2024 (4) TMI 697 - AT - Customs

Classification of imported goods - amino acid powder - whey protein powder - to be classified them under the Customs Tariff Item (CTI) 29379090 or under CTI 21069099? - multiple assessments in the same Bills of Entry - Finalization of provisional assessment - violation of principles of natural justice - Jurisdiction - Assistant Commissioner of Customs, proper officer or not - enhancement of value of Insane Lab Psychotic (Amino Acid Powder). Were there multiple assessments in the same Bills of Entry in these cases contrary to the provisions of section 17 as alleged by the appellant? - HELD THAT - Assessment has to be done by the importer himself and the proper officer can (a) verify the entries made, i.e., the details provided in the Bill of Entry with regard to the nature of goods, specifications, value, etc; and (b) verify the self-assessment of the goods; and then re-assess the duty. Both the self-assessment and the re-assessment are assessments as per section 2(2). But there could be occasions when the assessment cannot be done at that stage because of some details or test report, etc. are required. In such cases, the goods are provisionally assessed to duty and the goods are cleared for home consumption and thereafter, the provisional assessment is finalized. In such a case, although the goods cease to be imported goods once they are cleared for home consumption, the assessment which was only provisional before such clearance has to be finalized. This finalization is not a new assessment but a completion of the assessment which was left incomplete before the goods were cleared. Once an order under section 47 is issued, the goods cease to be imported goods as per section 2(25) and therefore, no assessment of duty is possible. Thus, it puts an end to the process of assessment under section 17. Thereafter, the assessment already made can be modified either on appeal to the Commissioner (Appeals) by either side or an appeal by higher appellate authorities or it can be reopened and revised by the department by issuing an SCN under section 28 - until the order clearing the goods for home consumption under section 47 is issued, the goods continue to be imported goods and assessment and re-assessment is permissible more than once. It is this flexibility within the system which greatly facilitates trade and expedites clearances while providing an opportunity to the assessing officer to make changes in the assessment if necessitated before clearing the goods for home consumption. Finalization of provisional assessment - Was there any violation of principles of natural justice in these cases? - HELD THAT - As per the Customs Act, SCN has to be issued under section 28 (if a demand is being raised) or under section 124 (if the goods are to be confiscated or penalty is to be imposed). Regular assessment under section 17 or its finalization under section 18 have no provision for issue of SCN. However, if the duty is re-assessed under section 17(2) by the proper officer, unless the importer accepts such re- assessment in writing, he has to issue a speaking order within 15 days. Similarly, nothing in section 18 which deals with provisional assessment or its finalization provides for issue of an SCN. In these cases, initially, the Bills of Entry were provisionally assessed awaiting the test reports of CRCL on receiving which the assessments were finalized. The appellant was provided copies of the test reports and the appellant made written submissions which were considered - thus, no violation of either any provision of the Act or the principles of natural justice in not issuing an SCN to the appellant before finalizing the assessment. Was the Assistant Commissioner of Customs who passed the OIO the proper officer to do so? - HELD THAT - The provisional assessment order was issued by Assistant Commissioner, ICD, Piyala and it was finalized by the Deputy Commissioner, ICD, Piyala. A successor in office naturally completes the action by the predecessor. There are no infirmity in the order of finalization of assessment being done by the successor officer. Were the imported goods classifiable under CTI 29379090 as claimed by the appellant or CTI 21069099 as classified in the impugned orders? - HELD THAT - It is evident both from the test reports of CRCL as well as copies of the labels of the imported goods enclosed with the appeal that they are mixtures of amino acids and also contain vitamins and caffeine or tea extract and other similar substances. They are meant to be consumed as such or after mixing in water. They are not meant to be consumed in unlimited quantities and the recommended consumption is also indicated - Nothing in the test reports or in the labels indicates that they are either hormones or hormone-stimulating factors as is claimed by the learned counsel. The imported goods are not protein concentrates (such as whey protein) but are mixtures of amino acids, vitamins, etc. for use by dissolving in water. In our considered view, Chapter Note 5(b) squarely puts the imported goods under heading 2106 and since they do not exactly fall under any of the other Customs Tariff Items, CTI 2106 90 99 is the correct classification. Can the enhancement of value of Insane Lab Psychotic (Amino Acid Powder) 35 SU/220 grams be sustained? - HELD THAT - The assistant Commissioner, finding the value of US 10.25 per piece much lower, rejected it under rule 12 of the Customs Valuation Rules and enhanced it to US 12.50 per piece based on a previous import by the appellant itself, under Rule 4 of the Customs Valuation Rules. The Commissioner (Appeals), observing that the contemporaneous value adopted was for the same product imported by the same importer, upheld the re-determination of value. We find that the appellant s submission that the previous import by the invoice dated 22.10.2018 was for only 1176 pieces while this import by Invoice dated 24.09.2018 was for 15,624/- pieces deserves to be accepted. When 14 times as many goods are imported, a reduction in pieces per piece from US 12.50 to US 10.25 is explicable in the normal course of business. The enhancement of value cannot, therefore, be sustained. Appeal allowed in part.

Summary

Issues Involved:
1. Multiple assessments contrary to section 17.
2. Violation of principles of natural justice.
3. Jurisdiction of the Assistant Commissioner of Customs.
4. Classification of imported goods.
5. Enhancement of value of imported goods.

Summary:

1. Multiple Assessments:
The appellant contended that the assessing officers resorted to multiple assessments in two of the Bills of Entry contrary to the provisions of section 17. The Tribunal held that nothing in section 17 restricts the officer from re-assessing more than once before the goods are cleared for home consumption u/s 47. It was concluded that assessment and re-assessment are permissible more than once until the order clearing the goods for home consumption is issued.

2. Violation of Principles of Natural Justice:
The appellant argued that no Show Cause Notice (SCN) was issued before finalizing the assessment. The Tribunal found no violation of principles of natural justice as the Customs Act does not mandate an SCN for finalizing provisional assessments u/s 18. The appellant had made written submissions which were considered, thus fulfilling the requirements of natural justice.

3. Jurisdiction of the Assistant Commissioner of Customs:
The appellant claimed that the Assistant Commissioner of Customs was not the competent authority to pass the orders as per the Supreme Court judgment in Canon India. The Tribunal clarified that Canon India was specific to DRI officers issuing notices u/s 28, and in this case, the provisional assessment was finalized by the Deputy Commissioner, ICD, Piyala, making the order valid.

4. Classification of Imported Goods:
The appellant contended that the imported goods were correctly classifiable under CTI 29379090. The Tribunal, after examining the test reports and product labels, concluded that the goods were mixtures of amino acids, vitamins, and other substances meant for consumption and not separate chemically defined compounds or hormone-stimulating factors. Therefore, they were correctly classified under CTI 21069099 as "Food preparations not elsewhere specified or included."

5. Enhancement of Value:
In Customs Appeal No. 51857 of 2021, the appellant contested the enhancement of the value of "Insane Labz Psychotic (Amino acid powder) 35 SU/220 grams" from US $10.25 to US $12.50. The Tribunal found that the reduction in price per piece was justified due to the significantly larger quantity imported. Thus, the enhancement of value was not sustained.

Conclusion:
The Tribunal dismissed Customs Appeal Nos. 51855 and 51856 of 2021, upholding the Revenue's position. Customs Appeal No. 51857 of 2021 was partly allowed, setting aside the enhancement of value but upholding the rest of the impugned order.