Setting aside order enhancing value, which was already accepted by the importer, unjustified

Commissioner of Customs Vs Manvi Exim Pvt. Ltd. (CESTAT Delhi)

Held that importer already accepted the enhanced value determined by the assessing officer, setting aside the said order on casual observation by the Commissioner (Appeals) is unsustainable in law

Facts-

The respondent had imported certain products and filed eight Bills of Entry on the basis of self-assessment. These Bills of Entry were assessed at higher values by the assessing authority on the basis of contemporaneous data which values were accepted by the importers in writing. The assessee accepted the value and after payment of duty in terms of the re-determination of the value, the eight appeals were filed by the respondent before the Commissioner (Appeals). The Commissioner (Appeals) set aside the assessment order, hence aggrieved revenue filed an appeal before CESTAT.

Conclusion-

As the enhanced value was accepted by the importer, the argument that NIDB data cannot be the sole basis to reject the transaction value without any cogent reason has no relevance.

The general observations made the Commissioner (Appeals) in the impugned order that the value declared in the Bills of Entry were being enhanced uniformly by the Department for a considerable period of time was uncalled for. The Commissioner (Appeals) completely failed to advert to the crucial aspect that the importers had themselves accepted the enhanced value. The Commissioner (Appeals) in fact, proceeded to examine the matter as if the assessing officer had enhanced the declared value on the basis of other factors and not on the acceptance by the importers. This casual observation is not based on the factual position that emerges from the records of the case. The Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry.

FULL TEXT OF THE CESTAT DELHI ORDER

All these appeals have been filed by the Department to assail the order dated 23.05.2019 passed by the Commissioner of Customs (Appeals), New Delhi¹, by which the eight appeals filled by M/s. Manvi Exim Pvt. Ltd.² before the Commissioner (Appeals), were allowed. The respondent had imported certain products and filed eight Bills of Entry on the basis of self assessment. These Bills of Entry were assessed at higher values by the assessing authority on the basis of contemporaneous data which values were accepted by the importers in writing. It is after payment of duty in terms of the re-determination of the value of the assessed goods by the assessing authority that the eight appeals were filed by the respondent before the Commissioner (Appeals).

2. It is not in dispute that the respondent had declared a certain value for the goods in the eight Bills of Entry. In Customs Appeal No. 52793 of 2019, the declared value was USD 1.03 per kg. The proper officer doubted the value of the goods declared by the respondent since the contemporaneous data in respect of the goods imported was USD 1.94 per kg. On being confronted with this contemporaneous data, the respondent submitted letters specifically stating that it agreed for enhancement of the value of goods to USD 1.94 per kg and that it did not desire that a show cause notice should be issued to it or personal hearing be provided to it, which requirements are set out in section 124 of the Customs Act, 1962³. It also stated that it did not desire that a speaking order, as contemplated under section 17(5) of the Customs Act, should be passed on the Bills of Entry. Similar letters were written by the respondent in the other appeals. In view of the specific requests made in the letters that were submitted by the respondent in regard to all the Bills of Entry that it had agreed for the declared value of the goods to be enhanced, the assessing officer assessed the value of the goods at the enhanced rate. It is after the payment of duty on the aforesaid assessments made by the assessing officer and after the “out of charge” date that the respondent filed eight appeals before the Commissioner (Appeals), which appeals were ultimately allowed by a common order dated 23.05.2019.

3. The Commissioner (Appeals) allowed the appeals primarily for the following reasons :

(i) The acceptance of the enhanced value proposed by the Revenue does not preclude an assessee from filing an appeal to challenge the assessment order;

(ii) An obligation was cast on the assessing officer to pass a speaking order disclosing the grounds for rejecting the declared value and only thereafter the proper officer could have resorted to enhancement of the value;

(iii) The declared value can be rejected on the basis of reasonable and cogent evidence only and the Revenue has to discharge this burden by proving that the invoice value did not represent the true transaction value in the international market;

(iv) For a considerable period of time, the Bills of Entry were being enhanced uniformly, which in the opinion of the Commissioner (Appeals), was not correct. Parameters like nature, quality, level of import, time etc. were required to be looked into while applying the value of contemporaneous imports;

(v) Unless there is an additional consideration involved or any of the exceptions of rule 4(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 ⁴ are attracted, the transaction value cannot be rejected. NIDB data alone cannot be made the basis of enhancement of value; and

(vi) In view of the judgment of the Supreme Court in C.E. & S.T., Noida vs. Sanjivani Non-Ferrous Trading Pvt. Ltd.⁵, the transaction value has to be arrived at on the basis of the price that is actually paid as provided by section 14 of the Customs Act and the declared price can be rejected only by giving cogent reasons, but no such exercise was undertaken by the assessing authority to reject the value declared in the Bills of Entry.

4. The relevant portions of the order passed by the Commissioner (Appeals) are reproduced below:

“5.3 The appellant has contended that the acceptance of enhanced value proposed by the Revenue during assessment and clearance to save demurrages by the appellant does not preclude from challenging the enhancement by way of appeal. I find considerable force in the contention of the appellant. The issue as to whether an assessee can file an appeal against assessment made in respect of Bill of Entry has been settled by judicial pronouncements. It is settled legal proposition that there is no estoppel in taxation matters. The Hon’ble Supreme Court in the case of Dunlop India Limited Vs. UOI reported in 1983(13) ELT 1566(SC) has laid down that even assuming that there is an acceptance it does not preclude the assessee from challenging by way of appeal as there cannot be an estoppel against law. Similar view was held in [2015(329) ELT 307(T)] and 2016(343) ELT 963(T).

5.4 The appellant has assailed that the enhancement of assessable value is arbitrary and illegal as the practice of not making the assessment on the declared value in terms of the mandate of Section 14 of the Customs Act, 1962 read with Rule 3 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 (CVR, 2007), is against the provisions of law. Rule 3 of CVR, 2007 provides that subject to Rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provision of Rule 10 and unless the price actually paid for the particular transaction falls within the exceptions in Rule 3(2), the Customs authorities are bound to assess the duty on the transaction value. There is no question of determining the value under the subsequent Rules if the same does not fall within the exception provided therein. The appellant relied upon the above mentioned judgments in their support.

5.5 I find that an obligation was cast on the assessing authority to pass a speaking order disclosing the grounds for rejecting the declared value and then resorting to loading and enhancement in value. The declared value can be rejected on the basis of reasonable and cogent evidence only and Revenue should discharge the heavy burden to prove that invoice value does not represent the true transaction value in the international market.

5.6 I find that in the Bills of Entry for a large period of time the assessable values are being enhanced uniformly which, in my view, is not correct. Parameters like nature, quality, level of import, time etc. are to be looked into while applying the value of contemporaneous imports. Uniform value loading in each Bill of Entry at uniform price on the basis of DRI Alerts, DGoV Circulars and other Standing orders, etc., is not in consonance with the provision of the Customs Act & Rules. ********

5.7 ********                    ********                 ********

5.8 It is settled law by the following decisions of the Hon’ble Supreme Court that unless there is additional consideration involved or any of the exceptions of Rule 4(2) is attracted, transaction value cannot be rejected :

********                ********                 ********

5.9 If the circumstances mentioned in proviso to Rule 4(2) are not applicable, the Department is bound to assess the duty of transaction value. NIDB data alone cannot be made basis of enhancement of value.

5.10 In the case of M/s Maruti Fabric Impex & Ors., where the enhancement of value was resorted to by the Department and was rejected by Commissioner of Customs (Appeals), Delhi and the matter travelled to the Hon’ble CESTAT by Department’s Appeal, the Hon’ble CESTAT vide Final Order No. C/A/51690-51694/2016-CU(DB) dated 27.04.2016 held that for rejecting the transaction value, first it has to be rejected as incorrect value and there being no evidence to show that the importer has paid over the above the transaction value to the seller of goods, there is virtually no reason to reject the transaction value. Similar view has been held by Tribunal in Final Orders C/A/52972/2016 dated 08.08.2016 and C/A/52685-86 dated 27.07.2016.

5.11 Hon’ble Supreme Court in the case of Noida Vs. M/s Sanjivani Non-Ferrous Trading Pvt. Ltd. (Civil Appeal No. 18300-18305/2017) held vide judgment dated 10.12.2018 that “The normal rule is that assessable value has to be arrived at on the basis of the price which is actually paid, as provided by Section 14 of the Customs Act. That the declared price could be rejected only with cogent reasons by undertaking the exercise as to on what basis the assessing Authority could hold that the paid price was not the sole consideration of the transaction value. Since there is no such exercise done by the Assessing Authority to reject the declared in the Bills of Entry, Order-in-Original was therefore clearly erroneous.”

********                ********                 ********

5.15 In view of the facts and findings, supra, I set aside the re-assessment of goods covered under the impugned Twenty Seven Bills of Entry. I allow the appeals filed by the appellant accordingly and restore the assessment at the declared values.”

(emphasis supplied)

5. Shri Rakesh Kumar and Shri Nagendra Yadav, learned authorized representatives appearing for the Department made the following submissions:

(i) The assessing officer had reason to doubt the accuracy of the value declared in the Bills of Entry submitted by the importers as they were grossly undervalued as compared to the contemporaneous import data and since the importers had submitted letters clearly stating that they have agreed for enhancement of the value and did not require any personal hearing or a speaking order, the assessing officer enhanced the value. Thus, once having accepted the value of the goods in writing, it was not open to the importers to challenge the value of the goods, nor was it open to the importers to file appeals for the reason that the requirement of not passing any speaking order is to reduce litigation;

(ii) The decisions relied upon by the Commissioner (Appeals) are clearly distinguishable on facts, as in the present case, letters were submitted voluntarily by the importers accepting the enhanced value based on contemporaneous data;

(iii) The findings of the Commissioner (Appeals) that the importers had accepted the value to avoid demurrages and detention is not borne out from the records;

(iv) The Commissioner (Appeals) was not justified in making a general statement about uniform enhancement of value by the assessing officer on the basis of NIDB data;

(v) The finding of the Commissioner (Appeals) that the valuation of the declared goods has to be first rejected under rule 12 of the Valuation Rules, is not correct in the facts and circumstances of the present case;

(vi) The Commissioner (Appeals) committed an error in observing that the assessing officer should have passed a speaking order, in view of the specific statements made by the importers that they did not want a speaking order;

(vii) The Commissioner (Appeals) was not justified in holding that the transaction value declared by the importers should have been determined in accordance with the provisions of section 14 of the Customs Act and rule 3 of the Valuation Rules; and

(viii) Reliance has been placed upon the order passed by the Tribunal in Commissioner of Customs Hanuman Prasad & Sons⁶, wherein similar orders passed by the same Commissioner (Appeals) were set aside and the appeals filed by the Department were allowed.

6. Shri Abhishek Jaju, learned counsel for the respondent made the following submissions:

(i) The acceptance of the enhanced value proposed by the Department does not preclude the assessee from challenging the enhancement through an appeal as there cannot be an estopple against law in taxation matters. In support of this contention reliance has been placed upon the decision of the Supreme Court in Dunlop India Ltd. Union of India⁷;

(ii) Section 17(5) of the Customs Act requires the adjudicating authority, in cases of re-assessment under section 17(4) of the Customs Act, to pass a speaking order. In fact, by a letter dated 15.03.2019 the respondent had requested the adjudicating authority to pass speaking orders in respect of the eight Bills of Entry but speaking orders were not passed. The enhancement of the assessed value is, therefore, arbitrary and illegal;

(iii) The Commissioner (Appeals) was justified in observing that the assessable values in the past in the Bills of Entry were enhanced uniformly; and

(iv) In similar matters, in the case of respondent itself, the Tribunal in Commissioner of Customs M/s. Manavi Exim Pvt. Ltd.⁸, had dismissed the appeals filed by the Department.

7. The submissions advanced by the learned authorized representatives appearing for the Department and the learned counsel for the respondent have been considered.

8. Section 14 of the Customs Act deals with ‘Valuation of Goods’ and is reproduced below:

“Section 14. Valuation of goods. – (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf:

Provided       ********”

9. It would be seen that section 14 of the Customs Act provides that the transaction value of goods shall be the price actually paid or payable for the goods when sold for export to India where the buyer and the seller of the goods are not related and the price is the sole consideration for the sale, subject to such other conditions as may be specified in the rules made in this behalf. The Valuation Rules have been framed in exercise of the powers conferred by section 14 of the Customs Act. Rule 12 deals with rejection of the declared value and is reproduced below:

“Rule 12. Rejection of declared value. – (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of sub-rule(1) of rule 3.

(2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1).

Explanation.-(1) For the removal of doubts, it is hereby declared that:-

(i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 9.

(ii) The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after the said enquiry in consultation with the importers.

(iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include –

(a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed;

(b )the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price;

(c) the sale involves special discounts limited to exclusive agents;

(d) the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production;

(e) the non declaration of parameters such as brand, grade, specifications that have relevance to value;

(f) the fraudulent or manipulated documents.”

10. Rule 12 provides that when the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of rule 3(1). Explanation (iii) to rule 12 provides that the proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons, which may include any of the six reasons contained therein, one of which is that there is a significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed.

11. The relevant portion of section 17(5) of the Customs Act is reproduced below:

“Section 17. Assessment of duty.- (1) An importer entering any imported goods under section 46, or an exporter entering any export goods under section 50, shall, save as otherwise provided in section 85, self- assess the duty, if any, leviable on such goods.

(2) The proper officer may verify the entries made under section 46 or section 50 and the self-assessment of goods referred to in sub-section (1) and for this purpose, examine or test any imported goods or export goods or such part thereof as may be necessary.

Provided that the selection of cases for verification shall primarily be on the basis of risk evaluation through appropriate selection criteria.

(3) For the purposes of verification under sub- section (2), the proper officer may require the importer, exporter or any other person to produce any document or information, whereby the duty leviable on the imported goods or export goods, as the case may be, can be ascertained and thereupon, the importer, exporter or such other person shall produce such document or furnish such information.

(4) Where it is found on verification, examination or testing of the goods or otherwise that the self- assessment is not done correctly, the proper officer may, without prejudice to any other action which may be taken under this Act, re-assess the duty leviable on such goods.

(5) Where any re-assessment done under sub- section (4) is contrary to the self-assessment done by the importer or exporter and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry or the shipping bill, as the case may be.”

12. It would be seen that though in a case where re-assessment has to be done under sub-section (4) of section 17 of the Customs Act, the proper officer is required to pass a speaking order on the re­assessment, but if the importer or exporter confirms his acceptance of the re-assessment, a speaking order is not required to be passed.

13. The Commissioner (Appeals), despite a categorical statement made by the importers that they did not desire a speaking order to be passed, observed “an obligation was cast on the assessing authority to pass a speaking order disclosing the grounds for rejecting the declared value and only then the assessing officer could have enhanced the value.” This finding of the Commissioner (Appeals) is perverse as it is clearly contrary to the specific statement made by the importers in the letters submitted by them to the assessing officer. What has also to be kept in mind is that section 17(5) of the Customs Act permits the importers to waive this right.

14. It is seen from a perusal of section 17(4) of the Customs Act that the proper officer can re-assess the duty leviable, if it is found on verification, examination or testing of the goods or otherwise that the self-assessment was not done correctly. Sub-section (5) of section 17 provides that where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer, the proper officer shall pass a speaking order on the re-assessment, except in a case where the importer confirms his acceptance of the said re­assessment in writing.

15. In the present case, as noticed above, the proper officer doubted the truth or accuracy of the value declared by the importers for the reason that contemporaneous data had a significantly higher value. It was open to the importers to require the proper officer to intimate the grounds in writing for doubting the truth or accuracy of the value declared by them and seek a reasonable opportunity of being heard, but they did not do so. On the other hand, the importers submitted in writing that though they had declared the value of the imported goods at a particular value, but on being shown contemporaneous data, they agreed that the value of the goods should be enhanced. The importers also specifically stated that they did not want to avail of the right conferred on them under section 124 of the Customs Act and, therefore, they did not want any show cause notice to be issued to them or personal hearing to be provided to them. The importers also specifically stated that they did not want a speaking order to be passed on the Bills of Entry. It needs to be noted that section 124 of the Customs Act provides for issuance of a show cause notice and personal hearing, and section 17(5) of the Customs Act requires a speaking order to be passed on the Bills of Entry, except in a case where the importers/exporters confirm the acceptance in writing.

16. It is no doubt true that the value of the imported goods shall be the transaction value of such goods when the buyer and the seller of goods are not related and the price is the sole consideration, but this is subject to such conditions as may be specified in the Rules to be made in this behalf. The Valuation Rules have been framed. A perusal of rule 12(1) indicates that when the proper officer has reason to doubt the truth or accuracy of the value of the imported goods, he may ask the importer to furnish further information. Rule 12(2) stipulates that it is only if an importer makes a request that the proper officer shall, before taking a final decision, intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared and provide a reasonable opportunity of being heard. To remove all doubts, Explanation 1(iii)(a) provides that the proper officer can have doubts regarding the truth or accuracy of the declared value if the goods of a comparable nature were assessed at a significantly higher value at about the same time.

17. Explanation (1)(i) to rule 12 of the Valuation Rules, however, provides that the rule only provides a mechanism and procedure for rejection of declared value and does not provide a method for determination of value and if the declared value is rejected, the value has to be determined by proceeding sequentially in accordance with rules 4 to 9.

18. In Century Metal Recycling Pvt. Ltd. Union of India⁹, the Supreme Court summarized the provisions of rule 12 of the Valuation Rules in the following manner:

“15. The requirements of Rule 12, therefore, can be summarised as under :

(a) The proper officer should have reasonable doubt as to the transactional value on account of truth or accuracy of the value declared in relation to the imported goods.

(b) Proper officer must ask the importer of such goods further information which may include documents or evidence.

(c) On receiving such information or in the absence of response from the importer, the proper officer has to apply his mind and decide whether or not reasonable doubt as to the truth or accuracy of the value so declared persists.

(d) When the proper officer does not have reasonable doubt, the goods are cleared on the declared value.

(e) When the doubt persists, sub-rule (1) to Rule 3 is not applicable and transaction value is determined in terms of Rules 4 to 9 of the 2007 Rules.

(f) The proper officer can raise doubts as to the truth or accuracy of the declared value on certain reasons which could include the grounds specified in clauses (a) to (f) in clause (iii) of the Explanation.

(g) The proper officer, on a request made by the importer, has to furnish and intimate to the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to the imported goods. Thus, the proper officer has to record reasons in writing which have to be communicated when requested.

(h) The importer has to be given opportunity of hearing before the proper officer finally decides the transactional value in terms of Rules 4 to 9 of the 2007 Rules.

16. Proper officer can therefore reject the declared transactional value based on certain reasons to doubt the truth or accuracy of the declared value in which event the proper officer is entitled to make assessment as per Rules 4 to 9 of the 2007 Rules. What is meant by the expression grounds for doubting the truth or accuracy of the value declared has been explained and elucidated in clause (iii) of Explanation appended to Rule 12 which sets out some of the conditions when the reason to doubt exists. The instances mentioned in clauses (a) to (f) are not exhaustive but are inclusive for there could be other instances when the proper officer could reasonably doubt the accuracy or truth of the value declared.”

(emphasis supplied)

19. It is non-consideration of the factual position emerging from the statements made by the respondent that led the Commissioner (Appeals) to believe that the declared value could be rejected only on the basis of reasonable and cogent evidence, which burden the Revenue failed to discharge as it could not prove that the invoice did not represent the true transaction value in the international market.

20. Despite the specific requests made by the importers in the letters submitted by them, it was sought to be contended by the importers in the appeals filed by them before the Commissioner (Appeals) that the transaction value of the imported goods alone should have been treated to be the value of the goods, as provided for under rule 3(1) of the Valuation Rules, since none of the conditions stipulated in the proviso to sub-rule (2) of rule 3 were attracted and in any case, if the declared value could not be determined under sub-rule (1) of rule 3, it was required to be determined by proceeding sequentially through rules 4 to 9.

21. Rule 3 of the Valuation Rules is, therefore, reproduced below:

“Rule 3. Determination of the method of valuation.-

(1) Subject to rule 12, the value of imported goods shall be the transaction value adjusted in accordance with provisions of rule 10;

(2) Value of imported goods under sub-rule (1) shall be accepted:

Provided that –

(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which –

(i) are imposed or required by law or by the public authorities in India; or

(ii) limit the geographical area in which the goods may be resold; or

(iii) do not substantially affect the value of the goods;

(b) the sale or price is not subject to some condition or consideration for which a value cannot be determined in respect of the goods being valued;

(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of rule 10 of these rules; and

(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below:

(3) ********                         ********                         ********

(4)If the value cannot be determined under the provisions of sub-rule (1), the value shall be  determined by proceeding sequentially through rule 4 to 9.”

22. The very fact that the importers had agreed for enhancement of the declared value in the letters submitted by them to the assessing authority, itself implies that the importers had not accepted the value declared by them in the Bills of Entry. The value declared in the Bills of Entry, therefore, automatically stood rejected. Further, once the importers had accepted the enhanced value, it was really not necessary for the assessing authority to undertake the exercise of determining the value of the declared goods under the provisions of rules 4 to 9 of the Valuation Rules. This is for the reason that it is only when the value of the imported goods cannot be determined under rule 3(1) for the reason that the declared value has been rejected under sub rule 2, that the value of the imported goods is required to be determined by proceeding sequentially through rule 4 to 9. As noticed above, the importers had accepted the enhanced value and there was, therefore, no necessity for the assessing officer to determine the value in the manner provided for in rules 4 to 9 of the Valuation Rules sequentially.

23. In this connection, it would be useful to refer to a decision of this Tribunal in Advanced Scan Support Technologies vs. Commissioner of Customs, Jodhpur¹⁰, wherein the Tribunal, after making reference to the decisions of the Tribunal in Vikas Spinners vs. Commissioner of Customs, Lucknow ¹¹ and Guardian Plasticote Ltd. vs. CC (Port), Kolkata¹², held that as the appellant therein had expressly given consent to the value proposed by the Revenue and stated that it did not want any show cause notice or personal hearing, it was not necessary for the Revenue to establish the valuation any further as the consented value became the declared transaction value requiring no further investigation or justification. Paragraph 5 of the decision is reproduced below:

“5. We have considered the contentions of both sides. We find that whatever may be the reasons, the appellant expressly gave its consent to the value proposed by Revenue and expressly stated that it did not want any Show Cause Notice or personal hearing. Even the duty was paid without protest. By consenting to enhancement of value and thereby voluntarily foregoing the need for a Show Cause Notice, the appellant made it unnecessary for Revenue to establish the valuation any further as the consented value in effect becomes the declared transaction value requiring no further investigation or justification. To allow the appellant to contest the consented value now is to put Revenue in an impossible situation as the goods are no longer available for inspection and Revenue rightly did not proceed to further collect and compile all the evidences/basis into a Show Cause Notice as doing so, in spite of the appellant having consented to the enhancement of value and requested for no Show Cause Notice, could/would have invited allegation of harassment and delay in clearance of goods. When Show Cause Notice is expressly foregone and the valuation is consented, the violation of principles of natural justice cannot be alleged. In the present case, while value can be challenged but such a challenge would be of no avail as with the goods not being available and valuation earlier having been consented, the onus will be on the appellant to establish that the valuation as per his consent suffered from fatal infirmity and such onus has not been discharged. Further, valuation of such goods requires their physical inspection and so re­assessment of value in the absence of goods will not be possible. The case of Eicher Tractors v. Union of India (supra) cited by the appellant is not relevant here as in that case there was no evidence that the assessee had consented to enhancement of value.”

(emphasis supplied)

24. In Vikas Spinners, the Tribunal dealing with a similar situation observed as under:

“7. In our view in the present appeal, the question of loading of the value of the goods cannot at all be legally agitated by the appellants. Admittedly, the price of the imported goods declared by them was US $ 0.40 per Kg. but the same was not accepted and loaded to US $ 0.50 per Kg. This loading in the value was done in consultation with Shri Gautam Sinha, the Representative and Special Attorney of the appellants who even signed an affirmation accepting the loaded value of the goods on the back of the Bill of Entry dated 7-5-1999. After loading of the value, the appellants produced the special import licence and paid the duty on the goods accordingly of Rs. 4,22,008/-on 19-5-1990. Having once accepted the loaded value of the goods and paid duty accordingly thereon without any protest or objection they are legally estopped from taking somersault and to deny the correctness of the same. There is nothing on record to suggest that the loaded value was accepted by them only for the purpose of clearance of the goods and that they reserved their right to challenge the same subsequently. They settled their duty liability once for all and paid the duty amount on the loaded value of the goods. The ratio of the law laid down by the Apex Court in Sounds N. Images, (supra) is not at all attracted to the case of the appellants. The benefit of this ratio could be taken by them only if they had contested the loaded value at the time when it was done, but not now after having voluntarily accepted the correctness of loaded value of the goods as determined in the presence of their Representative/Special Attorney and paid the duty thereon accordingly.”

(emphasis supplied)

25. In Guardian Plasticote Ltd., the Tribunal after placing reliance on the decision of the Tribunal in Vikas Spinners, had also observed as follows:

“4. The learned Advocate also cites the decision of the Tribunal in the case of M/s. Vikas Spinners v. C.C., Lucknow – 2001 (128) E.L.T. 143 (Tri.-Del.) in support of his arguments. We find that the said decision clearly holds that enhanced value once settled and duty having been paid accordingly without protest, importer is estopped from challenging the same subsequently. It also holds that enhanced value uncontested and voluntarily accepted, and accordingly payment of duty made discharges the burden of the department to establish declared value to be incorrect. In view of the fact that the Appellants in this case have not established that they had lodged any protest and on the contrary their letter dated 21-4-1999 clearly points to acceptance of the enhanced value by them, the cited decision advances the cause of the department rather than that of the Appellants contrary to the claim by the learned Counsel.”

(emphasis supplied)

26. In BNK Intrade (P) Ltd. Commissioner of Customs, Chennai¹³, the Tribunal observed as follows:

“2………. It is also to be noted that the importer had also agreed for enhancement of the price based on contemporaneous prices available with the Department. We, therefore, find no merit in the contention raised in the appeal challenging the valuation and seeking the refund of the differential duty paid by the appellants on enhancement.”

27. The following position emerges from the aforesaid decisions of the Tribunal:

(i) When an importer consents to the enhancement of value, it becomes unnecessary for the revenue to establish the valuation as the consented value, in effect, becomes the declared transaction value requiring no further investigation;

(ii) When an importer accepts the loaded value of the goods without any protest or objection, the importer cannot be permitted to deny its correctness; and

(iii) The burden of the Department to establish the declared value to be in correct is discharged if the enhanced value is voluntarily accepted.

28. This is precisely what was held by this Bench of the Tribunal in Hanuman Prasad & Sons.

29. The decisions on which reliance has been placed by learned counsel for the respondent were considered and distinguished by this Bench of the Tribunal in Hanuman Prasad & Sons.

30. Reliance was also placed by learned counsel for the respondent on a decision of the Tribunal in their own case. This decision was rendered on 21.10.2020, a day after the decision was rendered by this Bench of the Tribunal in Hanuman Prasad & Sons on 20.10.2020. In the said decision, a finding was recorded by the Tribunal that it was because the Department was coercing the importer that the importer by letter dated 01.03.2019 stated that the value of the goods could be re-determined. The Tribunal also noticed that such letter was given because of “undue influence” exerted by the officers of the Customs. This is not the situation in the present appeals and, therefore, the earlier decision rendered by the Tribunal on 21.10.2020 the matter of M/s. Manavi Exim Pvt. Ltd. would not help the respondent.

31. Learned counsel of the respondent also placed reliance upon the letter dated 20.03.2019 sent by the Assistant Commissioner to the Department in connection with the letter dated 15.03.2019 sent by the respondent to the assessing authority by which a request was made for a speaking order to be passed. This letter was submitted to the Department after the “out of charge date” under section 47 of the Customs Act. This factual position is also clear from the Table contained in the order dated 23.05.2019 passed by the Commissioner (Appeals) and it reproduced below:

32. The goods, therefore, had been cleared for home consumption and would no longer be “imported goods” under section 2(25) of the Customs Act. This letter would, therefore, not confer a right upon the respondent for a speaking order to be passed. It needs to be noted that the respondent deliberately waited for the goods to be cleared before submitting this letter. Such tactics cannot be appreciated nor any benefit can be taken, particularly when the importer had specifically stated in writing that neither it would require a show cause notice to be issued or a speaking order to be passed, as it was accepting the value proposed to be enhanced by the Department.

33. Learned counsel for the respondent has also emphasized that NIDB data cannot be the sole basis to reject the transaction value without any cogent reasons. As seen above, the importers had in writing accepted the transaction value and it is perhaps for this reason that they did not require any show cause notice to be issued to them or a personal hearing to be granted to them. The respondent is, therefore, not justified in asserting that the transaction value has been determined on the basis NIDB data. It was their acceptance of the value that formed the basis for determination of the value. The decisions relied upon by the respondent to support the contention sought to be raised are, therefore, of no benefit to them.

34. The general observations made the Commissioner (Appeals) in the impugned order that the value declared in the Bills of Entry were being enhanced uniformly by the Department for a considerable period of time was uncalled for. The Commissioner (Appeals) completely failed to advert to the crucial aspect that the importers had themselves accepted the enhanced value. The Commissioner (Appeals) in fact, proceeded to examine the matter as if the assessing officer had enhanced the declared value on the basis of other factors and not on the acceptance by the importers. This casual observation is not based on the factual position that emerges from the records of the case.

35. Thus, for all the reasons above, the Commissioner (Appeals) was not justified in setting aside the orders passed by the assessing officer on the Bills of Entry.

36. The order dated 23.05.2019 passed by the Commissioner (Appeals) allowing all the eight appeals filed by the respondent, therefore, deserves to be set aside and is set aside. All the eight appeals filed by the Department bearing Customs Appeal Nos. 52793 of 2019, 52794 of 2019, 52795 of 2019, 52796 of 2019, 52797 of 2019, 52798 of 2019, 52799 of 2019 and 52800 of 2019 are allowed.

(Order Pronounced on 04.07.2022)

Notes:-

1. the Commissioner (Appeals)

2. the respondent

3. the Customs Act

4. the Valuation Rules

5. 2019 (365) E.L.T. 3 (S.C.)

6. MANU/CE/0151/2020

7. 1983 (13) ELT 1566 (SC)

8. Customs Appeal Nos. 52124 to 52127 of 2019 decided on 21.10.2020

9. 2019 (367) E.L.T. 3 (S.C.)

10. 2015 (326) E.L.T. 185 (Tri. – Del)

11. 2001 (128) E.L.T. 143 (Tri. – Del)

12. 2008 (223) E.L.T. 605 (Tri. – Kol)

13. 2002 (140) E.L.T. 158 (Tri. – Del)