2023 (9) TMI 825 - AT - Customs

Valuation of goods for the purpose of assessment of Customs Duty - inclusion of royalty and lumpsum fees in the assessable value of imports effected from a related person - calculation of invoice value - HELD THAT - It is noticed that the order of acceptance of invoice value as reliable enough guide to the proper officer for assessing future imports under section 17 of the Customs Act, 1962 was disputed by reviewing authority. By setting aside that order, the first appellate authority has effectively exercised power of assessment and has confined the proper officer to such assessment on goods that were yet to be imported. On a query, Learned Counsel admitted that the proceedings which culminated in the impugned order had been initiated without a show cause notice; apparently, the prevailing practice is for all transactions between related persons to be subjected to such scrutiny, evaluation and direction to assessing authority. Thus, it is the appeal before the lower authority that took on the appearances of show cause notice. The internal procedures for providing expert consultation to the statutorily empowered assessing officers, even if of long standing existence, do not vest the institution, established by executive fiat for such purpose, with the same statutory empowerment; notwithstanding, the arrogation of direction, one way or the other, by the Deputy Commissioner, Special Valuation Branch (SVB), its recommendatory character cannot be elevated to that of an order in the absence of statutory support - Customs Act, 1962 is concerned with levy of duty, as well as the enforcement of prohibitions, under law, on import/export goods. Other consequences such as differential duty, refund, drawback, fines and penalties may arise but only in consequence. The possible detriment that may arise on a future date is not a grievance that should be entertained unless and until it does translate as one upon occurrence of import or export of goods. The proceedings under section 18 of Customs Act, 1962 not interfered except if terms of such assessment is a cause of grievance. Even so, no incidence of provisional assessment is impugned. Chapter XV of Customs Act, 1962 contains the design and hierarchy of appeals and that entrusted with Commissioner of Customs (Appeals) is one of the sources of appellate jurisdiction of the Tribunal. The same hesitancy that informs our jurisdictional dilemma attaches also to the first appellate authority - The first appellate authority should have dealt with the appeal, at the behest of jurisdictional Commissioner of Customs, within such circumscribing and passed such order as is legal and proper for disposal of appeal. Notwithstanding the lack of appellate recourse, that the jurisdictional Commissioner of Customs opted for review does not fall within empowerment, or that of Commissioner of Customs (Appeals), to prevent; but it is certainly within empowerment to render appropriate disposal in terms of our exposition on the true nature of Special Valuation Branch (SVB). The appeal preferred is restored at the instance of the jurisdictional Commissioner of Customs before the first appellate authority for a fresh disposal - appeal allowed by way of remand.

Summary

Issues Involved:
1. Premature Appeal
2. Valuation and Jurisdiction
3. Role of Special Valuation Branch (SVB)
4. Provisional Assessment
5. Appellate Jurisdiction

Summary:

Premature Appeal:
The Tribunal was directed by the Hon'ble High Court of Bombay to re-examine the issue of "premature appeal" after the initial decision was challenged. The primary issue was the dismissal of the challenge without examining the merit of the impugned order, which was deemed not yet appealable despite insinuation of detriment therein.

Valuation and Jurisdiction:
The appellant's contention over sustaining detriment at the secondary level and the unwillingness to be a 'prototype' for similar cases was noted. The Tribunal emphasized that the precedents cited by the appellant did not merit adoption because they did not involve a deliberated and proper assumption of jurisdiction. The Tribunal insisted on validating assessments and noted that lower authorities had failed to contemplate jurisdiction properly.

Role of Special Valuation Branch (SVB):
The Tribunal discussed the historical and operational context of the SVB, which was established to scrutinize relationships and prices to guard against deliberate undervaluation. The Tribunal emphasized that the SVB's role is advisory and recommendatory, not adjudicatory, and that any direction or mandate to assess in a particular way by the SVB is anathema to adjudication.

Provisional Assessment:
The Tribunal highlighted that the internal procedures for providing expert consultation to assessing officers do not vest the SVB with statutory empowerment. The assessments guided by the SVB's findings are provisional under section 18 of the Customs Act, 1962, until finalization. The Tribunal found no record of any detriment to importers and noted that any grievance should be entertained only when it translates into an actual detriment upon the occurrence of import or export of goods.

Appellate Jurisdiction:
The Tribunal noted that it is not within its jurisdiction to render a decision on goods that are provisionally assessed, as this would be a premature intervention. The Tribunal emphasized that the first appellate authority should have desisted from intervening before any provisional assessment had been finalized. The Tribunal set aside the impugned order and restored the appeal preferred by the jurisdictional Commissioner of Customs before the first appellate authority for fresh disposal.

Conclusion:
The appeal was allowed by way of remand, and the impugned order was set aside for fresh disposal by the first appellate authority.

(Order pronounced in the open court on 14/09/2023)