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2021 (3) TMI 1068 - HC - CustomsValuation - related party transaction - respondent has furnished the Impugned Investigation Report concluding that the petitioner s relationship with its group companies has influenced the declared prices warranting intervention and opining that the declared prices are to be rejected under Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - whether the impugned Investigation Report is issued in violation of the principles of natural justice, and if it is issued in violation of the principles of natural justice, what would be the appropriate order? - HELD THAT - When the procedure laid down in the Circular dated 09.02.2016 in No.5/2016 is examined as against these factors, there cannot be any doubt that a Deputy Commissioner, or an Assistant Commissioner (SVB), in furnishing an Investigative Report discharges a quasi-judicial function with the responsibility of extending suitable opportunity to submit evidence and to render an investigative finding with the grounds substantiating such finding. Further, the investigative finding by a Deputy Commissioner, or an Assistant Commissioner (SVB), in the scheme of the procedure contemplated under the Circular dated 09.02.2016, cannot be called as an institutional decision, the hallmark of which is a decision taken by a large number of people who take part in the collective decision-making process rather than one designated person. The Hon ble Supreme Court in Automotive Tyre Manufacturers Association v. Designated Authority and Others 2011 (1) TMI 7 - SUPREME COURT after an overview of the decisions on compliance with the principles of natural justice has held that principle holds good irrespective of whether the power conferred on a statutory body or Tribunal is administrative or quasi-judicial - It is further declared in this decision that it is trite that the concept of natural justice can neither be put in a strait-jacket nor is it a general rule of universal application. There can be exceptions to the said doctrine, but the question whether the principle has to be applied or not is to be considered bearing in mind the express language and the basic scheme of the provision conferring the power; the nature of the power conferred and the purpose for which the power is conferred and the final effect of the exercise of that power. It is only upon a consideration of these matters that the question of application of the said principle can be properly determined. In the light of the undisputed fact that the personal hearing was held by Sri. H.C. Neelakantarya, the then Assistant Commissioner of Customs SVB and the Investigative Report is filed by the incumbent Assistant Commissioner Sri. K.S.V.Murthy, this Court will have to opine that this procedure, as held by the Hon ble Supreme Court, offends one of the basic principles. Therefore, the impugned Investigating Report is liable to be quashed - petition allowed.
Issues Involved:
1. Violation of principles of natural justice in issuing the Investigation Report. 2. Appropriate order if the Investigation Report is found to violate principles of natural justice. Detailed Analysis: Violation of Principles of Natural Justice: The petitioner, a 100% subsidiary of a Swiss company, engaged in importing aromatic chemicals and other materials, challenged an Investigation Report dated 17.09.2018 issued by the Assistant Commissioner of Customs, Special Valuation Branch (SVB), Bengaluru. The report concluded that the petitioner's relationship with its group companies influenced the declared prices, warranting rejection under the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The petitioner argued that the report violated principles of natural justice as the personal hearing was conducted by one officer (Sri. H D Neelakantaraya), but the report was issued by another officer (Sri K.S.V.Murthy). The petitioner relied on the Supreme Court's decision in Gullapalli Nageswar Rao vs. Andhra Pradesh State Road Transport Corporation, which held that personal hearing by one officer and decision by another violates natural justice. The respondent countered that the report was an institutional decision and no specific officer was mandated to conduct the hearing and issue the report. They cited the Supreme Court's decision in Kalinga Mining Corporation vs. Union of India, which supported institutional decisions. They also argued that the petitioner did not demonstrate any prejudice caused by the alleged violation, referencing Dharampal Styapal Ltd. v. Deputy Commissioner of Central Excise. Appropriate Order: The court examined the Circular dated 09.02.2016, which outlines the procedure for SVB inquiries. It mandates that the Assistant Commissioner must provide a suitable opportunity for the importer to submit evidence and must render an investigative finding with grounds for acceptance or rejection of the transaction value. The court referred to the Supreme Court's decision in Automotive Tyre Manufacturers Association v. Designated Authority, emphasizing that unless explicitly excluded, principles of natural justice must be observed, especially when decisions have adverse civil consequences. The court concluded that the procedure followed in this case, where the personal hearing was conducted by one officer and the report issued by another, violated the principles of natural justice. It reiterated the need for the same officer to conduct the hearing and issue the report to ensure fairness and transparency. Order: 1. The writ petition is allowed. 2. The impugned Investigation Report dated 17.09.2018 is quashed. 3. The Assistant Commissioner of Customs (SVB), Bengaluru, is directed to extend a personal hearing to the petitioner and furnish a new Investigation Report within two months from the date of receipt of the court's order.
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