2019 (5) TMI 1360 - AT - Customs

Valuation of imported goods - inclusion of royalty and lumpsum fees in the assessable value of imports - Section 17 of the Customs Act, 1962 - HELD THAT - The time of finalization that should inevitably take place is also, as yet, uncertain. It is also apparent that procedure does not deter the finalization of an assessment for want of decision by the Tribunal or, should such need arise, by the Hon ble Supreme Court. The internal process of the customs administration that enables the proper officer, under section 17 or section 18 of the Customs Act, 1962, to be assisted in the discharge of the statutory obligation and, which, legally, may not even bind the proper officer does not merit our attention. To the extent that we accord approval or disapproval at this stage, we would be appropriating the exercise of powers under section 18 of Customs Act 1962 for finalization of the assessment to ourselves and, thereby, would also erase one level of remedial jurisdiction that would, otherwise, be available to either side. This is not the intent of section 128 of Customs Act, 1962. The impact of the impugned order has been to transfigure a final assessment of the future to provisional assessment at the insistence of the Commissioner of Customs. Any grievance arising from finalization does have appellate remedies commencing with the first appellate authority. Appeal dismissed.

Summary

Issues involved:
- Inclusion of 'royalty' and 'lumpsum fees' in the assessable value of imports from a related person.
- Dispute regarding acceptance of invoice value as a reliable guide for future imports under section 17 of the Customs Act, 1962.
- Challenge against the first appellate authority's addition of royalty and lumpsum fees by the importing company.
- Initiation of proceedings without a show cause notice for transactions between related persons.
- Validity of provisional assessment under section 18 of the Customs Act, 1962.
- Jurisdiction of the Tribunal to interfere with provisional assessments.
- Impact of the impugned order on the final assessment process and appellate remedies available.

Analysis:
The appeal before the Appellate Tribunal CESTAT MUMBAI challenged the inclusion of 'royalty' and 'lumpsum fees' in the assessable value of imports from a related person, M/s TDK Toshiba Limited, Japan. The dispute arose from the reviewing authority setting aside the order accepting invoice value as a reliable guide for future imports under section 17 of the Customs Act, 1962. The first appellate authority added royalty and lumpsum fees to the assessable value, which was contested by the importing company. The proceedings were initiated without a show cause notice, raising questions about the validity of the assessment process for transactions between related parties.

The Tribunal examined the validity of provisional assessment under section 18 of the Customs Act, 1962. It noted that the internal procedures for expert consultation did not confer statutory acknowledgment, and assessments guided by such consultations were provisional until finalized. The Tribunal emphasized that it does not interfere with provisional assessments unless the terms of assessment are challenged. It clarified that it does not have the authority to approve or disapprove advance rulings that have not yet impacted goods under Section 46 of the Customs Act, 1962.

Regarding the Tribunal's jurisdiction, it concluded that rendering a decision on goods that are provisionally assessed would be premature. The Tribunal highlighted that the customs administration's internal processes to assist the proper officer do not bind the officer and should not be a matter of concern for the Tribunal. It emphasized that interfering at this stage would usurp the powers under section 18 of the Customs Act, 1962, for finalizing assessments. The Tribunal also noted that any grievance arising from finalization has appellate remedies starting from the first appellate authority.

Ultimately, the Tribunal dismissed the appeal as premature without delving into the merits of the issue, emphasizing the importance of allowing the proper assessment process to unfold and the availability of appellate remedies for any grievances arising from final assessments.