2011 (6) TMI 418 - AT - Customs

Valuation dispute - Enhancement of the assessable value by the AO - appellant imported bearing of different sizes from different suppliers of china - appellants declared certain prices for the imported goods and the assessing authority enhanced the values for the purpose of assessment based on prices of contemporaneous imports of goods claimed to be identical/similar - Held that - Where declared value is rejected, an appealable order should be issued to the importer after following the due process of law. Hence, orders of Commissioner (Appeals) and the assessment orders in so far as the same related to enhancement of the assessable values are set aside and original assessment orders passed by the assessing authorities are in gross violation of the procedure prescribed by the Board and the also in clear violation of principles of natural justice. The Assistant/Deputy Commissioners have failed to issue speaking orders inspite of request for such order by the appellants. The Commissioner (Appeals) upholding the assessment orders on the ground that requests for issue of speaking orders were made after the clearance of the goods and therefore no violation of principles of natural justice cannot be approved - the matter remanded to the original authority to issue a speaking orders after disclosing the relevant materials relied for enhancement of the values - Appeals allowed by way of remand.

Summary

Issues: Valuation dispute under Customs Valuation Rules, Enhancement of assessable values without speaking orders, Violation of principles of natural justice, Guidelines by the Board not followed

Analysis:
The judgment by the Appellate Tribunal CESTAT, Delhi addresses multiple appeals by the same importer involving a common issue of valuation dispute under Customs Valuation Rules. The appellants imported goods from China and faced a disagreement regarding the declared prices and the enhanced values determined by the assessing authority. The appellants contended that the enhancements were arbitrary and lacked speaking orders, violating the procedure outlined by circular No.16/2003-Cus. Appeals were made to the Commissioner (Appeals) challenging the assessments, which were upheld, leading to further appeals before the Tribunal.

The appellants argued that the assessments were conducted without following the prescribed procedure, rejecting declared values without valid reasons, and failing to provide relevant details of contemporaneous imports. They highlighted discrepancies in the assessment process and the reliance on values of comparable goods from other importers. The Tribunal noted a previous case where a similar issue was remanded for fresh consideration, indicating inconsistencies in the assessment practices.

The assessing authorities based the enhancement of values on contemporaneous import prices, justifying their actions. However, the Tribunal raised concerns about the repeated pattern of enhancements without speaking orders, leading to undue harassment for the importers. The judgment emphasized the importance of following the guidelines set by circulars issued by the Board to prevent arbitrary rejection of declared values and ensure natural justice principles are upheld.

The Tribunal found that the assessing authorities had flouted the guidelines and directions of the Board by casually enhancing assessable values without proper justification. The judgment highlighted the appellants' practice of paying duty on enhanced values to avoid delays, raising questions about the burden passed on to consumers and the potential issue of unjust enrichment. The Tribunal emphasized the need for speaking orders and adherence to procedural fairness in assessments.

In conclusion, the Tribunal set aside the orders of the Commissioner (Appeals) and remanded the matter to the original authority to issue speaking orders, disclose relevant materials relied upon for value enhancements, and provide a reasonable opportunity of hearing to the appellants. The judgment also directed the registrar to inform the Chairman of CBEC about the violations observed and the need for appropriate action to prevent further unnecessary litigation.