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TMI Blog2024 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... usual additions under Rule 10(2) ibid. The appellant s declared values have been accepted as the transaction value under Rule 3(3)(a) of Customs Valuation Rules, 2007 for the purpose of assessment of duty. It was also observed that the exporting company in Japan was selling to unrelated buyers in India prior to January 2012 at a slightly lower side than the prices at which these were sold to the appellant. The above decision will be valid if there is no change in the present method of invoicing or terms of the agreement and their relationship with the foreign supplier. Whenever, if it is noticed that contemporary imports at higher prices, the SVB, Chennai Customs has to be informed by the assessing groups to review the decision taken. The Assessing Authority has ordered for enhancement of the transaction value w.e.f. 05.10.2016. It appears that the enhancement in the values was based on the Cost Sheet provided by the Appellant - the SVB have not communicated to the Appellant the outcome of filing of Annexure-I to Circular dated 46/2016 for renewal of SVB order. Payment under protest or not - HELD THAT:- The specified officer of MEPZ-SEZ vide letter dated 04.09.2018 informed the Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the values in terms of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007. The appeal is allowed by way of remand. - MS. SULEKHA BEEVI C.S., MEMBER (JUDICIAL) AND MR. VASA SESHAGIRI RAO, MEMBER (TECHNICAL) For the Appellant : Ms. Tanushree Roy, Consultant Mr. Dushyant Minocha, Consultant For the Respondent : Mr. Anoop Singh, Authorised Representative ORDER M/s. TCI Chemicals (India) Private Limited, the Appellant herein has filed this appeal assailing the Order-in-Appeal No. 152/2020 dated 22.06.2020 passed by the Commissioner of Customs (Appeals-I), Chennai rejecting the appeal filed by the Appellant against the Speaking Order issued vide letter dated 20.02.2020 in F.No.02/SO/2018/MEPZ/Cus., by the Specified Officer, MEPZ-SEZ, on the principle of Res Judicata. The Appellant s name has undergone a change to M/s. Tokyo Chemical Industry (India) Private Limited. 2.1 The brief facts are that the Appellant, engaged in warehousing and trading of Organic Lab Chemicals, Fine Chemicals and Speciality Chemicals, is a unit operating from the MEPZ, Special Economic Zone which is a wholly owned subsidiary of M/s Tokyo Chemical Industry Company Limited, Japan from who ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... order for enhancement of value which did not happen. Meanwhile, the Appellant filed an appeal seeking refund of duty paid under protest before Commissioner (Customs-Appeals) who vide Order-in-Appeal No. 82/2018 dated 18.06.2018 rejected the appeal as time barred. The Appellant again insisted on the Specified Officer to issue a speaking order and the development Commissioner, MEPZ-SEZ vide letter bearing reference F.No. 02/SO/2015/MEPZ-Cus/4200 dated 04.09.2018 declined to issue any speaking order stating that assessment was already completed as per their self-declaration and duty was paid without any protest. 2.4 Vide Letter dated 20.02.2020 issued from F.No. 02/SO/2018/MEPZ/Cus., the Specified Officer, MEPZ, informed the Appellant that the value adopted for the clearance to their own branch was not accepted in terms of Section 14 of Customs Act, 1962 read with the Customs Valuation Rules (CVR), 2007. Aggrieved by such communication not revealing the methodology adopted for enhancement of value, the Appellant filed an appeal before Commissioner (Appeals) who vide Order-in-Appeal No. 152/2020 dated 22.06.2020 rejected the appeal on the principle of res judicata, mentioning the earl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sideration of all the relevant materials on record. The Commissioner (Appeals) having failed to do the required exercise in the matter in hand, his order cannot be sustained. (b) M/s. Commissioner of Central Excise, Bangalore vs. Srikumar Agencies [2008 (232) ELT 577 (SC)]:- 6. Since the factual position has not been analysed in detail, disposal of appeals by mere reference to decisions, was not the proper way to deal with the appeals. The CEGAT also does not appear to have dealt with the relevance and applicability of ITC's case (supra) on which strong reliance has been placed by learned Solicitor General. The CEGAT ought to have examined the cases individually and the articles involved. By clubbing all the cases together and without analyzing the special features of each case disposing of the appeals in the manner done was not proper... There are no analyses of the materials on record, nor the logical conclusions supported by reasons. The findings do not disclose consideration of all the relevant materials on record. The Commissioner (Appeals) having failed to do the required exercise in the matter in hand, his order cannot be sustained. (iii) The Appellant further averred th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the prospective customers. Thus, an enhancement of assessable value by 90% cannot be made applicable in this case and the value originally charged by the Appellant to DTA Unit should be construed at arm's length / transaction value. (vi) It was contested that the impugned order failed to appreciate that as per law the Appellant is entitled to a speaking order against which a valid appeal could be filed under Section 128 of the Customs Act. A mere endorsement on the BOE, finalizing the assessment to the prejudice of the Appellant is not an appealable order. The Specified Officer, MEPZ-SEZ has not issued any Impugned Speaking Order to the payment that is made under protest since 05 October 2016. The first Order was issued as per Section 17(5), for the duty paid under protest for the Bills of Entry dated 24 January 2020 to 29 January 2020. For the earlier Bills of Entry on which duty was paid under protest, there is no speaking order issued. Section 17 of the Customs Act requires the importer to self-assess the duty. However, on verification, if the proper officer finds that the self-assessment is not done correctly, then he may re-assess the duty leviable on such import of goods. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd to pass a speaking order . Even if without having for a speaking order, the petitioner files an appeal based on BOE that would also be maintainable. I am of opinion that in view of the categoric provision under Section 17(5) it was mandatory on the part of the 3rd respondent to pass a speaking order, in so far as in the BOE itself the petitioner has registered against such assessment which were followed by Ext. P4. Therefore, the petitioner was perfectly justified in finding for speaking order without which the petitioner cannot know the reasons for the assessment made by the 3rd respondent . In fact the limitation for filing appeal under Section 128 would start only from the date of communication of the decision or order to the petitioner. Clearly BOE is not a decision or order contemplated under Section 128. It can only be an order under Section 17(5) which has to be a speaking order . (c) Ingram Micro India (P) Ltd vs. Principal Commissioner of Customs, Chennai in [2017 (358) E.L.T. 125 (Mad.)]:- 27. The submission of the revenue that the petitioner should have filed an appeal after entering the BOE's does not impress me, as without a speaking order, the appeal, if any, p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eing finalized should be preceded by issue of notice, grant of personal hearing and a speaking order in case the contention of the importer is not accepted, yet the principles of natural justice have to be read into the Stature. It is only when a party is given an opportunity to point out its case against the proposed variation that mistakes in making the assessments could be prevented as the importer may have a complete answer to the objections of the revenue . While finalizing the BOE for the purpose of assessment, it would be incumbent upon the Assessing Officer to inform the importer what variation he proposes to make to the BOE as filed by the importer and the reasons for the same. This would give an opportunity to the importer to explain why the proposed variation in the BOE is uncalled for. If the explanation of the importer is accepted then the BOE would be assessed in accordance with the claim made by the importer or even if not accepted, the authority would be required to give reasons in support of its conclusion. This would undoubtedly curtail/reduce unwarranted litigation. The above process of natural justice is only in compliance with elementary principles of Rule of l ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er pointed out that in the earlier appeal filed before Commissioner of Customs (Appeals) on 21 February 2018 was not against a speaking order, whereas the appeal filed on 20 February 2020 is against the Impugned Speaking Order passed under Section 17(5), for the duty paid under protest on the BOE's filed between 24 January 2020 to 29 January 2020. The transaction in the earlier appeal was duty paid under protest on the clearances made from SEZ to Branch in DTA Unit. In the current appeal, the duty is paid under protest on the clearances made from SEZ to Wholly owned subsidiary unit in DTA. The Learned Commissioner of Customs (Appeals) erred that the principle of res-judicata can be invoked when the first judgment was not passed on merits. The Appellant's earlier appeal in the given case was rejected vide Order-in-Appeal C.Cus. I No. 82/2018 dated 18 June 2018, on the ground that the appeal filed was time barred. In this regard reliance was placed on the following decisions:- (a) Tilokchand Motichand Ors. Vs. H.B. Munshi An [1970 AIR 898 (SC)] held that if a petition under Art. 226 is dismissed not on merits but because an alternative remedy was available to the petitioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... to be issued or the refund claim has to be considered. It was further held that the officers of Customs are also required to follow the law and the refusal to collect correct rate of duty, compelling the Assessee to pay higher duty itself was wrong. The correct procedure would have been to resort to provisional assessment in which case, the Assessee would not have paid higher duty at all. Reliance was placed on the Hon ble CESTAT decision in the case of Redington India Ltd. vs Commissioner of Customs, Chennai [2011 (269) E.L.T. 233 (Tri.- CHENNAI)] wherein it was held that:- the main provision under Section 27(1) requires a refund claim to be filled within six months from the date of payment of duty. The second proviso to Section 27 (1) states that the limitation of Six month shall not apply where any duty has been paid under protest. Subsequently the forth proviso states that where the duty becomes refundable as a consequence of any judgement, degree, order or direction of the Appellate Authority, Appellate Tribunal or any Court, the limitation of six months shall be computed from the date of such judgement, decree, order or direction. Both these provisions require to be read har ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the Customs Act, 1962 and reliance was placed in this regard in the matter of Sanjivani Vs. Union of India [2015 (325) ELT 571 (All.)]. 4.3 It was averred that the declared value should be accepted for payment of Customs duty as the enhanced value is arbitrary and baseless. In this regard, it was pointed out that the interpretative notes to Rule 3(3) of Customs Valuation Rules, 2007, clarify the approach required to be followed to determine the price in case of imports from related person. Thus, it is sufficient, if condition stipulated in clause (a) of Rule 3(3) of the valuation Rules is satisfied. The interpretative notes also clarified that the Department is not required to investigate relationship if there no doubts about the acceptability of the price. It was pointed out that the department neither provided reasonable grounds for enhancement of value nor they have raised any doubts about the acceptability of the price. Accordingly, the declared price should have been accepted as the transaction value. Reliance was placed on the following decisions in support of this contention:- (a) Commissioner of Customs (Import), Mumbai Vs. Viacom Electronics Pvt. Ltd. [2017 (357) ELT ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) ELT 906 (Tri.-Del.)] 12. That so far the enhancement of value is concerned, we find that Rule 12(2)(iii)(d) is not applicable inasmuch as there is no mis-declaration of goods. We further find that the Department has not produced any evidence to show that the relationship between the parties has influenced the price. Therefore, we find that the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside. We also find the goods are not liable for confiscation as well. 13. Since the charges of misdeclaration undervaluation are not sustainable in law, the differential duty demand is liable to be set aside along with penalties imposed and redemption fine imposed. (b) Sanjivani Non-ferrous Trading Pvt. Ltd. Vs. CCE ST, Noida [2017 (7) GSTL 82 (Tri.-All.) (c) Commissioner of Customs, Mumbai Vs. Clariant (India) Limited [2007 (210) ELT 481 (SC)] 11. In the present case that is not so. The respondent here had conceded before the appellate authority that the two companies are related. We make it clear that merely because the two parties are related to each other will not amount to undervaluation per se. It will depend on the facts and circ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... action value under Rule 3(3)(a) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 with usual additions under Rule 10(2) ibid for the period since January 2012. However, if any contemporary imports at higher prices are noticed, assessment groups may evaluate the goods under appropriate provisions of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. 4. The importer shall make annual declaration to the undersigned regarding any change in mode of invoicing or terms of agreements and relationship with the Foreign Supplier. 5. This decision will remain in force till present method of invoicing remains unchanged. Any changes, affecting the invoice value materially, shall be informed to this SVB suo moto by the importer without delay. 6. If there is any change in the method of invoicing, terms of relationship or any other material facts affecting the valuation of goods under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14(1) of the Customs Act, the importer of the concerned assessing Group shall inform the same to SVB immediately so as to enable the review of the decisio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... import prices after calling for information from the appellant. The Appellant was stock transferring goods to their branch office in DTA with applicable additions of USD 3 or USD 5 as the case may be. The Assessing Authority has ordered for enhancement of the transaction value w.e.f. 05.10.2016. It appears that the enhancement in the values was based on the Cost Sheet provided by the Appellant. We find that the SVB have not communicated to the Appellant the outcome of filing of Annexure-I to Circular dated 46/2016 for renewal of SVB order. 10. No speaking order was issued by the specified officer, MEPZ-SEZ for nearly a year despite many request letters and the Appellant filed an appeal before the Appellate Authority in respect of duty payment covering the Bill of Entry No. 18514 dated 05.10.2016 for clearance to their own branch. The Appellate Authority, prima facie, without going into the merits of the case, dismissed the appeal on the ground of limitation where no speaking order was issued by the Assessing Authority. The Appellant inadvertently failed to exercise the option of Duty Payment under Protest and discharged the duty on the said Bill of Entry dated 05.10.2016 on self-as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lowing the appellant to submit his defence and by not according any opportunity of hearing. We find that the Appellant filed an appeal before the Appellate authority who, instead of delving into the merits of the case, preferred to dismiss the appeal vide impugned order dated 22.06.2020 on the principle of res judicata, being aware that the appeal preferred previously was with reference to clearances to the branch Unit on 05.10.2016 whereas the subject clearances against which appeal was filed before the authority was in respect of clearances during 24th to 29th January 2020 to their subsidiary company. Hence, we find that the impugned order is not legal or logical and requires to be set aside. 13. We find that Section 17 of the Customs Act, 1962 requires the importer to self-assess the duty. However, on verification, if the proper officer finds that the self-assessment is not done correctly, then he may re-assess the duty leviable on such import of goods. If the re-assessment is contrary to the self-assessment done by the importer, the proper officer is required to pass a speaking order on the re-assessment, within 15 days from the date of re-assessment of the Bills of Entry as pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed persons then after establishing that the price is not sole consideration the transaction value can be rejected and taking the other evidences into consideration the assessable value can be arrived at. Such exercise has not been done in these cases on hand. Therefore, we reject the enhancement of assessable value in respect of the Bills of Entry which are involved in all the appeals being decided and we restore the assessable value as declared by the appellant in said Bills of Entry. 8. In result, we set aside all the impugned Orders-in-Appeal and allow all the appeals. The appellant shall be entitled for consequential relief, if any, in accordance with law. 15. We find that the Appellant had been discharging the duty on the enhanced values since 05 October 2016. As many Letters were addressed asking for a Speaking Order, which was not issued, we order that all the payments made since 05.10.2016 at enhanced values are to be treated as having been made under protest and the time limit prescribed under Section 27 of the Act will not be applicable and the refund application cannot be considered as time barred. CESTAT Bangalore in the case of Commissioner of Cus, C. Ex. ST., Guntur V ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the decision of the CESTAT in the case of Redington India Ltd vs. Commissioner of Customs, Chennai [2011 (269) E.L.T. 233 (Tri.-CHENNAI)] which also supports the contention of the appellant. 16. To summarize, the impugned order dated 22.06.2020 of Commissioner of Customs (Appeals), Chennai deserves to be set aside, as there was no discussion in regard to blatant violation of principles of natural justice by the specified officer, MEPZ-SEZ in enhancement of the value unilaterally without intimating the reasons therefor. The appellant was forced to clear the goods to their DTA Unit at enhanced rates where the Special Valuation Branch, Chennai Customs after detailed investigation accepted the declared value as the transaction value. In case, there is any change in the method of invoicing or if any contemporary goods are imported at higher prices or for any other reason, the specified officer must have taken it up with the SVB, Chennai for review. 17. In view of the aforesaid discussion and appreciating the above case laws unilaterally enhancing the assessable value without issuing any speaking order though repeatedly asked for is in blatant violation of the procedures and absolutely ..... X X X X Extracts X X X X X X X X Extracts X X X X
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