2016 (12) TMI 1206 - AT - Customs

Valuation - enhancement of value of imported goods - principles of natural justice - Held that - On a perusal of the order-in-original we find that it is replete with assumptions and presumptions which render the conclusions shaky. We also observe that both the lower authorities have not taken into consideration the decisions of this Tribunal which restrict the inclusion of royalty and technical know-how in assessable value to appropriate situations in accordance with the terms of the agreement relating to these fees. In the matter of goods imported for trading as such, it would appear that both the lower authorities have proceeded to enhance the declared value without any elaboration as to the manner or rationale for computation. It would also appear that it is the alleged relationship between exporter and appellant, and not misgivings about the declared value, that prompted the enhancement A remand to the original authority would entail a reopening of the entire investigation which would not be equitable given the lapse of time since the proceedings were initiated - appeal allowed by way of remand.

Summary

Issues:
Enhancement of value of imported goods based on the relationship between the importer and the supplier, Violation of principles of natural justice in considering submissions made by GATT Valuation Cell, Inclusion of royalty and technical know-how in assessable value, Lack of elaboration in enhancing declared value of goods imported for trading, Procedure followed by GATT Valuation Cell without issuing a show cause notice, Equitability of remanding the matter to the original authority, Directions to the first appellate authority for re-hearing and examination of findings.

Analysis:
The appeal was filed against an order confirming the enhancement of the value of imported goods due to the relationship between the importer and the supplier. The appellant imported raw materials from a related supplier, and the authorities concluded that this relationship influenced the price of the goods. The appellant argued a violation of natural justice as certain submissions were not made available before the first appellate authority. The order-in-original was criticized for being based on assumptions and presumptions, lacking consideration of Tribunal decisions on royalty inclusion in assessable value.

The lower authorities enhanced the declared value of goods imported for trading without providing a clear rationale. The GATT Valuation Cell's procedure, involving a questionnaire and personal hearing without a show cause notice, was noted. The Tribunal found remanding the matter to the original authority equitable, directing the first appellate authority to re-hear the appellant, consider GATT Valuation Cell submissions, examine the relationship with the supplier, assess the influence on prices, review the inclusion of royalty and technical know-how fees, and justify the enhancement of the goods' value within three months.

In conclusion, the appeal was disposed of with directions for a thorough re-examination by the first appellate authority to ensure procedural fairness and a comprehensive review of the factors influencing the value of imported goods.