2020 (12) TMI 1092 - AT - Customs

Valuation of imported goods - The Commissioner (Appeals) set aside the order of enhancement in value - polyester knitted fabric of different weights and colours - enhancement of assessable value, on the basis of contemporaneous imports data - HELD THAT - In the present case, the proper officer doubted the truth or accuracy of the value declared by the importer for the reason that contemporaneous data had a significantly higher value. It was open to the importers to require the proper officer to intimate the grounds in writing for doubting the truth or accuracy of the value declared by them and seek a reasonable opportunity of being heard, but they did not do so. On the other hand, the importers submitted in writing that though they had declared the value of the imported goods at 1.20 USD per kg., but on being shown contemporaneous data, they have agreed that the value of the goods should be enhanced to 1.80 USD per kg for Hanuman Prasad and to 1.94 USD per kg. for Niraj Silk. The importers also specifically stated that they did not want to avail of the right conferred on them under section 124 of the Customs Act and, therefore, they did not want any show cause notice to be issued to them or personal hearing to be provided to them. The importers also specifically stated that they did not want a speaking order to be passed on the Bills of Entry. It needs to be noted that section 124 of the Customs Act provides for issuance of a show cause notice and personal hearing, and section 17(5) of the Customs Act requires a speaking order to be passed on the Bills of Entry, except in a case where the importer/exporter confirms the acceptance in writing. It is non-consideration of the factual position emerging from the statements made by Hanuman Prasad and Niraj Silk that led the Commissioner (Appeals) to believe that the declared value could be rejected only on the basis of reasonable and cogent evidence, which burden the Revenue failed to discharge as it could not prove that the invoice did not represent the true transaction value in the international market. The very fact that the importers had agreed for enhancement of the declared value in the letters submitted by them to the assessing authority, itself implies that the importers had not accepted the value declared by them in the Bills of Entry. The value declared in the Bills of Entry, therefore, automatically stood rejected. Further, once the importers had accepted the enhanced value, it was really not necessary for the assessing authority to undertake the exercise of determining the value of the declared goods under the provisions of rules 4 to 9 of the Valuation Rules - here, the importers had accepted the enhanced value and there was, therefore, no necessity for the assessing officer to determine the value in the manner provided for in rules 4 to 9 of the Valuation Rules sequentially. The general observations made the Commissioner (Appeals) in the impugned order that the value declared in the Bills of Entry were being enhanced uniformly by the Department for a considerable period of time was uncalled for. The Commissioner (Appeals) completely failed to advert to the crucial aspect that the importers had themselves accepted the enhanced value. The Commissioner (Appeals) in fact, proceeded to examine the matter as if the assessing officer had enhanced the declared value on the basis of other factors and not on the acceptance by the importers. This casual observation is not based on the factual position that emerges from the records of the case - the Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry. Appeal allowed - decided in favor of appellant.

Issues Involved:
1. Whether the acceptance of enhanced value by the importers precludes them from challenging the assessment order.
2. Whether the Assessing Officer was required to pass a speaking order despite the importers waiving their rights.
3. Whether the enhancement of assessable value was arbitrary and illegal.
4. Whether the Department followed the correct procedure under Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.
5. Whether the transaction value should have been determined in accordance with Section 14 of the Customs Act and Rule 3 of the Valuation Rules.

Detailed Analysis:

1. Acceptance of Enhanced Value and Right to Challenge:
The Tribunal noted that both importers, Hanuman Prasad and Niraj Silk, had agreed in writing to the enhanced values of 1.80 USD per kg and 1.94 USD per kg respectively, and explicitly waived their rights to a show cause notice, personal hearing, and a speaking order. Despite this, the Commissioner (Appeals) held that acceptance of the enhanced value did not preclude the importers from challenging the assessment order. This was supported by legal precedents stating that there is no estoppel in taxation matters, and an assessee can file an appeal against an assessment even after accepting an enhancement to avoid demurrages.

2. Requirement of a Speaking Order:
The Commissioner (Appeals) found that the Assessing Officer was obligated to pass a speaking order disclosing the grounds for rejecting the declared value before enhancing it. However, the Tribunal disagreed, emphasizing that Section 17(5) of the Customs Act permits the importer to waive this right. Since the importers had waived their right to a speaking order, the Assessing Officer was not required to pass one.

3. Arbitrary and Illegal Enhancement:
The Commissioner (Appeals) ruled that the enhancement of the assessable value was arbitrary and illegal, as it did not follow the mandate of Section 14 of the Customs Act and Rule 3 of the Valuation Rules. The Tribunal, however, highlighted that the importers had voluntarily accepted the enhanced value, which implied that the declared value was effectively rejected by the importers themselves. Thus, the enhancement was not arbitrary but based on the importers' acceptance.

4. Procedure under Rule 12 of the Valuation Rules:
The Tribunal examined whether the Department followed the correct procedure under Rule 12 of the Valuation Rules. Rule 12 allows the proper officer to doubt the declared value and seek further information from the importer. If the doubt persists, the transaction value must be determined sequentially through Rules 4 to 9. In this case, the importers had accepted the enhanced value without requiring further inquiry, making it unnecessary for the Assessing Officer to follow the sequential determination process.

5. Determination of Transaction Value:
The Commissioner (Appeals) asserted that the transaction value should have been determined in accordance with Section 14 of the Customs Act and Rule 3 of the Valuation Rules, which require the declared value to be accepted unless specific conditions are met. The Tribunal noted that the importers' acceptance of the enhanced value indicated that the declared value was not accepted by them, thus not necessitating the sequential determination under Rules 4 to 9.

Conclusion:
The Tribunal concluded that the Commissioner (Appeals) erred in setting aside the orders passed by the Assessing Officer. The importers' voluntary acceptance of the enhanced value and waiver of their rights negated the need for a speaking order and further valuation procedures. Consequently, the Tribunal set aside the 36 orders passed by the Commissioner (Appeals) and allowed the appeals filed by the Department.

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