2003 (12) TMI 364 - AT - Customs

Summary

Issues: Valuation of imported goods, Enhancement of value by Customs Authorities, Compliance with Circular No. 11/2001-Cus., Provisional assessment, Special Valuation Branch (SVB) investigation, Extra duty deposit, Finalization of assessment within four months.

In this case, the appellant, a subsidiary of a holding company, challenged the enhancement of the value of imported goods by 70% by the Customs Authorities at Bangalore. The appellant argued that this enhancement contradicted the instructions on valuation in Circular No. 11/2001-Cus. Despite the Board's instructions, the Commissioner of Customs (Appeals) upheld the assessment at the enhanced value. The Tribunal noted that cases like this should be investigated by the Special Valuation Branch (SVB) of Customs. The SVB initiated an investigation into the appellant's case in November 2002, and the appellant responded to the questionnaire in January 2003, with the investigation ongoing.

Circular No. 11/01-Cus. provided detailed instructions on valuation during SVB investigations, stating that an extra duty deposit of 1% should be made by the importer. However, if the importer failed to provide a complete reply to the questionnaire within 30 days, the extra duty deposit would increase to 5% until the Department received the reply. The Circular also mandated that if provisional assessment was used, the assessment had to be finalized within four months. If not, the extra duty deposit should be discontinued, and the responsible officials would be held accountable for delays.

The Tribunal found that the appellant was only required to make a 1% extra duty deposit, which was no longer necessary as the investigation initiated in November 2002 had not been finalized within four months. The Tribunal concluded that the view taken in the impugned order was contrary to the Circular's instructions and was unsustainable. Therefore, the impugned order was set aside, and the appeal was allowed. Pending the finalization of the SVB investigation, the appellant's imports were to be provisionally assessed to duty at the invoice price without any loading. Additionally, any additional duty collected from the appellant beyond 1% of the value was to be refunded to the appellant. The Registry was directed to provide a copy of the order promptly.