2019 (3) TMI 455 - AT - Customs

Valuation of imported goods - enhancement of value of imported goods - main ground raised is that the respondent had given his written acceptance of the enhanced values and thereby has forgone his right to speaking order under Section 17(5) of the Customs Act - Held that - Section 14 of the Customs Act, 1962 read with Customs Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as the assessable value. The Customs Valuation Rules outlines the step by step methodology to be adopted for re-determination of the assessable value in certain cases. The primary requirement for re-determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value. Perusal of the records of the case indicates that the only reason cited reason for re-assessment of value is that the respondent has accepted the enhanced value. No doubt acceptance of the enhanced value in writing waives the requirement of the issue of speaking order under Section 17(5) ibid. However, the requirement of Section 14 and the Customs Valuation Rules need to be satisfied for enhancement of value. Nothing is forthcoming in the record of the case from which the basis for such re-assessment can be made out. Also, in spite of the admission on behalf of the importer, the Revenue is required to satisfy the requirements prescribed under Section 14 of the Customs Act read with Customs Valuation Rules before any enhancement of valuation. The matter is required to be remanded to the Original Assessing Authority for sharing the basis for such re-assessment with the importer - appeal allowed by way of remand.

Summary

Issues: Valuation of imported goods, acceptance of enhanced value, requirement of speaking order under Section 17(5) of the Customs Act, 1962, application of Customs Valuation Rules, challenge to assessment, remand to Original Assessing Authority.

Valuation of Imported Goods:
The case involved a dispute over the valuation of goods imported by the respondent. The Customs authorities re-assessed the imported goods at values higher than declared by the respondent in the Bill of Entry for self-assessment. The respondent accepted the enhanced value through their CHA, the authorized agent, without a speaking order as required under Section 17(5) of the Customs Act, 1962. Despite this acceptance, the respondent challenged the valuation by filing an appeal against the assessment. The Commissioner (Appeals) set aside the re-assessment and restored the self-assessment, emphasizing that the transaction value declared by the importer should be the basis of assessment unless rejected for specific reasons outlined in the Customs Valuation Rules.

Acceptance of Enhanced Value and Speaking Order Requirement:
The Revenue contended that the respondent's acceptance of the enhanced values precluded the need for a speaking order under Section 17(5) of the Customs Act. They relied on various decisions to support their argument. However, the Tribunal noted that while acceptance in writing may waive the requirement for a speaking order, the Customs Valuation Rules must still be adhered to for enhancing the value. The absence of a cogent basis for re-assessment in the records indicated a lack of compliance with Section 14 and the Customs Valuation Rules.

Application of Customs Valuation Rules:
The Tribunal highlighted that Section 14 of the Customs Act, 1962, along with the Customs Valuation Rules, mandates that the transaction value in ordinary commerce serves as the assessable value. Re-determination of value requires cogent reasons for rejecting the transaction value, as prescribed in the Rules. The absence of such reasons in the case records raised concerns about the validity of the enhanced valuation.

Challenge to Assessment and Remand to Original Assessing Authority:
The Tribunal concluded that the Revenue must satisfy the requirements of Section 14 and the Customs Valuation Rules before enhancing the valuation, despite the importer's admission. As a result, the matter was remanded to the Original Assessing Authority to share the basis for re-assessment with the importer and issue a speaking order after allowing the importer's representative to rebut the basis for enhancement. The impugned order was set aside, and the appeal by the Revenue was allowed by way of remand.