and filed 843 Bills of Entry along with invoices and purchase orders relating to the same, and declared the transaction value of the imported goods in the Bills of Entry for payment of custom duty. The Assessing Authority rejected the Respondent’s declared transaction value on the ground that it was low and, after re-assessing the same as per its own calculations, increased the assessable value of the imported goods. The Respondent, thereafter, challenged the re-assessment by the Assessing Authority in a Writ Petition before the High Court of Allahabad. Upon the High Court’s remand, the Assessing Authority passed a speaking order giving reasons for the rejection and reassessment of the assessable value of the imported goods. The Respondent challenged the said Order before the Commissioner (Appeals), Central Excise and Customs, Noida, which were dismissed. The Respondent, thereafter, filed Appeals before the Customs, Excise and Service Tax Appellate Tribunal (CESTAT). The CESTAT allowed the Respondent’s Appeals and rejected the enhancement of the assessable value by the Assessing Authority on the following grounds That, as per Section 14 of the Customs Act and precedent, the assessable value has to be arrived on the basis of the price actually paid and in a case where price is not the sole consideration or if the buyers and sellers are related persons, then after establishing the same, the transaction value can be rejected and the assessable value can be arrived at after taking other evidence into consideration, which was not done; That, although the Assessing Authority was directed to pass a speaking Order by the High Court, the Order passed by the Assessing Authority, instead, contained grounds in the Writ Petition leading to remand and did not properly examine the evidence available with the department as required for enhancement of assessable value. The Judgment of the CESTAT is challenged before the Supreme Court in the above Appeals. The Supreme Court, after hearing the submissions made by the parties to the Appeal, held as follows “...It is, therefore, rightly contended by Mr. Dushyant A. Dave, learned senior counsel appearing for 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 exercise done by the Assessing Authority to reject the price declared in the Bills of Entry, Order-in-Original was, therefore, clearly erroneous...”