2019 (9) TMI 651 - AT - Customs

Valuation of imported goods - import of HSS Drills - rejection of declared value - enhancement of value - re-assessment done without following the procedure - Commissioner (Appeals) directed the revenue to conduct audit - Section 17(6) of the Customs Act, 1962 - HELD THAT - On going through the records of the case, it is seen that the value of the goods imported vide Bill of Entry No. 5500405 dated 19/12/2011 has been increased and the Respondents have cleared the goods by paying duty of ₹ 8,59,459. However, it is not clear as to whether the Respondent have contested the loading of the value or whether duty has been paid under protest. Further, it is not coming forth by records whether the provisions of Section 17(5) of the Customs Act, 1962 have been complied with or otherwise. From a plain reading of the provisions of Section 17(6) give an understanding that the same would be necessitated when reassessment has not been done or when a speaking order has not been passed on reassessment - There is certainly a change in the value initially declared and the value on which duty was paid and goods were given out of charge. However, it appears that as the respondent is not satisfied with the value adopted, they filed an appeal. Understandably, if the value has been changed by the respondents themselves, there would be no cause for an appeal which would have been against their own assessment as the self-assessment regime is under place - Therefore, it can be deemed that there was a reassessment, understandably, without following the procedure. Under the circumstances, conducting audit would not serve any purpose and would result in absurd situation as contended by Revenue. The situation envisaged under Section 17(6) is not applicable to such circumstances. The appeal filed by the department is allowed by way of remand to the Commissioner Appeals with a direction to decide the issue on merits - Appeal allowed by way of remand.

Summary

Issues:
1. Proper application of Section 17(6) of the Customs Act, 1962.
2. Validity of the direction given by the Commissioner (Appeals) for audit under Section 17(6).
3. Compliance with procedural requirements under Section 17(5) of the Customs Act, 1962.
4. Applicability of post-clearance audit in the given circumstances.

Analysis:
1. The case involved a dispute regarding the assessment of imported goods by M/s Hi-tech Corporation. The assessing authority had enhanced the declared value, leading to an appeal by the importer before the Commissioner (Appeals). The Commissioner (Appeals) remanded the case back to the original authority for audit under Section 17(6) of the Customs Act, 1962.

2. The Revenue appealed against the direction for audit on the grounds that Section 17(6) is intended for situations related to self-assessment under the accredited client program. The Revenue argued that compliance with the direction would result in passing a new order by an authority of the same rank on an issue already decided. Additionally, it was contended that the Commissioner (Appeals) should have passed an order on the merits of the case instead of directing for audit.

3. Upon review, the Tribunal found discrepancies in the records regarding whether the importer contested the enhanced value or paid duty under protest, as well as the compliance with Section 17(5) procedural requirements. The Tribunal noted that Section 17(6) is applicable when reassessment has not been done or a speaking order has not been passed, indicating a change in the initially declared value.

4. The Tribunal concluded that conducting an audit in this case would be unnecessary and could lead to an absurd situation, as the reassessment had been done by the department without following proper procedure. The Tribunal held that the Commissioner (Appeals) erred in directing for audit and remanded the case with a direction to decide the issue on merits instead.

In summary, the Tribunal allowed the department's appeal, remanding the case to the Commissioner (Appeals) for a decision on the merits of the case rather than proceeding with an audit under Section 17(6) of the Customs Act, 1962.