2015 (10) TMI 829 - AT - Customs

Principle of natural justice - order beyond the scope of SCN - it was contended that they have preferred appeal only against addition of royalty amount ordered by the adjudicating authority whereas the Commissioner (Appeals) has gone beyond the grounds of appeal and suo moto set aside the order of the lower authority relating to acceptance of the transaction value. Held that - appellant has accepted adjudication order insofar as it related to acceptance of transaction value and related party transaction and they preferred appeal only against addition of royalty amount to transaction value Commissioner (A) can pass order enhancing duty or penalty but only after giving notice to appellant and then pass order Commissioner (A) has not followed principles of natural justice and has violated procedure by going beyond grounds of appeal preferred by appellant and suo moto set aside order Therefore impugned order set aside Matter remanded back to commissioner (A) and decide matter afresh Application disposed of.

Summary

Issues: Valuation of related party transaction, jurisdiction of Commissioner (Appeals) to decide beyond grounds of appeal.

Valuation of related party transaction: The case involved a dispute regarding the valuation of related party transactions. The Assistant Commissioner accepted the transaction value of imported goods but ordered the addition of royalty fees paid to the overseas principal. The appellant appealed against the addition of royalty amount, contesting the order. The Commissioner (Appeals) upheld the royalty amount addition but set aside the order related to the acceptance of the transaction value. The appellant argued that the Commissioner (Appeals) exceeded the grounds of appeal by setting aside the transaction value acceptance, which was not challenged. The Tribunal noted that the Revenue did not appeal against the acceptance of the transaction value. The Commissioner (Appeals) was found to have violated the principles of natural justice by going beyond the appeal grounds and setting aside the transaction value acceptance. The Tribunal set aside the Commissioner (Appeals) order and remanded the case for a fresh decision following the Customs Act provisions.

Jurisdiction of Commissioner (Appeals) to decide beyond grounds of appeal: The key issue was whether the Commissioner (Appeals) had the jurisdiction to decide beyond the grounds of appeal set by the appellant. The appellant argued that the Commissioner (Appeals) overstepped by setting aside the acceptance of transaction value, which was not challenged in the appeal. The Tribunal held that the Commissioner (Appeals) did not follow the principles of natural justice and violated the procedure by going beyond the specified grounds of appeal. The Tribunal emphasized that the Commissioner (Appeals) could enhance duty or penalty only after giving notice and following due process. As the Commissioner (Appeals) did not adhere to these principles, the Tribunal set aside the order and remanded the case for a fresh decision in compliance with the Customs Act provisions.