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The Hon’ble Bench of Supreme Court comprising Justice AK Sikri and Justice S Abdul Nazeer observed that assessment of value must be based on the price in the Bills of entry. The priced entered in the Bills of Entry should be denied only on justifiable reasons by analysing on what basis the assessing authority stressed that the price paid was not the sole consideration of the transaction value.
Rejection of declared value and reassessment made by increasing the assessable value is the issue in the case between Commissioner of Central Excise and Service Tax, Noida and Sanjivani Non-Ferrous Trading Private Limited. The Revenue resorted to the apex Court since the Tribunal set aside the reassessment.
Citing the relevant provisions, the court observed two relevant sections, i.e. section 14(1) and 14 (1A) of the Customs Act, which provides for the value of goods chargeable to ad valorem duty is deemed to be the price referred to in that provision. Section 14(1) is a deeming provision, and the assessing authority generally has to take into account the basis on which the price is paid, and the same would be deemed as the transaction value of the goods.
The Supreme Court declared that the transaction value shall be precluded from consideration if the buyers and sellers are related to each other, or when there are identical goods or similar goods that are priced high around the same time. Therefore, the assessing authority has to justify his assessment with supporting materials for the rejection of transaction value in the Bills of Entry; for establishing that price is not the exclusive consideration, and for his assessable value.
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