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2015 (6) TMI 109 - AT - Customs


Issues:
Valuation of imported goods on related party transaction, determination of differential customs duty, application of Customs Valuation Rules, violation of natural justice in enhancing value without notice.

Analysis:
The appeal pertains to the valuation of imported goods in a related party transaction and the consequent differential customs duty. The appellant, a subsidiary of a UK company, imported spares for laboratory gas generators. The Special Valuation Branch ordered provisional assessment due to the related party nature of the transaction. The Deputy Commissioner rejected the declared value, ordered enhancement to 39%, and directed finalization of the assessment. The Commissioner (Appeals) upheld the order, increased the loading percentage to 65.125%, and rejected the appeal.

During the hearing, the appellant argued against the enhancement, citing lack of notice and awareness of the proposed increase. They contended that the loading percentage was incorrectly calculated and submitted third-party invoices for verification. The appellant's live consignments were affected by the enhanced value, impacting subsequent imports. They requested setting aside the order and remanding the case, referencing relevant case laws.

The respondent argued that the enhancement was justified, as no fresh demand was made, and the appellant failed to provide evidence to support their claim. The Commissioner (Appeals) upheld the order, stating the increase was an arithmetical calculation and not a violation of Section 128A.

Upon review, the Tribunal found that the appellant was not given a proper opportunity to defend against the increased loading percentage. The failure to consider the submitted third-party invoices and the direct impact of the enhancement on duty liability were noted. The Tribunal emphasized the importance of following principles of natural justice before proposing value enhancements. Consequently, the impugned order was set aside, and the matter was remanded to the Commissioner (Appeals) for a fresh decision with proper opportunity for the appellant to present their case. The Commissioner was directed to decide the issue on merit within six months, emphasizing cooperation from the appellant.

In conclusion, the Tribunal highlighted the necessity of adherence to natural justice principles in valuation matters involving related party transactions and directed a fair reconsideration of the case by the Commissioner (Appeals).

 

 

 

 

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