2022 (8) TMI 114 - AT - Customs

Valuation of imported goods - goods were re-assessed at values higher than what was declared by the Appellant in the Bills of Entry for self-assessment - 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 for re-assessment of value is that the Appellant 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 from the record of the case that what is the basis for such re-assessment - Neither the provisions of Section 14 of the Customs Act dealing with Valuation of Goods nor the provisions of Customs valuation Rules, 2011 have been followed while assessing the impugned bills of entry. The assessment orders do not assign any reason for discarding the transaction value nor do they mention under which rule of Customs Valuation Rules, the value has been determined. 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 /Appellant - Appeal allowed by way of remand.

Summary

Issues:
Challenging reassessment of 84 Bills of Entry based on enhanced value due to non-acceptance of declared value, validity of consent letter, failure to follow Customs Valuation Rules, requirement of speaking order under Section 17(5) of the Customs Act, satisfaction of Section 14 of the Customs Act and Customs Valuation Rules for value enhancement.

Analysis:

1. The Appeals were filed to challenge two Orders-In-Appeal upholding the reassessment of 84 Bills of Entry due to the non-acceptance of declared value of imported Aluminium scrap. The Assessing officer enhanced the value based on a Circular, leading to the Appellant filing appeals before the Commissioner (Appeals) who rejected them citing the Appellant's consent letter accepting the enhanced value.

2. The Appellant argued that they were pressured by Customs Authorities to give the consent letter to avoid delays and additional charges. They contended that the consent letter had no legal basis as there was no provision under the Customs Act or Rules for such consent. The Assessing officer was also criticized for not following the mandatory Rules for value rejection under the Customs Valuation Rules.

3. The Tribunal noted the dispute centered around the valuation of the imported goods, with the Appellant accepting the enhanced value but still challenging it through appeals. The Commissioner (Appeals) observed the Appellant's acceptance of the enhanced value as a waiver of their right to a speaking order under Section 17(5) of the Customs Act.

4. Section 14 of the Customs Act, 1962, along with Customs Valuation Rules, requires the transaction value in the ordinary course of commerce to be the assessable value, with a prescribed methodology for re-determination in specific cases. The Tribunal emphasized the need for cogent reasons to reject the transaction value and the basis for arriving at the assessable value if rejected.

5. The Tribunal found that while the Appellant's acceptance of the enhanced value waived the speaking order requirement, the satisfaction of Section 14 and Customs Valuation Rules for value enhancement was crucial. It was highlighted that the department needed to provide a basis for the value enhancement beyond the importer's admission.

6. Ultimately, the Tribunal decided to remand the matter to the Original Assessing Authority to share the basis for the reassessment with the importer, allowing the Appellant to rebut the basis before passing a speaking order. The impugned orders were set aside, and the Appeals were disposed of by way of remand to the assessing authority.