Additions based on import customs assessable value vs. actual import value

Facts:

Assessee's import duty valuation were assessed applying customs assessable value based on National Import Data Base (NIDB). AO made additions on the difference between actual import value and that of the customs assessable value citing that assessee has suppressed/concealed purchase value to this extent. On appeal CIT(A) allowed appeal of the assessee. On higher appeal by the revenue -

Held against the revenue that the reason for customs database import value and the actual import value has been established by the assessee. Order of CIT(A) needs no review.

Ed. Note: It is unknown if the imports happened from related parties. If thus, then the customs import value may be read as the arm's length price (ALP) both as per Section 40A(2) or under TP provisions. But in this case the purchase price would get jacked up that much resulting in lower income tax implication thus would become a futile exercise. It might be an apt case on seller/exporter's side, if they were assessable in India to hold that revenue was underestimated/under reported.

Purpose of customs assessable value fixation is to increase import duty while on TP under domestic or international law is to examine normally if imports were not over stated in books of accounts. They operate on inverse relationship on import or on export trade.

Case: ITO v. Plasto Polymer (India) 2023 TaxPub(DT) 533 (Del-Trib)