2018 (4) TMI 857 - HC - Customs

Valuation - Contention of the appellant is that he had added freight amount of EURO 3900, being 20% of FOB value, to the invoice value, to arrive at the assessable value - Whether the Hon ble Tribunal has erred in directing the Commissioner of Customs, Appeals, to decide the case on merits, after only in the event if it is found that the assessable value was enhanced by the adjudicating Authority? Held that - it is manifestly clear that where the cost of transport referred to, in clause (a) of sub-Rule 2 of Rule 10 of the said Rules is not ascertainable, such cost shall be 20% of the free on board value of the goods. Even taking it for granted that the appellant has not filed any proof of document, viz., protest letter or representation against the excess payment, department is not entitled to collect amount, not exceeding 20% of the free on board value of goods. Remand order of the CESTAT, Madras, with a rider that whether the miscellaneous charges were declined by the appellant, as otherwise, added at the instance of the assessing officer, in the course of assessment proceedings, is contrary to the statutory rules. Matter is remanded to the Commissioner of Appeals to reassess the Bill of Entry, dated 20/2/2009, in accordance with the statutory rule, extracted supra, within a period of one month from the date of receipt of a copy of this order.

Summary

Issues:
1. Interpretation of Customs Valuation Rules regarding the inclusion of freight charges in the assessable value.
2. Appealability of an order when duty is not paid under protest.
3. Application of the doctrine of estoppel in customs valuation.

Analysis:

Issue 1: Interpretation of Customs Valuation Rules regarding the inclusion of freight charges in the assessable value

The appellant imported goods and added a 20% freight amount to the FOB value to calculate the assessable value. However, the assessing Officer directed the appellant to include the balance freight amount as miscellaneous charges, resulting in a higher assessable value. The CESTAT remanded the matter to ascertain if the miscellaneous charges were declared by the appellant or added by the assessing officer. The Court analyzed Rule 10 of the Customs Valuation Rules, emphasizing that if the cost of transport is not ascertainable, it shall not exceed 20% of the FOB value. The Court held that the department cannot collect an amount exceeding 20% of the FOB value, regardless of whether a protest was made or not. The remand order was deemed contrary to the statutory rules, and the Court allowed the appeal, setting aside the CESTAT order.

Issue 2: Appealability of an order when duty is not paid under protest

The appellant contended that the duty paid in excess was not justifiable under the Customs Valuation Rules. The Court referred to precedents and highlighted that the filing of an appeal itself constitutes a protest. The Tribunal had remanded the appeal to the Commissioner of Appeals to decide on the merits, even though duty was not paid under protest. The Court supported the appellant's argument that the appeal was maintainable, irrespective of the protest, and that excess payment was in violation of the statutory rules.

Issue 3: Application of the doctrine of estoppel in customs valuation

The appellant argued that there cannot be any estoppel against the law, emphasizing that the Customs department cannot collect more than 20% of the FOB value as freight charges. The Court agreed with this argument, stating that the statutory rules clearly define the allowable costs in determining the value of imported goods. The Court found in favor of the appellant on substantial questions of law and remanded the matter to the Commissioner of Appeals for reassessment in accordance with the statutory rules.

In conclusion, the Court allowed the Civil Miscellaneous Appeal, set aside the CESTAT order, answered the substantial questions of law in favor of the appellant, and remanded the matter for reassessment within a specified timeframe.