2022 (7) TMI 466 - AT - Customs

Valuation of imported goods - application of valuation rules where the importer itself has accepted the enhanced value - Commissioner (appeals) set aside the demand - rejection of declared value - enhancement of value of goods - redetermination of values of assessed goods - HELD THAT - It is seen from a perusal of section 17(4) of the Customs Act that the proper officer can re-assess the duty leviable, if it is found on verification, examination or testing of the goods or otherwise that the self-assessment was not done correctly. Sub-section (5) of section 17 provides that where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer, the proper officer shall pass a speaking order on the re-assessment, except in a case where the importer confirms his acceptance of the said re-assessment in writing. In the present case, the proper officer doubted the truth or accuracy of the value declared by the importers 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 - 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 importers/exporters confirm the acceptance in writing. It is non-consideration of the factual position emerging from the statements made by the respondent 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. 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. This is for the reason that it is only when the value of the imported goods cannot be determined under rule 3(1) for the reason that the declared value has been rejected under sub rule 2, that the value of the imported goods is required to be determined by proceeding sequentially through rule 4 to 9 - 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. Appeal allowed.

Issues Involved:
1. Whether the acceptance of enhanced value by the importer precludes them from challenging the assessment order.
2. Whether the assessing officer was obligated to pass a speaking order disclosing the grounds for rejecting the declared value.
3. Whether the declared value can be rejected based solely on contemporaneous data without cogent evidence.
4. Whether uniform enhancement of value in Bills of Entry is justified.
5. Whether the transaction value can be rejected in the absence of additional considerations or exceptions under rule 4(2) of the Customs Valuation Rules.
6. Whether the enhancement of value based on NIDB data alone is valid.
7. Compliance with the judgment of the Supreme Court in determining transaction value based on actual price paid.

Detailed Analysis:

1. Acceptance of Enhanced Value and Right to Appeal:
The Commissioner (Appeals) held that the acceptance of the enhanced value proposed by the Revenue does not preclude an assessee from filing an appeal to challenge the assessment order. This aligns with the legal principle that there is no estoppel in taxation matters, as established by the Supreme Court in Dunlop India Limited vs. UOI. The Tribunal, however, noted that the importers had explicitly accepted the enhanced value in writing and waived their right to a speaking order, which implies they cannot later contest the value.

2. Obligation to Pass 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. However, the Tribunal observed that section 17(5) of the Customs Act allows importers to waive this requirement. Since the importers had submitted letters stating they did not want a speaking order, the Tribunal concluded that the Commissioner (Appeals)'s finding was perverse and contrary to the importers' explicit statements.

3. Rejection of Declared Value Based on Contemporaneous Data:
The Commissioner (Appeals) asserted that the declared value could only be rejected based on reasonable and cogent evidence. The Tribunal, however, emphasized that the importers had voluntarily accepted the enhanced value based on contemporaneous data, thereby negating the need for further evidence from the Revenue. The Tribunal referenced various decisions, including Advanced Scan Support Technologies vs. Commissioner of Customs, which support the view that once an importer consents to an enhanced value, it becomes the declared transaction value requiring no further investigation.

4. Uniform Enhancement of Value:
The Commissioner (Appeals) criticized the uniform enhancement of value in Bills of Entry, stating that parameters like nature, quality, level of import, and time should be considered. The Tribunal, however, noted that the importers' acceptance of the enhanced value nullified the need for such considerations. The Tribunal found the Commissioner (Appeals)'s general statement about uniform enhancement unsubstantiated and irrelevant to the specific case.

5. Transaction Value Rejection and Rule 4(2) Exceptions:
The Commissioner (Appeals) held that unless additional considerations or exceptions under rule 4(2) of the Customs Valuation Rules are involved, the transaction value cannot be rejected. The Tribunal agreed that the transaction value should be accepted unless specific exceptions apply. However, since the importers had accepted the enhanced value, the Tribunal found no need to determine the value under rules 4 to 9 sequentially.

6. Enhancement Based on NIDB Data:
The Commissioner (Appeals) argued that NIDB data alone cannot be the basis for value enhancement. The Tribunal clarified that the importers' acceptance of the enhanced value, rather than the NIDB data, formed the basis for the assessment. The Tribunal emphasized that the importers had voluntarily waived their rights to contest the value, making the reliance on NIDB data a non-issue.

7. Compliance with Supreme Court Judgment:
The Commissioner (Appeals) referenced the Supreme Court judgment in C.C.E. & S.T., Noida vs. Sanjivani Non-Ferrous Trading Pvt. Ltd., which mandates that transaction value be based on the actual price paid. The Tribunal found that the importers' acceptance of the enhanced value complied with this requirement, as they agreed to the value after being shown contemporaneous data.

Conclusion:
The Tribunal set aside the order dated 23.05.2019 passed by the Commissioner (Appeals), which allowed the eight appeals filed by the respondent. The Tribunal allowed the eight appeals filed by the Department, concluding that the importers' acceptance of the enhanced value and waiver of rights to a speaking order were binding and precluded further contestation of the assessment.

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