2024 (11) TMI 751 - AT - Customs

Demand of differential custom duty - enhancement of the valuation of goods cleared from SEZ Unit to the DTA - under valuation has been confirmed against the appellant s SEZ unit along with penalty and also imposed penalties on co-appellant who are appellant s DTA buyers of the goods - value of the goods cleared by SEZ unit is not proper and correct - HELD THAT - Whether the appellant being a SEZ Unit is required to pay the duty or the DTA buyer is required to pay the duty is a very contentious issue which needs to be dealt with applying the SEZ Act and Customs Act intendum. We find that the adjudicating authority has not given a proper finding on this issue. Second it is also observed that the Revenue has disputed the CAS-4 Certificate submitted by the appellant SEZ Unit in support of their declared value however the adjudicating authority has raised the dispute that certain expenditure such as R D etc. were not taken into consideration to arrive at the cost of the product in CAS-4, therefore he rejected the price arrived at on the basis of CAS-4 Certificate. We find force in the discussion of adjudicating authority however the appellant shall be granted an opportunity to explain the costing of the product arrived at in the CAS-4 Certificate. Therefore, on this count also, the matter needs to be reconsidered. Appellant have vehemently submitted that though the price of third party clearance was applied in the present case however the various factors such as the size of the manufacturing facility, turn over, quantum of clearance and the quality of products have to be considered to apply the price of comparable goods which in our view the adjudicating authority has not properly verified such factors, therefore, on this count also the matter needs to be reassessed. The appellant have also raised the issue of time bar, therefore, on all the issues, the adjudicating authority must give elaborate finding dealing with each and every defense made by the appellants. Thus, entire matter needs to be re-considered on all the issues.

Summary

Issues:
1. Confirmation of demand of differential custom duty on the ground of under valuation against SEZ unit and DTA buyers.
2. Rejection of CAS-4 Certificate submitted by the appellant.
3. Adoption of price of third party SEZ sale of goods in DTA.
4. Allegation of suppression of fact and time bar.

Analysis:
The judgment pertains to appeals challenging an order confirming the demand of differential custom duty on the basis of under valuation against the appellant's SEZ unit and DTA buyers, along with penalties imposed. The appellant contended that the SEZ unit and DTA buyers are related persons, hence the price enhancement based on another SEZ unit's pricing is unjustified. The appellant's Chartered Accountant argued that the demand is unsustainable as the SEZ supplier should not be held liable for duty, but rather the DTA buyer. Furthermore, it was highlighted that the Customs Valuation Rules were not followed, and the CAS-4 Certificate was wrongly discarded by the adjudicating authority, claiming certain expenditures were not considered. The appellant also argued that the demand is not sustainable due to IGST being available as input tax credit to the buyer, resulting in a revenue-neutral situation. Additionally, the appellant asserted that there was no suppression of fact and the demand is time-barred. Several judgments were cited in support of these contentions.

The Revenue, represented by the Assistant Commissioner, reiterated the findings of the impugned order without introducing new arguments. However, upon careful consideration, the Tribunal found merit in the appellant's submissions. The Tribunal observed that the issue of whether the duty liability lies with the SEZ unit or the DTA buyer requires a detailed analysis of the SEZ Act and Customs Act. It was noted that the adjudicating authority failed to provide a proper finding on this critical issue. The Tribunal also acknowledged the dispute regarding the CAS-4 Certificate and the need for the appellant to explain the cost calculation in detail. Moreover, the Tribunal agreed with the appellant's contention that various factors such as manufacturing facility size, turnover, and product quality should be considered when adopting the price of comparable goods, which was not adequately verified by the adjudicating authority. The issue of time bar was also raised, emphasizing the necessity for elaborate findings on all defenses presented by the appellant. Consequently, the Tribunal set aside the impugned order and remanded the matter to the adjudicating authority for a fresh de-novo order, emphasizing the need for comprehensive reconsideration on all issues.

In conclusion, the judgment highlights the complexities surrounding the valuation of goods cleared from SEZ units to DTA buyers, emphasizing the importance of thorough analysis and proper application of relevant laws and regulations in determining customs duty liabilities. The decision to remand the matter underscores the significance of addressing all raised issues comprehensively to ensure a just and well-founded outcome.