2024 (12) TMI 960 - AT - Customs

Valuation of goods - Inclusion of royalty agreed upon in contracts of the appellant herein with M/s Henkel AG Co, KGaA in the assessable value - rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - HELD THAT - The appeals filed before the Tribunal, from the enablement under section 129 of Customs Act, 1962, should be by a person and, in one against an order of Commissioner of Customs (Appeals), under section 128A of Customs Act, 1962, should have been caused by grievance against decision or order passed under the Act by an officer of customs lower in rank than Principal Commissioner or Commissioner; in relation to assessment, it should have stemmed from final determination, either under section 17 of Customs Act, 1962 or under section 18 of Customs Act, 1962, by proper officer so empowered. Normally, under section 17 of Customs Act, 1962, the proper officer should either not interfere in the assessment of duty liability determined by importer or exporter on goods that have been entered for import or for export, under section 46 or under section 50 of Customs Act, 1962, as the case may be, or undertake re-assessment of duty on goods entered for import under section 46 or for export under section 50 of Customs Act, 1962, as the case may be. In the absence of details of bills of entry filed under section 46, which, presumably, pertained to the decision of the original authority that was cause of grievance to the jurisdictional Commissioner of Customs, in the light of no disputation on that score, infer the grievance to have arisen from finalization of provisional assessment. Even so, there is no finalization inasmuch as it was the responsibility of the proper officer to bring the provisional assessment to final determination inclusive of differential duty; such re-determination being integral to finalization under section 18(2) of Customs Act, 1962 is not amenable to alienation either to subordinate in hierarchy with adjudication acknowledging no superior other than appellate or by defering to the future. The order impugned before the first appellate authority could, in the absence of finalization of differential duties of customs, have caused grievance only by lack of having been completed; such finalization having been ordered in that decision was no decision and not appealable as long as the assessments were not finalized for each bill of entry. The first appellate authority entertained, and granted relief, beyond its jurisdiction. Not having been within the jurisdiction of the first appellate authority, such premature disposal was incorrect. The lack of jurisdiction of the first appellate authority infects the decision on merits and that contagion cannot be kept alive and there are no option but to invalidate the order as of essence to resolve the existential crisis. The impugned order is set aside - appeal allowed.

Summary

Issues: Existential crisis of the Tribunal, Inclusion of royalty in transaction value, Jurisdiction of the first appellate authority

In this judgment by the Appellate Tribunal CESTAT MUMBAI, the Tribunal addresses the existential crisis it faces due to being embroiled in a dispute regarding the inclusion of 'royalty' in the transaction value of imported goods. The genesis of the grievance lies in contracts between the appellant and other entities, triggering an investigation by the Special Valuation Branch (SVB) under the Customs Act, 1962. The SVB found that 'royalty' was not to be included in the transaction value as per Customs Valuation Rules, leading to a show cause notice proposing additions to the declared value. The jurisdictional Commissioner of Customs appealed the decision, which was affirmed by the Commissioner of Customs (Appeals), Mumbai. However, the appellate order lacked reference to specific bills of entry, causing doubts about the empowerment under the invoked statute.

The Tribunal heard arguments on the includability of 'royalty' under Customs Valuation Rules. Despite references in the show cause notice and the impugned order, doubts arose due to the absence of import details and specific references in the proceedings. The appellant produced bills of entry, but without mention in the show cause notice, their relevance to the dispute was questioned. The Tribunal highlighted the absence of clarity on duty liability and the lack of specifics in the appellate structure's engagement with the assessment dispute.

The Tribunal delved into the legal provisions governing appeals under the Customs Act, emphasizing the role of the 'proper officer' in finalizing assessments and differential duties. It outlined the process of provisional assessment under section 18(2) of the Customs Act and the necessity for final determination by the 'proper officer.' The Tribunal concluded that the first appellate authority had prematurely disposed of the matter beyond its jurisdiction, leading to the invalidation of the order.

In setting aside the impugned order, the Tribunal clarified that the decision was without prejudice to any remedies arising from the finalization of provisional assessments by the 'proper officer.' The judgment aimed to resolve the existential crisis faced by the Tribunal and underscored the importance of adherence to jurisdictional boundaries in appellate proceedings under the Customs Act, 1962.