2022 (6) TMI 215 - AT - Customs

Validity of assessment order - enhancement of value as declared by the importer at the time of filing Bills of Entry - whether Customs authorities are correct in enhancing the value self-assessed by the importer on the Bill of Entry on the basis of the consent given by the importer without assigning any such reason for such enhancement? - Difference of opinion. HELD THAT - In view of the divergent opinion expressed by various Benches of the Tribunal, this matter needs to be referred to the Larger Bench of the Tribunal. This matter is remanded to Hon ble President for considering making reference to Larger Bench of the Tribunal the following questions of law - (i) Whether the enhanced value as accepted for early clearance or for any reason is equivalent to the declared value on the Bill of Entry. (ii) Whether such an acceptance of the enhanced value is binding on the importer in respect of the import made by him even if he is able to show that enhanced value does not specify the requirements of Section 14 of the Customs Act. (iii) What is the scope of the Section 17 (5) of the Customs Act, 1962 making it mandatory to pass an speaking order within prescribed period by the concerned authorities in case of any changes made to self assessment made by the importer while filing the bill of entry.

Summary

Issues Involved:
1. Whether Customs authorities are correct in enhancing the value self-assessed by the importer on the Bill of Entry based on the consent given by the importer without assigning any reason for such enhancement.
2. The requirement for a speaking order under Section 17(5) of the Customs Act, 1962.
3. The binding nature of the acceptance of enhanced value by the importer.
4. The divergent views of the Tribunal on the acceptance of enhanced value.

Detailed Analysis:

1. Enhancement of Value Based on Importer's Consent:
The primary issue is whether Customs authorities can enhance the value self-assessed by the importer on the Bill of Entry solely based on the importer's consent without providing any reasons. The Tribunal noted that after the introduction of self-assessment in 2011, it became mandatory for the proper officer to pass a speaking order recording the reasons for re-assessing or modifying the self-assessment made by the importer/exporter. This requirement applies even if the re-assessment is accepted by the importer/exporter. The Tribunal referenced the Supreme Court's decision in the ITC case, which emphasized that self-assessment could only be modified through an appeal or a re-assessment order.

2. Requirement for a Speaking Order under Section 17(5) of the Customs Act, 1962:
Section 17(5) mandates that a speaking order must be passed within fifteen days from the date of re-assessment if the re-assessment is contrary to the self-assessment made by the importer/exporter. This speaking order must detail the reasons for differing from the self-assessment. The Tribunal highlighted that this requirement ensures transparency and accountability in the assessment process.

3. Binding Nature of the Acceptance of Enhanced Value by the Importer:
The Tribunal discussed various cases where the acceptance of the enhanced value by the importer was considered binding. In cases like Laxmi Colour Lab and Hingora Industries Ltd., the Tribunal held that mere acceptance of the escalated price does not preclude the importer from challenging the same on legal grounds. However, in cases like Hanuman Prasad & Sons and Vikas Spinners, the Tribunal held that once the importer consents to the enhanced value, it becomes the declared transaction value, and the importer is estopped from challenging it later.

4. Divergent Views of the Tribunal on the Acceptance of Enhanced Value:
The Tribunal acknowledged the existence of conflicting decisions on whether the acceptance of enhanced value precludes the importer from challenging it. Some decisions held that acceptance of the enhanced value does not discharge the Revenue's burden to establish the enhanced value, while others held that once accepted, the enhanced value becomes binding on the importer.

Conclusion and Reference to Larger Bench:
Given the divergent views, the Tribunal decided to refer the matter to the Larger Bench for clarity. The questions referred to the Larger Bench are:
(i) Whether the enhanced value accepted for early clearance or any reason is equivalent to the declared value on the Bill of Entry.
(ii) Whether such acceptance of the enhanced value is binding on the importer even if the importer can show that the enhanced value does not meet the requirements of Section 14 of the Customs Act.
(iii) The scope of Section 17(5) of the Customs Act, 1962, regarding the mandatory speaking order for any changes made to self-assessment by the importer.

Order Pronouncement:
The order was pronounced in the open court on 04.05.2022.