2016 (3) TMI 187 - AT - Customs

Refund claim - Loading of transaction value at 12.5% in terms of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - Appellant imported branded watches under a Distributorship Agreement from the foreign supplier which are related parties in terms of Rule 2(2) ibid, therefore the goods are assessed by the Special Valuation Branch (SVB) which rejected the transaction value and determined loading of transaction value at 12.5% in terms of the Customs Valuation Rules - Held that loading of 12.5% do not sustain under Rule 4 of Customs Valuation Rules, 2007. - Decided in favour of the appellant

Summary

Issues:
- Challenge to orders of the Commissioner of Customs (Appeals) regarding loading of transaction value at 12.5%
- Lack of notice or opportunity of personal hearing before passing impugned orders
- Unsustainability of loading of 12.5% of transaction value based on Tribunal's final order
- Validity of impugned orders and primary adjudication orders
- Granting liberty to file refund applications for duty paid

Analysis:

1. Challenge to Commissioner's Orders on Loading of Transaction Value:
The appellant, a distributor of branded watches, imported goods under a Distributorship Agreement with a related foreign supplier. The Special Valuation Branch (SVB) assessed the imported goods due to the relationship between the appellant and the foreign supplier. The Assistant Commissioner of Customs rejected the declared transaction value and imposed a loading of 12.5% under the Customs Valuation Rules. The appellant's appeal against this decision was initially rejected by the Commissioner of Customs (Appeals) but was later allowed by the Tribunal, stating that the loading of 12.5% was not sustainable under the Customs Valuation Rules.

2. Lack of Notice or Opportunity of Personal Hearing:
The impugned orders by the Commissioner (Appeals) confirmed the loading of 12.5% of the transaction value in 597 appeals without providing the appellant with a notice or an opportunity for a personal hearing. The appellant contended that this lack of procedural fairness was a crucial flaw in the orders, a point that the Revenue did not contest. This procedural irregularity raised questions about the validity of the orders passed without affording the appellant a chance to present their case.

3. Unsustainability of Loading Based on Tribunal's Final Order:
The Tribunal's final order in a related appeal established that the loading of 12.5% of the transaction value was unsustainable. This finding was not contested by the Revenue, indicating a clear legal position on the matter. Consequently, the Tribunal deemed it unnecessary to delve into detailed analyses of each appeal, as the unsustainability of the loading percentage had been conclusively established.

4. Validity of Impugned Orders and Primary Adjudication Orders:
Given the Tribunal's final order and the unsustainable nature of the loading percentage, the impugned orders passed by the Commissioner (Appeals) were declared invalid. Additionally, the primary adjudication orders against which the appeals were made were also deemed invalid in light of the Tribunal's decision. This declaration of invalidity paved the way for the appellant to seek refunds for the duty paid, as per the law and the Tribunal's final order.

5. Granting Liberty to File Refund Applications:
In light of the findings and declarations made by the Tribunal, the appellant was granted the liberty to file applications for the refund of duty paid. The Tribunal emphasized that such refund applications, if submitted, should be promptly considered and disposed of by the appropriate authority in accordance with the law. This provision aimed to ensure that the appellant could seek redress for the duty paid erroneously due to the now-invalid loading percentage. The appeals were allowed with no costs imposed.