Case Law Details
Union of India Vs Sri Rumon Dey (Tripura High Court)
Material Facts
The Revenue appealed against the CESTAT, Kolkata order dated 19.06.2023. Two show cause notices dated 05.11.2014 alleged that the respondent had evaded additional customs duty of ₹12,113 and ₹72,677 by undervaluing cement imported from Bangladesh through Agartala Land Customs Station, alleging that cement from the same manufacturer imported through other ports carried a higher MRP of ₹320 per 50 kg bag.
Procedural History
The Adjudicating Authority, by orders dated 06.10.2015, confirmed the duty demands and imposed equal penalties. The Commissioner (Appeals), Guwahati, upheld the orders on 05.02.2016. The respondent then succeeded before CESTAT, Kolkata, which set aside the demand. The Revenue challenged that order before the Tripura High Court.
Legal Issues
- Whether CESTAT wrongly interpreted the Supreme Court’s decision in ITC Ltd.
- Whether the differential duty demand could be sustained without challenging the importer’s self-assessment of the Bills of Entry.
- Whether the CESTAT order was perverse in view of the Explanation to the proviso to Section 3(2) of the Customs Tariff Act, 1975.
Parties’ Submissions
The respondent contended that the self-assessed Bills of Entry had never been challenged by the Department and had therefore attained finality. It also submitted that differences in MRP were natural since the goods were imported through different ports.
The Revenue raised two substantial questions of law regarding the interpretation of the Supreme Court’s judgment in ITC Ltd. and the legality of the CESTAT order.
Findings and Reasoning
The High Court held that the Supreme Court’s decision in ITC Ltd. clearly requires the Department to challenge and modify the self-assessment of Bills of Entry under Section 128 or other relevant provisions before demanding differential duty. It was undisputed that the Department had never challenged the respondent’s self-assessment.
The Court also accepted the Tribunal’s reasoning that imports through different ports could legitimately have different MRPs and that there was no evidence that the price difference resulted from suppression of value. The Tribunal’s reasoning was held to be plausible and not perverse.
The Court additionally observed that the appeal involved only about ₹73,000 and remarked that it ought not to have been filed.
Final Ruling
The Tripura High Court found no merit in the Revenue’s appeal and dismissed it. Pending applications, if any, also stood disposed of. No order as to costs was passed.
FULL TEXT OF THE JUDGMENT/ORDER OF TRIPURA HIGH COURT
This appeal has been preferred by the Revenue challenging the order dt.19.06.2023 passed in Customs Appeal No.75364 of 2016 of the CESTAT, Kolkata.
2. The brief facts are that the respondent was issued with two show cause notices both dated 05.11.2014 alleging that he has evaded additional duties of customs amounting to Rs.12,113/- and Rs.72,677/- respectively by way of undervaluation in as much as cement from the same manufacturer in Bangladesh imported through Agartala, Land Customs Station (LCS, for short) was having a higher MRP of Rs.320/- per bag of 50 kg.
3. The Adjudicating Authority by the orders-in-original both dt. 06.10.2015, confirmed the demands and imposed equal amount of duty as penalty.
4. Challenging the same, the appellant filed an appeal before the Commissioner (Appeals), Guwahati, on the ground that the impugned Bills of Entry duly which were self-assessed, were not challenged by the department, and hence they became final.
5. But the Commissioner (Appeals), Guwahati, vide order in appeal dt. 05.02.2016 upheld both the orders-in-original and rejected the appeal filed by the appellant.
6. Challenging one of the said orders, the respondent approached the CESTAT, Kolkata Bench.
7. The CESTAT, Kolkata Bench, considered the submissions of the parties and held as under:
“6. The Appellant contended that the impugned Bills of Entry duly self-assessed were not challenged by the department and hence became final. As held by the Hon’ble Supreme Court in the case of ITC Ltd, unless the original Assessment by the assessing officer is challenged, the department cannot demand differential duty subisequently by issuing a demand. Notice.
7. The Appellant cited the decision of the Hon’ble Supreme Court in the case of I.T.C. vs. Commissioner of Central Excise, New Delhi [2019(368) ELT 216 (SC)] wherein it has been held that the department cannot demand differential duty without challenging the self-assessment made by the importer. Accordingly they contended that the impugned order is not sustainable.
8. The Ld A.R reiterated the findings in the impugned order
9. The issue involved in the present appeal is undervaluation of cement imported from Bangladesh. The department alleged that the declared MRP of the cement imported by the Appellant was much less as compared to the MRP declared on the cement imported from the same manufacturer through other ports. We observe that different lots of the impugned goods were imported by different importers through different land ports though the goods were manufactured by the same manufacturer in Bangladesh. The Appellant stated that the MRP printed on the goods imported through other ports can be different as the Place of importation itself was different and hence difference in MRP is quite natural. We observe that MRP on the same item is decided in consideration of a number of factors besides landing cost and duty element. In the instant case the goods were imported through different ports. That itself is a valid reason for the difference in price. There is no evidence to suggest that the goods so imported through different ports under different MRP were being sold at same price. Hence, the price difference cannot be attributed to suppression of the value by the Appellant. Accordingly, we hold that the demand is not sustainable.
10. We observe that the self-assessment of the Bills of Entry by the importer was not challenged by the department. The Hon’ble Supreme Court in the case of ITC Ltd, has held as under:
47. When we consider the overall effect of the provisions prior to amendment and post-amendment under Finance Act, 2011, we are of the opinion that the claim for refund cannot be entertained unless the order of assessment or self-assessment is modified in accordance with law by taking recourse to the appropriate proceedings and it would not be within the ken of Section 27 to set aside the order of self-assessment and reassess the duty for making refund; and in case any person is aggrieved by any order which would include self-assessment, he has to get the order modified under Section 128 or under other relevant provisions of the Act.
11. We observe that the ratio of the above said decision is squarely applicable in this case. We find that the impugned order passed demanding differential duty without challenging the original assessment of the Bills of entry is not sustainable. Hence, the demand is not sustainable on this count also.”
8. In this appeal, the counsel for the appellant raised two substantial questions of law which are as under:
“SUBSTANTIAL QUESTIONS OF LAW
i. Whether CESTAT, Kolkata has wrongly interpreted the Hon’ble Apex Court’s judgment of ITC Vs. Commissioner of Central Excise, Kolkata IV, 2019 (368) ELT 216 (SC)?
ii. Whether the impugned judgment passed by the Hon’ble CESTAT is perverse and suffers from illegality in view to the Explanation to the proviso to sub-section 2 of Section 3 of the Customs Tariff Act, 1975?”
9. The judgment of the Supreme Court in ITC specifically lays down that the self-assessment of the Bills of Entry by the importer has to be challenged by the department and it should be got modified under Section 128 or under other relevant provisions of the Act., if not the same has to be accepted by the department.
10. The learned Tribunal had correctly applied the said principle to the facts of the case as it is not the case of the appellant that it had challenged at any point of time the self-assessment of the Bills of Entry by the respondent.
11. Moreover, the reasoning given in paragraph no.09 of the impugned order is worthy of acceptance and is certainly plausible and based on the knowledge of the members of the Tribunal as to how imports coming through different ports are normally treated by the department itself. The reasoning given by the Tribunal cannot be said to be perverse. So we do not find any merit in this Appeal.
12. Also since value of this Appeal is very small i.e. of Rs.73,000/-, it ought not to have been filed by the appellant.
13. Therefore, the instant appeal fails and is dismissed. Pending application(s), if any, shall stand disposed of. No costs.
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