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2024 (7) TMI 16 - AT - CustomsPrinciple of Res Judicata - determination of value to be adopted for the clearances made to the DTA Unit - rejection of declared transaction value - enhancement of declared values by the specified officer, MEPZ-SEZ in respect of DTA clearances - payments done under protest or not - violation of the Principle of Natural Justice. Determination of value - HELD THAT - Before July 2018, the Appellant supplied the imported chemicals to its branch in DTA. However, from July 2018 onwards, the Appellant supplied the goods to its wholly owned subsidiary Viz. Tokyo Chemical Industry (India) Private Limited, a DTA unit. The SVB vide Order-in-Original No.22881/2013 dated 11.12.2013 held that the declared value could be accepted as transaction value under Rule 3(3)(a) of CVR, 2007 for the purpose of assessment of duty in respect of imports up to December 2011 and since January 2012, declared value could be adopted as transaction value with usual additions under Rule 10(2) ibid. The appellant s declared values have been accepted as the transaction value under Rule 3(3)(a) of Customs Valuation Rules, 2007 for the purpose of assessment of duty. It was also observed that the exporting company in Japan was selling to unrelated buyers in India prior to January 2012 at a slightly lower side than the prices at which these were sold to the appellant. The above decision will be valid if there is no change in the present method of invoicing or terms of the agreement and their relationship with the foreign supplier. Whenever, if it is noticed that contemporary imports at higher prices, the SVB, Chennai Customs has to be informed by the assessing groups to review the decision taken. The Assessing Authority has ordered for enhancement of the transaction value w.e.f. 05.10.2016. It appears that the enhancement in the values was based on the Cost Sheet provided by the Appellant - the SVB have not communicated to the Appellant the outcome of filing of Annexure-I to Circular dated 46/2016 for renewal of SVB order. Payment under protest or not - HELD THAT - The specified officer of MEPZ-SEZ vide letter dated 04.09.2018 informed the Appellant that no speaking order could be issued as the assessment was already complete as per the self-declaration and the payment under Protest Option was not exercised - The conduct of specified officer, MEPZ-SEZ in not issuing any speaking order while ordering enhancement of the values for clearances to DTA though repeatedly the appellant has made such a request is to be critically viewed. In respect of related parties transaction, it is the practice to refer it to SVB section for carrying out specialised investigation. At the relevant period, the Assessing Officer in MEPZ-SEZ is required to comply with the directions issued in SVB order dated 11.12.2013 - the Appellant filed an appeal before the Appellate authority who, instead of delving into the merits of the case, preferred to dismiss the appeal vide impugned order dated 22.06.2020 on the principle of res judicata, being aware that the appeal preferred previously was with reference to clearances to the branch Unit on 05.10.2016 whereas the subject clearances against which appeal was filed before the authority was in respect of clearances during 24th to 29th January 2020 to their subsidiary company. Hence, we find that the impugned order is not legal or logical and requires to be set aside. The impugned order dated 22.06.2020 of Commissioner of Customs (Appeals), Chennai deserves to be set aside, as there was no discussion in regard to blatant violation of principles of natural justice by the specified officer, MEPZ-SEZ in enhancement of the value unilaterally without intimating the reasons therefor. The appellant was forced to clear the goods to their DTA Unit at enhanced rates where the Special Valuation Branch, Chennai Customs after detailed investigation accepted the declared value as the transaction value. In case, there is any change in the method of invoicing or if any contemporary goods are imported at higher prices or for any other reason, the specified officer must have taken it up with the SVB, Chennai for review. The impugned order dated 22.06.2020 issue by the Lower Appellate Authority is devoid of any merits and is required to be set aside - the entire issue of enhancement of the values of clearances to the DTA Unit by the appellant is required to be looked into afresh, and so, ordered to be remanded to the Original Authority for issuing a well-reasoned Speaking Order for determination of the values in terms of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007. The appeal is allowed by way of remand.
Issues Involved:
1. Legality of enhancement of declared values by the specified officer, MEPZ-SEZ. 2. Treatment of payments made by the Appellant as payments under protest. Detailed Analysis: 1. Legality of Enhancement of Declared Values: The Appellant, engaged in warehousing and trading of chemicals, challenged the enhancement of declared values by the specified officer, MEPZ-SEZ, for clearances to their DTA unit. The Special Valuation Branch (SVB) had previously accepted the declared values as transaction values under Rule 3(3)(a) of the Customs Valuation Rules, 2007. However, the specified officer, MEPZ-SEZ, enhanced the value by loading 90% on the import prices without issuing a speaking order, despite repeated requests from the Appellant. This enhancement was based on the prices sold by the DTA unit to its prospective customers, which the Appellant contested as arbitrary and without legal basis. The specified officer's failure to issue a speaking order violated principles of natural justice and procedural requirements under Section 17(5) of the Customs Act, 1962, which mandates passing a speaking order within 15 days from the date of re-assessment of the Bills of Entry. 2. Treatment of Payments as Payments Under Protest: The Appellant had been discharging duty on enhanced values since 05 October 2016 and had communicated their disagreement with the valuation determined by the department. Despite this, the specified officer did not issue any speaking order justifying the enhancement of value. The Appellant's payments were considered as made under protest, and thus, the time limit prescribed under Section 27 of the Act for filing a refund application did not apply. The Tribunal referred to the case of Commissioner of Cus, C. Ex. & ST., Guntur Vs. Fairway Trading Company Pvt. Ltd., which held that payments made under protest should be treated as such even if there is no specific procedure prescribed in Customs law for payment under protest. Conclusion: The Tribunal found that the specified officer, MEPZ-SEZ, had violated principles of natural justice by unilaterally enhancing the assessable value without issuing a speaking order. The impugned order dated 22.06.2020 by the Commissioner of Customs (Appeals), Chennai, was set aside. The entire issue of enhancement of values was ordered to be remanded to the Original Authority for issuing a well-reasoned speaking order in terms of Section 14 of the Customs Act, 1962, read with Customs Valuation Rules, 2007, ensuring strict observance of principles of natural justice. The duty payments made at enhanced rates since 05.10.2016 were treated as payments made under protest, and no limitation would apply while processing the refund claim if the duties paid were found to be in excess. The remand proceedings were directed to be completed within three months from the date of communication of the order. Order: The appeal was allowed by way of remand, and the impugned order dated 22.06.2020 of the Commissioner of Customs (Appeals), Chennai, was set aside. The Tribunal ordered the Original Authority to re-examine the issue and issue a well-reasoned speaking order.
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