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Internet prices cannot determine Transaction Value
June, 25th 2007
One of the inscrutable ways of revenue authorities is to continuously ignore judgements by Courts and Tribunals while taking decisions and do exactly the opposite of what these imply.
 
Several judgements are available to the effect that the prices or data on the Internet cannot be taken to compare and reject transaction value in customs or excise. But the revenue authorities keeps on comparing the Internet value to with the invoice value and thereafter rejecting it.
 
Recently there have been two more judgements on the subject by the Tribunal reiterating the same point of view.
 
In the judgement in the case of HT Company vs. Commissioner of Customs, Hyderabad 2006 (201)ELT 311 (T), it was held by the Tribunal that revenue authorities in this case rejected the transaction value and proceeded to enhance the value on the basis of Internet prices. The Tribunal relied on several judgements.
 
The Tribunal referred to the case of Aggarwal Distributors (P) Ltd vs. CC, New Delhi reported in 2000(117) ELT 49(T), which has been confirmed by the Apex Court reported in 2000 (122) ELT A121(SC).
 
The Tribunal also relied on the ruling rendered in the case of Competent Business Machines vs. CC., Trichirapalli, reported in 2005 (182) ELT 426(T), wherein it has been held that data from Internet cannot be used to enhance the value and hence, it cannot be accepted.
 
The Tribunal also rightly observed that there is no corroborative evidence to justify the Internet prices. As a matter of fact, the Tribunal is very right here in saying that there must be some other evidence also. There has to be some evidence about transmission of extra money through other sources other than through banks.
 
Although that is not essential when the other evidence is very strong, Internet prices cannot by itself constitute the same status as strong independent evidence. So in this case, the Tribunal set aside the order of revenue in respect of the enhancement of the transaction value.
 
In another more recent case Eastern Exports & Imports Co. vs. CCE &C, Kolkata 2007(209)ELT 459 (T), the Tribunal has again rejected the enhancement of transaction value on the ground that Internet prices are not reliable enough to come to such punitive conclusion. Here also the Tribunal has depended on the same Supreme Court judgement quoted above. The Commissioner also took into account the fact that there are cyber crimes being indulged into by several companies and also that the particular company whose Internet display is being relied upon is the subject of many enquiries by agencies.
 
The main reason why the Internet prices are not acceptable as an authentic evidence is that these are mere quotations and there is no knowing whether any actual imports has taken place on the basis of these quotations.
 
It is also not sure whether these are not advertisement prices, that is prices floated by the advertisers and it is also not sure whether they have been taken from actual invoice.
 
It is only actual importations, which are comparable and not just quotations.
 
It is a great pity that data available in the Directorate of Valuation in the Mumbai Customs House is not being utilised for comparing transaction value declared in different cases, which are under adjudication.
 
A whole host of data regarding prices of actual importations is available in the Directorates computer.
 
The CBEC should come down heavily on such officers harassing the trade. Whenever such cases are reported in the judgements of Tribunal or Courts, their disobedience must be brought to book.

Sukumar Mukhopadhyay
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