CESTAT Remands order for Declared Value Rejection without Specific Reasons

Scion Spinners Pvt Ltd Vs Commissioner of Customs (Imp) (CESTAT Mumbai)

CESTAT Remands Order for Rejection of Declared Value Without Specific Reasons

Introduction: In a significant ruling, the Customs, Excise and Service Tax Appellate Tribunal (CESTAT) Mumbai has overturned a non-speaking order related to the reassessment of assessable value in the case of Scion Spinners Pvt Ltd versus Commissioner of Customs. This case revolves around the importer’s declaration of value versus the valuation determined by customs officials.

Detailed Analysis: The dispute arose when Scion Spinners Pvt Ltd imported polyester spun yarn and declared its value based on overseas invoices. However, the customs authorities contested this declared value, citing factors like denier, count, and other quality parameters. Despite the appellants’ contention that proper procedural steps weren’t followed under Section 14 of the Customs Act and the Valuation Rules, the initial appeals were rejected by the Commissioner of Customs (Appeals).

Mumbai, in its detailed order, highlighted procedural lapses and statutory non-compliance in the customs assessment process. The tribunal noted that the customs officials had enhanced the assessable value without providing a speaking order, as mandated under Section 17(5) of the Customs Act. This section requires a clear justification for any deviation from the declared value by importers.

The appellants, Scion Spinners Pvt Ltd, had argued that the customs authorities failed to follow due process in their reassessment, thereby violating their rights under the Customs Act and Valuation Rules. They contended that the lack of a speaking order deprived them of a fair opportunity to contest the enhanced value determination.

The CESTAT Mumbai further emphasized that the acceptance of duty payments by the appellants did not waive their right to challenge the assessment. According to Section 128 of the Customs Act, any aggrieved party can appeal against decisions that affect them, irrespective of payment status under protest.

In overturning the earlier orders, CESTAT Mumbai directed the customs authorities to revisit the assessment, this time adhering strictly to procedural requirements. The tribunal mandated that a speaking order must be issued within fifteen days of the decision, outlining clear reasons for any valuation adjustments. It also underscored the necessity of granting the appellants a fair hearing during this process.

Conclusion: In conclusion, the decision by CESTAT Mumbai in the case of Scion Spinners Pvt Ltd versus Commissioner of Customs serves as a precedent for ensuring procedural fairness in customs valuation disputes. By setting aside the non-speaking order and remanding the case for proper reassessment, the tribunal has reinforced the importance of statutory compliance and due process in customs matters.

This ruling underscores the significance of procedural integrity in customs assessments, ensuring that importers are afforded their rightful opportunities to contest valuation decisions based on clear and justified grounds.

FULL TEXT OF THE CESTAT MUMBAI ORDER

None appeared for the appellant, despite issuance of notice by the Registry. Heard the learned Authorized Representative for the Revenue.

2. Briefly stated, the facts of the case are that the appellants herein had imported 100% polyester spun yarn and filed three numbers of Bills of Entry (B/E) for assessment and clearance of the said imported goods. In these B/Es, the appellants had declared the value as per the respective invoices issued by the overseas supplier. However, the proper officer had not considered the declared value mentioned by the appellants in the B/Es for the purpose of duty assessment and enhanced the assessable value, based on the quality like denier, count, dyed/undyed/ brightness/pet flake fiber etc. Feeling aggrieved with the enhancement of the declared value, the appellants had filed appeals before the learned Commissioner (Appeals), contending inter-alia that the requirements of Section 14 of the Customs Act, 1962 and the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 have not been complied with by the proper officer and that in support of rejection of the declared value, no speaking order was passed in terms of Section 17(5) ibid. Appeals filed by the appellants were disposed of by the learned Commissioner (Appeals) vide Order-in-Appeal No. 460-462 (Gr.III)/ 2014(JNCH)/IMP-440 to 442 dated 11.02.2014 (herein after, for short, referred to as ‘the impugned order(s)’), in rejecting the appeals filed by the appellants. In support of rejection of the appeals, the learned Commissioner (Appeals) has held that the appellants had not paid the duty under protest and had accepted the assessments made by the assessing authority in loading the value. He has further held that since the appellants have accepted the transaction value determined by the proper officer, such assessments cannot be challenged by way of filing the appeal before the appellate body. Feeling aggrieved with the impugned orders, the appellants have preferred these appeals before the Tribunal.

3. The facts are not under dispute that the appellants had filed three B/Es all dated 28.08.2013, claiming the value of the goods as per the respective invoices and that such B/Es were self-assessed in terms of sub-section (1) of Section 17 of the Customs Act, 1962. The assessment provisions contained in Section 17 ibid were substituted by the Finance Act, 2011 (Act No.8 of 2011), dated 08.04.2011. The effect of the substitution was that the concept of self-assessment was introduced and mechanism were provided for verification of such self-assessment made by importer/exporter; and that for passing of the re-assessment order by the proper officer of Customs, in the eventuality, when the self-assessment done by the importer is not found to be correct. It has also been mandated that for the purpose of re-assessment, the proper officer is under the statutory obligation for passing of a speaking order on the re-assessment, within a period fifteen days. It has also been provided that the proper officer may not pass any speaking order, where the importer/exporter confirms his acceptance of the re-assessment in writing.

4. On perusal of the case records, we find that the value of imported goods was loaded by the proper officer, without assigning any specific reasons and more particularly, the requirement of sub­section (5) of Section 17 ibid was not at all complied with for such purpose. It is not the case of Revenue that the appellants had accepted the enhanced assessable value determined by the proper officer inasmuch as no communication was made by the appellants in accepting such assessment done by the department. Thus, under such circumstances, it was obligatory on the part of the proper officer/original authority for passing of a speaking order with regard to the value enhanced at the time of re-assessing the self-assessed B/Es. We do not find any merits in the impugned order, insofar as it has held that the enhanced duty was not paid by the appellants under protest, and had also paid such duty by accepting the re-assessment done by the department. Payment of duty under protest will not be the determining factor for consideration as to whether the assessment order can be challenged or otherwise. Section 128 ibid mandates that any person aggrieved by any decision or order passed under this Act, by an officer of Customs, lower in rank than a Principal Commissioner/ Commissioner of Custom, may appeal against before the Commissioner (Appeals). In the present case, re-assessment done by the proper officer is contrary to the self-assessment made by the appellants. Thus, it can be said that the appellants were aggrieved by such decision or order of the proper officer, and as such, correctly filed the appeals before the learned Commissioner of Customs (Appeals). Therefore, in our considered view, rejection of appeal by the learned Commissioner (Appeals) on the ground of non-maintainability of appeal against the assessment is contrary to the statutory provisions and thus, is liable to be set aside.

5. We find that the proper officer had not assigned any reason or passed the speaking order in terms of the statutory mandates contained in sub-section (5) of Section 17 ibid with regard to enhancement of value declared by the appellants. Therefore, we are of the considered opinion that the matter should go back to the original authority (proper officer) for due compliance of the requirements of sub-section (5) to Section 17 ibid for passing of a speaking order.

6. Therefore, the impugned order dated 11.02.2014 is set aside and the appeals are allowed by way of remand to the Original Authority for compliance of the statutory provisions contained in sub­section (5) of Section 17 ibid. Further, the original authority should also assign specific reasons for rejection of the declared value and duly follow the provisions contained in Section 14 ibid read with Valuation Rules, 2007 for re-determination of assessable value. It is made clear that the proper officer should complete the process of re­assessment within a period of 15 days from the date of receipt of this order. Needless to say, that opportunity of personal hearing should be granted to the appellants before passing of the speaking re­assessment order.

7. In the result, the appeals are allowed by way of remand.

(Dictated and pronounced in open court)