2008 (7) TMI 222 - AT - Customs

Enhancement of the value of Hot Path Parts (HPP) being part of the Gas Turbine Generator (GTG) re-imported after repair - exercise undertaken by the Commissioner to determine the transaction value of HPP under CVR is not in terms of the legal provisions or legal requirement for assessment of the impugned import - Therefore demand is not sustainable - refund of CVD paid on assessment of imported goods (GTG) cannot be claimed without challenging the assessment appeal of assessee is allowed

Issues Involved:
1. Valuation of Hot Path Parts (HPP) re-imported after repair.
2. Legitimacy of the enhanced duty demand under Section 28(2) of the Customs Act, 1962.
3. Applicability of interest under Section 28AB and penalty under Section 114A of the Act.
4. Refund of Countervailing Duty (CVD) paid on the Gas Turbine Generator (GTG).

Issue-wise Detailed Analysis:

1. Valuation of Hot Path Parts (HPP) Re-imported After Repair:

The primary issue revolves around the valuation of Hot Path Parts (HPP) that were part of a Gas Turbine Generator (GTG) re-imported after repair. The Commissioner had enhanced the value of the HPP, leading to a demand for differential duty. The appellant, BKPL, contended that the valuation method adopted by the Commissioner was incorrect. They argued that the Notification No. 94/96-Cus. prescribed a self-contained procedure for determining the duty payable on re-imported repaired goods, which should include the fair cost of repair, cost of materials replaced, and freight and insurance costs. BKPL also contested the comparison of their HPP with a refurbished HPP imported by another company, GMR Energy Ltd., citing differences in import terms and a significant time gap between the imports. The Tribunal found that the Commissioner's approach to valuing the HPP under the Customs Valuation Rules (CVR) was not justified, as the assessment should have been based on the GTG re-imported after repairs, not the HPP separately. Therefore, the demand for differential duty was deemed unsustainable, and the appeal was allowed in this regard.

2. Legitimacy of the Enhanced Duty Demand Under Section 28(2) of the Customs Act, 1962:

The Commissioner had demanded differential duty of Rs. 1,27,75,187/- under Section 28(2) of the Customs Act, 1962, based on the enhanced value of the HPP. BKPL challenged this demand, arguing that the valuation method was incorrect and that the show cause notice was barred by limitation. The Tribunal concluded that the Commissioner's determination of the transaction value of the HPP under CVR was not in accordance with legal provisions or requirements for assessing the re-imported GTG. Consequently, the demand for differential duty was set aside.

3. Applicability of Interest Under Section 28AB and Penalty Under Section 114A of the Act:

Along with the differential duty demand, the Commissioner had imposed interest under Section 28AB and a penalty equal to the differential duty under Section 114A of the Customs Act. Since the Tribunal found the demand for differential duty unsustainable, the consequential levies, including interest and penalty, were also set aside.

4. Refund of Countervailing Duty (CVD) Paid on the Gas Turbine Generator (GTG):

BKPL sought a refund of the CVD paid on the GTG, arguing that if the goods had been repaired in India, central excise duty would not have been payable. However, the Revenue contended that the proper procedure for claiming the refund had not been followed. The Tribunal noted that the relevant notification did not exempt the import from CVD and cited the Supreme Court judgments in Priya Blue Industries Ltd. v. Commissioner of Customs (Preventive) and Collector v. Flock (India) Pvt. Ltd., which established that a refund claim could not be made without challenging the assessment. Therefore, the claim for a refund of CVD was rejected.

Observations on Decorum:

The Tribunal expressed concern over the appellants' use of vitriolic remarks and acidic sarcasm towards the adjudicating authority. It emphasized that such unsavoury comments were uncalled for and condemned the practice, urging counsel to guide their clients appropriately in future proceedings.

Conclusion:

The Tribunal allowed the appeal filed by BKPL regarding the demand for differential duty and consequential levies, but rejected the claim for a refund of CVD. The judgment underscored the importance of adhering to proper legal procedures and maintaining decorum in legal submissions.

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