Commissioner of Customs Vs Artex Textile Private Limited (CESTAT Delhi)
CESTAT Delhi dismissed Revenue’s appeals challenging the common order of the Commissioner (Appeals), which had set aside enhancement of the declared transaction value in respect of 57 Bills of Entry filed by Artex Textile Private Limited for import of various kinds of polyester knitted fabrics of different weights and colours during the period from 8 June 2018 to 9 February 2019. The respondent importer had been regularly filing Bills of Entry at ICD Sonepat on the basis of self-assessment of customs duty on the declared transaction value. The Assistant/Deputy Commissioner of Customs, however, enhanced the value above the declared transaction value without passing a speaking order explaining the grounds for rejecting the declared value and adopting the enhanced value.
The importer challenged the reassessments before the Commissioner (Appeals), contending that its acceptance of the enhanced value proposed by Customs did not prevent it from challenging the reassessment in appeal. It relied upon Dunlop India Limited Vs Union of India, 1983 (13) ELT 1566 (SC) for the principle that there is no estoppel against law in taxation matters. It further contended that the declared transaction value had not been rejected in accordance with the Customs Act and Customs Valuation Rules and that the assessing authority had failed to proceed sequentially through the applicable valuation rules before determining a substituted value. The importer also referred to an earlier Order-in-Appeal dated 31.12.2014 in its own case involving similar imports, where reassessment had been set aside and the declared value accepted; that order had also been accepted by the Department and consequential refund granted.
The Commissioner (Appeals) accepted the importer’s contentions and restored assessment at the declared transaction value. It held that even if the importer had accepted the enhanced value during clearance, such acceptance did not prevent it from filing an appeal. The Commissioner (Appeals) further held that imported goods ordinarily had to be assessed on transaction value under Rule 3 read with Rule 12 of the Customs Valuation Rules, subject to the statutory exceptions. The assessing authority was required to disclose the basis for rejecting the transaction value and bore the burden of demonstrating that the invoice value did not represent the true transaction value.
The Commissioner (Appeals) also found that Customs had been enhancing declared values routinely over a considerable period without undertaking a proper comparison with contemporaneous imports having regard to relevant factors such as quality, level of import and timing. It held that loading based merely on DRI alerts, DGoV circulars or standing orders was not consistent with the Customs Act and Valuation Rules. Relying on Eicher Tractors Ltd., 2000 (122) ELT 321 (SC), it observed that unless the price actually paid in a transaction fell within the recognised statutory exceptions, Customs was required to assess duty on transaction value. It further held that NIDB data could not by itself constitute the sole basis for enhancement.
The Commissioner (Appeals) additionally relied upon the CESTAT Chandigarh decision in Commissioner of Customs, ICD, New Delhi Vs VSM Impex Pvt. Ltd., Final Order Nos. 63455-63456/2018 dated 25.10.2018, where on similar facts the Tribunal had dismissed the Department’s appeal and upheld relief granted by the Commissioner (Appeals).
Revenue challenged this relief before CESTAT primarily on the ground that Artex Textile had expressly accepted the re-determined value after examining contemporaneous import data. Revenue relied upon the importer’s written declaration stating that it voluntarily accepted rejection of the declared value and enhancement thereof and did not require a speaking order, show cause notice or personal hearing. Revenue therefore argued that Section 17(5) dispensed with a speaking order where an importer confirmed acceptance of reassessment in writing and that the importer could not subsequently challenge an assessment which it had voluntarily accepted. Revenue also relied upon Veera Ibrahim Vs State of Maharashtra, CCE Vs Systems and Components Private Limited, Jai Shiv Trading Co., CC Vs Sodagar Knitwear, Advanced Scan Support Technologies Vs CC and Surjeet Singh Chhabra Vs Union of India.
The importer opposed Revenue’s appeal and explained that it had accepted the enhanced value because it was under commercial pressure to secure immediate clearance of the imported goods and avoid continuing losses, including demurrage. According to the importer, seeking provisional assessment frequently resulted in delay in obtaining Out of Charge clearance and consequent demurrage liability. It also argued that the loaded values reflected in NIDB data were themselves enhanced values and therefore could not automatically constitute proper contemporaneous transaction values for assessment purposes.
CESTAT found merit in the importer’s position. The Tribunal recorded that assessing officers had been making enhancement in a routine manner and that regular importers were effectively left with little choice but to “sign on the dotted line” in order to obtain delivery of their goods, continue their business and avoid demurrage arising from delayed clearance. This factual finding was significant because it demonstrated that written acceptance of enhanced value during customs clearance could not automatically be treated as a voluntary and conclusive surrender of the importer’s right to dispute the valuation.
CESTAT relied upon its earlier Final Order Nos. 63455-63456/2018 dated 25.10.2018 and also noted that the earlier Order-in-Appeal dated 31.12.2014 in the respondent’s own case had been accepted. It therefore found no reason to interfere with the common order of the Commissioner (Appeals), which had set aside the reassessments and restored the declared transaction values. Accordingly, all appeals filed by Revenue were dismissed as being without merit, and the stay applications were also disposed of. The order was pronounced in court on 14.09.2020.
Cases Discussed
- Dunlop India Limited Vs Union of India, 1983 (13) ELT 1566 (Supreme Court) — Relied upon for the proposition that there is no estoppel in taxation matters and that acceptance of an enhanced value does not by itself preclude an importer from challenging the reassessment in appeal.
- Eicher Tractors Ltd., 2000 (122) ELT 321 (Supreme Court) — Relied upon for the principle that where the price actually paid for the particular transaction does not fall within the statutory exceptions, Customs is required to assess duty on the transaction value.
- Commissioner of Customs, ICD, New Delhi Vs VSM Impex Pvt. Ltd., Final Order Nos. 63455-63456/2018 dated 25.10.2018 (CESTAT Chandigarh) — Followed on similar facts while upholding the Commissioner (Appeals)’s order against routine enhancement of declared transaction value.
- Veera Ibrahim Vs State of Maharashtra, 1983 (13) ELT 1590 (Supreme Court) — Revenue relied upon this decision in support of its argument concerning statements/admissions made before Customs authorities.
- CCE Vs Systems and Components Private Limited, 2004 (665) ELT 136 — Relied upon by Revenue for the proposition that facts admitted need not be independently proved.
- Jai Shiv Trading Co. – 2018 (359) ELT 2018 (CESTAT Delhi) — Cited by Revenue in support of its challenge to the Commissioner (Appeals)’s order.
- CC Vs Sodagar Knitwear – 2018 (362) ELT 819 (CESTAT Delhi) — Relied upon by Revenue concerning customs valuation and acceptance of reassessment.
- Advanced Scan Support Technologies Vs CC – 2015 (326) ELT 185 (CESTAT Delhi) — Cited by Revenue in support of its case concerning acceptance of enhanced valuation.
- Surjeet Singh Chhabra Vs Union of India – 1997 (89) ELT 646 (Supreme Court) — Cited by Revenue among the authorities supporting reliance on an importer’s admission or acceptance.
FULL TEXT OF THE CESTAT DELHI ORDER
These appeals filed by Revenue along with stay applications against the impugned order whereby the Commissioner (Appeals) has set aside the enhancement made in the declared value in respect of 57 Bills of Entry which were filed by the respondent for import of various kind of polyester knitted fabric of different weight and colour during the period 8 June, 2018 to 9 February, 2019.
2. The brief facts are that the respondent importer of polyester knitted fabrics were filing Bill of Entry from time to time at ICD Sonepat on the basis of self assessment of duty on the declared transaction value. The Bills of Entry were assessed by Assistant/Deputy Commissioner of Customs, by enhancing the value over and above the declared value. However, no speaking order was passed giving reasons for rejection of the declared value and enhancement thereof.
3. Being aggrieved the appellant preferred 57 appeals before the Commissioner (Appeals), New Customs House, New Delhi-37 on the grounds inter alia that acceptance of enhanced value proposed by the Department, does not preclude them from challenging the order in appeal. The importer is not precluded from challenging the enhancement by way of an appeal, as there is no estoppel against the Rule, as held in the case of Dunlop India 3 Limited Vs. UOI- 1983 (13) ELT 1566 (SC). There is no proper rejection of declared value as required under Rule 14 of Customs Act read with Rule 3 of Customs Valuation Rules. Further, the adjudicating authority have erred in not proceeding sequentially from Rule 4 to 9 of the Rules for revaluation of the goods. Further Rule 3(1) and (2) of Customs Valuation Rules 2012 provides that assessment has to be done on the transaction value, save an except for reasons to be recorded for rejection of the same. The importer also placed reliance on Order-in- Appeal No. CC(A)/CUS/D-II/ICD/788-1083/2014 dated 31.12.2014 in their own case wherein they were challenging similar enhancement in respect of import of similar goods at ICD Patparganj and at ICD – TKD. By the said order in appeal the reassessment of the bills of entry was set aside and the declared value were accepted. The said order in appeal have also been accepted by the department and admissible refund has been granted.
4. The Commissioner (Appeals) was pleased to allow the appeals setting aside the reassessment of goods covered under the 57 bills of entry and restored assessment at the declared value observing as follows:
(i) There is no estoppel in taxation matters and the importers have rightly filed the appeals relying ruling of Hon’ble Supreme Court in the case of Dunlop India Limited Vs. UOI – 1983 (13) ELT 1566 (SC). Even assuming there is acceptance of the enhanced value does not preclude the importer from challenging the same by way of appeal.
(ii) The assessment of imported goods have to be done as per transaction value in view of Rule 3 read with Rule 12 of Customs Valuation Rules and adjusted in accordance with the provisions of Rule 10. Unless the particular transaction falls within the exceptions in Rule 3(2) of CVR, the Customs authorities are bound to assess the duty on the transaction values.
(iii) The adjudicating authority is under obligation to pass a speaking order disclosing the grounds for loading or enhancement in the declared value. The adjudicating authority shall discharge the burden to prove that the invoice value does not represent the true transaction value.
(iv) It is also observed that the adjudicating authority in a routine manner over a large period of time, have been enhancing or loading the declared value uniformly which is not correct. There is no comparison with contemporaneous imports like quality, level of import, time of actual import, etc.
(v) Loading based on DRI Alerts and Circular of DGOV – other Standing orders, is not in consonance with the provisions of the Customs Act and Rules.
(vi) Reliance have been placed on the ruling of Hon’ble Supreme Court in the case of Eicher Tractors Ltd. – 2000 (122) ELT 321 (SC), where it has been laid down that unless the price actually paid for the particular transaction falls with the exception in Rule 4 (2), the Customs authority is bound to assess the duty on the transaction value.
(vii) NIDB data cannot be the sole basis for enhancement of value
(viii) Reliance was also placed on the Final order No. 63455-63456/2018 dated 25.10.2018 of Chandigarh Bench of this Tribunal in CC, ICD, 6 New Delhi Vs. M/s VSM Impex Pvt. Ltd. wherein similar facts and circumstances, Tribunal dismissed department’s appeal upholding order of the Commissioner (Appeals), that the same does not suffer from any infirmity.
5. Being aggrieved, Revenue is in appeal inter alia, on the grounds that the respondent – importer had agreed to re-determination of value/enhancement as per the reply to the query in EDI system after seeing the data of contemporaneous import. The respondent have agreed to enhancement of the declared value from US D 1.10 to US D 1.94 and have stated so in writing with reference to the Bill of Entry as follows:-
“Since, we have voluntarily accepted the rejection of declared value of the goods and increased value. We do not want any speaking order on the re-assessment of the same. We also do not want any show cause notice of personal hearing in the matter. Thus, we voluntarily forfeit our right so as to having show cause notice and opportunity of personal hearing as provided under Section 124 of the Customs Act, 1962. It 7 is requested to urgently release our consignment at the aforementioned rate”. Thus the importer did not exercise their right to provisional assessment even if the clearance was being taken to save the demurrage charges. As regards uniform enhancement of transaction value, the learned Commissioner (Appeals) have erred, as in case of three Bills of Entry the enhancement is different. Moreover, the enhancement of value was duly accepted by the importer waiving his right to show cause notice and opportunity of hearing. Although the import data of contemporaneous import have not been discussed in the assessment orders, but admittedly the same was shown to the importer who have accepted the same and referred to in their letter of acceptance. Further, learned Commissioner (Appeals) have erred to take cognizance of the written admission by the respondent importer before the assessing officer. Reliance is placed on the ruling of the Apex Court in the case of Veera Ibrahim Vs. State of Maharashtra – 1983 (13) ELT 1590 (SC), wherein it was held that statement recorded before the Custom officer is not hit by Article 20(3) of the 8 Constitution. The respondent after seeing the contemporaneous import data of Bill of Entry No. 8828516 dated 13 November, 2018, 9861114 dated 30 January, 2019 etc., agreed that the declared value/transaction value is low and vide their declaration letter accepted the enhancement of value. As per Section 17(5), the proper officer need not issue speaking order in cases where the importer confirms his acceptance of re-assessment in writing. Thus it is a case of amendment of the declared value in the Bill of Entry by the appellant, and hence they cannot make a grievance later on for the assessment made by the department on such amended Bill of Entry. Reliance is placed on the ruling of Hon’ble Supreme Court in the CCE Vs. Systems and Components Private Limited – 2004 (665) ELT 136, wherein it has been held – what is admitted need not be proved. The respondent importer did not exercise their right to demand provisional assessment, if they were not agreeable to the enhancement made in the transaction value. So far as incurring of demurrage is concerned, importer has facility under Section 49 of the Act to pray for warehousing of the goods. The learned AR relies on the following decisions:
(i) Jai Shiv Trading Co. – 2018 (359) ETL 2018 (Tri.-Del.);
(ii) CC Vs. Sodagar Knitwear – 2018 (362) ELT 819 (Tri.-Del.);
(iii) Advanced Scan Support Technologies Vs. CC – 2015 (326) ELT 185 (Tri.-Del.);
(iv) Surjeet Singh Chhabra Vs. Union of India – 1997 (89) ELT 646 (SC).
6. Opposing the appeal learned Counsel for respondent Shri Prem Ranjan Kumar urges that the importer was under pressure to take the delivery of the goods to mitigate losses, including demurrage charges, etc. In case of prayer for provisional assessment, the adjudicating authority are reluctant to grant the same and it leads to delay in getting out of charge, resulting in demurrage charges. It is further urged that the loaded values as per NIDB data, are not the declared value, but the same are loaded value. Thus, the loaded value is not the proper value or the contemporaneous value for the purpose of assessment. Further, it is evident from the facts on record that the assessing officer was left with no choice, but to make enhancement under the direction(s) of their superiors through circulars, direction etc. Thus, there is no illegality or impropriety in the impugned order and prays for dismissing the appeal by Revenue.
7. Having considered the rival contentions, we find that assessing officer have been making enhancement in a routine manner and the respondent who are regular importers are left with no choice but to sign on the dotted line for taking delivery of their goods to carry on their business, and also save the demurrage charges if the consignment is delayed in the port for want of clearance. Relying on the precedent Final Order No. 63455- 63456/2018 dated 25.10.2018 of this Tribunal and also in view of the Order-in-Appeal No. CC(A)/CUS/D- II/ICD/788-1083/2014 dated 31.12.2014 had been accepted in respondent own case, we uphold the impugned common order(s) in appeal. Accordingly, these appeals by Revenue are dismissed being without merit. The stay applications also stand disposed of accordingly.
(Pronounced in Court on 14.09.2020)
