2019 (10) TMI 550 - AT - Customs

Scope of SCN - Valuation of imported goods - whether the imported IQ/OQ documents should be included to the value of the equipment in terms of Rule 10(c) or not? - HELD THAT - The Order-in-Original did not accept the classification of IQ and OQ document / manual and classified the same under CTH 9027 9090. Aggrieved by the Order-in-Original, the appellant filed appeal before the Commissioner(Appeals) and Commissioner(Appeals) vide the impugned order has travelled beyond the scope of the adjudication order. Further, we find that the Commissioner(Appeals) has converted classification dispute into a valuation dispute as recorded in para 6 of the impugned order. The appeal before the Commissioner(Appeals) is also with regard to the classification issue but the Commissioner(Appeals) has wrongly converted the classification dispute into a valuation dispute and did not give any finding on the classification dispute as raised before him by the appellant. The impugned order is set aside as the same has travelled beyond the Order-in-Original and remand the matter back to the Commissioner(Appeals) to decide the issue of classification - appeal allowed by way of remand.

Summary

Issues: Classification dispute regarding imported IQ/OQ documents and their valuation.

Classification Dispute Analysis:
The appellant, a limited company manufacturing biotechnology drugs, imported Chromatography Columns and IQ/OQ documents. Customs authorities disputed the classification of IQ/OQ documents, classifying them as parts and accessories of equipment under CTH 9027 9090 instead of separately. The appellant argued that the documents were not essential for equipment functioning and were post-import record books for regulatory compliance. The Assistant Commissioner upheld the classification under CTH 9027 9090, leading to the appeal. The appellant contended that the impugned order exceeded the scope of the adjudication order and converted a classification dispute into a valuation issue. They cited various court decisions to support their argument.

Valuation Issue Analysis:
The Commissioner(Appeals) converted the classification dispute into a valuation issue, questioning whether the IQ/OQ documents should be included in the equipment's value under Rule 10(c). The appellant argued that the impugned order wrongly delved into valuation instead of focusing on classification. They referenced the Modi Xerox Ltd. case to support their stance. The appellant further contended that the IQ/OQ documents were post-import activities excluded from assessable value under Customs Valuation Rules. They emphasized that the documents were not parts or accessories of equipment under CTH 9027 9090. The learned counsel for the appellant presented a strong legal argument based on established legal principles and precedents.

Decision and Conclusion:
After considering both parties' submissions, the Tribunal found that the impugned order strayed beyond the adjudication order's scope by converting a classification dispute into a valuation issue. Citing legal precedents, the Tribunal concluded that the impugned order was unsustainable and ordered a remand to the Commissioner(Appeals) to decide the classification issue. The Tribunal highlighted the Commissioner(Appeals)' failure to address the classification dispute raised by the appellant. The appeal was allowed for remand, emphasizing adherence to natural justice principles in the redetermination of the classification issue.

This detailed analysis covers the classification dispute, valuation issue, legal arguments presented by both parties, the Tribunal's decision, and the subsequent remand for further adjudication.