1. Whether an Importer/Assesse Can Challenge the Enhancement of Value (Re-Assessment) Under Section 17(4) of the Customs Act, 1962 by way of an appeal under section 128 of the Customs Act, 1962 Pursuant to Acceptance of Value Enhanced by The Assessing Authority in Terms of Section 17(5) of The Act?
2. Whether Such Appeal Filed Under Section 128 of the Customs Act, 1962 Will Sustain Pursuant to Acceptance of Enhanced Value by The Importer or Authorized Representative Thereof?
At the time of re-assessment of the Bill of Entry under Section 17(4) of the Customs Act, 1962, if an importer/assesse or Authorized Representative thereof voluntary accepts the assessable value of the imported consignment as enhanced by the Assessing Authority /Department, the Importer/Assesse can always prefer an appeal under Section 128 of the Customs Act, 1962 but the same will not sustain in view of the recent judicial decisions since the voluntary acceptance of the value so enhanced by the department is now treated as transaction value under Section 14 of the Customs Act, 1962 read with Rule 3(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 . That the voluntary acceptance of the enhanced value thereby discharges the burden of the revenue to establish the declared value to be incorrect and therefore the requirement of re-determining the same in terms of Rule 3(4) Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 will not arise.
That a conjoint reading of Section 17(4) & 17(5) of the Customs Act, 1962 provides that in-case of a re-assessment by the proper officer pursuant of finding that the self-assessment done by the Importer/Assesse is not correct, the proper officer has to pass a speaking order within 15 days from the date of re-assessment of the Bill of Entry in case the value enhanced is not accepted by the Importer. Therefore, pursuant to acceptance of enhanced value, the Importer/Assesse also loses the right of being issued a speaking order qua re-assessment under Section 17(5) of the Customs Act, 1962 and thereby the remedy of challenging that very speaking order passed in terms of Section 17(5) of the Customs Act, 1962 by way of an appeal under Section 128 of the Customs Act, 1962 also disappears.
That mere perusal of the aforesaid provisions of the Customs Act, 1962, rules thereof read along with the judgments discussed below makes it amply clear that the voluntary acceptance of the value so enhanced by the Assessing Authority on the part of the importer/assesse not only compels the importer/assesse to pay an amount of duty which is higher to what would have been levied upon it in terms of the value declared by it in the Bill of Entry but also takes away its right to challenge the same by way of an Appeal under Section 128 of the Customs Act, 1962 by either impugning an unfavorable Order In Original passed under Section 122 of the Customs Act, 1962, impugning the assessment of Bill of Entry or the very speaking order which would have been passed towards re-assessment of the value under Section 17(5) of the Customs Act, 1962.
That in the matter of Commissioner of Customs Versus M/s Hanuman Prasad & Sons bearing Customs Appeal No. 51601 OF 2019 the Hon’ble Customs Excise Service Tax Appellate Tribunal, New Delhi observed that acceptance of the enhanced value by the Importer implies that the importer did not accept the value as declared by them in the Bill of Entry and therefore determination of the value of the impugned goods in terms of Rule 4-9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 was not necessary as the mandates of Rule 4-9 ibid will only come into play if the value cannot be determined under Rule 3(1) on rejection of same under Rule 3(2) of the said rules. It has been also observed that no statement as to acceptance of the enhanced value under protest or for saving demurrage charges has been made by the Appellant/Importer at initial stage of re-assessment.
That the Hon’ble Principal Bench of CESTAT further distinguished with the observations laid down in judgments of Commissioner of Customs Versus Maruti Fabric Impex reported as 2016 (343) E.L.T. 963 (Tri-Del), Commissioner of Customs, Patparganj Versus M/s Artex Textile Private Limited bearing Customs Appeal No. 51414, 52809 and 52810-52864 OF 2019 and Commissioner of Customs, Delhi (ICD TKD) Versus M/s Uniexcel Polychem Private Limited reported as 2016 (8) TMI-829-Cestat New Delhi on the basis that all the said decisions nowhere reflects that the importers have accepted the value of goods as proposed by the revenue in writing or that the right to a speaking order has been waived. The Hon’ble CESTAT further observed that the decisions in the matter of Eicher Tractors Ltd. and Century Metal Recycling will also not help the Importer on account of its voluntary acceptance of enhanced value.
That the Hon’ble CESTAT in the aforesaid judgments referred to the decisions in the matters of Advanced Scan Support Technologies Vs. Commissioner of Customs reported as 2015 (326) ELT 185, Vikas Spinners Vs. Commissioner of Customs, Lucknow reported as 2001 (128) ELT 143 and Guardian Plasticote Ltd. Vs. CC (Port), Kolkata reported as 2008 (223) ELT 605 wherein a common observation has been laid that when the Importer has given consent to the value enhanced by the department and has waived his right to the Show Cause Notice and Personal Hearing, it was not necessary for the department to establish valuation as the contested value became the declared value requiring no further investigation.
That in the matter of M/s Aestrik Techno Signs Versus The Commissioner of Customs bearing Customs Appeal No. 51101 of 2019, the Hon’ble Principal Bench of CESTAT held re-assessment of duty to be final as it was un-contested since the Appellant/Importer agreed to re-assessment of duty, waived his right to Show Cause Notice and stated that it was ready to bear the penalty and fine.
In the matter of CC (Import) Vs. AAA Impex bearing Customs Appeal No. 54012 of 2018-DB wherein the Bill of Entry was re-assessed at a higher value on acceptance by the CHA of the Importer that accordingly waived the requirement of a speaking order under Section 17(5) of the Customs Act, 1962. The Hon’ble Appellate Authority having set aside the re-assessment, the Revenue approached the Tribunal wherefrom the matter was remanded back to the Original Assessing Authority with an observation that inspite of admission on behalf of the Importer the revenue is required to satisfy the requirement Section 14 of the Customs Act, 1962 read with CVR, 2007 and therefore basis re-assessment has to be shared with the Importer. That the Hon’ble High Court of Delhi also upheld the impugned remand order and dismissed the Customs Appeal bearing No. CUSAA180/2019 preferred by the Importer.
That similar view is taken by the Hon’ble CESTAT, New Delhi in the cases pertaining to enhancement of value by way of market enquiry under Rule 7 of the CVR, 2007 wherein specific admissions and acceptance as to manner of calculating the assessable value and differential duty were made through statements tendered under Section 108 of the Customs Act, 1962. Reliance is placed upon the matters of Jai Shiv Trading Co. Versus Commissioner of Central Excise reported as 2018 (359) ELT 208 and Commissioner of Customs (Import) Versus Sodagar Knitwear reported as 2018 (362) ELT 819. It is pertinent to mention that the judgment of Commissioner of Customs (Import) Versus Sodagar Knitwear has been affirmed by the Hon’ble Supreme Court in Civil Appeal No. 8336/2018.
That by catena of judgments passed by the Hon’ble CESTAT, it has been held that acceptance of enhanced value by the department does not take away the right of the importer to challenge it if the same has been accepted under pressure and protest and to avoid further loses to the importer. Reliance is placed upon Marque International Versus Commissioner of Customs (Preventive) reported as 2015 (329) ELT 307, Commissioner of Customs, Amritsar Versus Bhawna Spinning Mills reported as 2013 (289) ELT 504, Digitech photocopiers Versus Commissioner of Customs, Mumbai reported as 2009 (233) ELT 425 and SKS Ispat & Power Ltd. Versus Commissioner of Customs, Raipur reported as 2018 (364) ELT 378.
It is pertinent to note that the law of estoppel also plays a vital role in the instant issue. It is a settled law that estoppel is not applicable on taxation matters as held in the matter of Dunlop India Ltd. & Madras Rubber Factory Limited Versus UOI & Ors reported as 1983 (13) ELT 1566. In the matter of Commissioner of Central Excise Vs Hingora Industries Limited reported as 2009 (237) ELT 318 wherein acceptance of enhanced value was made to avoid demurrage charges, Learned CESTAT while relying upon the judgment of Dunlop India and Laxmi Color Lab dismissed the Appeal filed by the revenue, observing that mere acceptance of escalated value does not preclude them from challenging the same. It is noteworthy that in both the aforesaid matters wherein the decision of Dunlop India has been relied, specific statements as to acceptance of enhanced value under protest was put on record of the department. It can be said that benefits of non-application of law of estoppel can only be sought once protest for acceptance of enhanced value is communicated to the department/assessing authority.
The aforesaid judgments have made it clear that once voluntary acceptance is communicated to the assessing authority qua enhanced value at the time of re-assessment under Section 17(4) of the Customs Act, 1962, the enhanced value becomes the transaction value and value declared in Bill of Entry is deemed to be unaccepted by the Importer/Assesse and therefore challenge made to the same under Section 128 of the Customs Act, 1962 won’t succeed.
Even in the given scenario, after an import is done and bill of entry is filed and the same is re-assessed by the department, it is advisable that the Importer restrains from accepting the enhanced value as per the dictates of the department. That the non-acceptance of the enhanced value will itself emphasize and restrain the Assessing Authority to have been left with no option other than passing a speaking order within a period of 15 days in terms of Section 17(5) of the Customs Act, 1962 or either if the same is to be accepted, a letter stating that the same is being accepted under protest so as to seek immediate clearance of the goods and avoid demurrage and detention charges should be put on record of the department.
That another way of approaching the situation could be by exercising the benefits of provisions of Section 18 of the Customs Act, 1962 that provides for Provisional Assessment of Duty. The Assesse may request the assessing authority to get the Bill of Entry assessed provisionally or may seek directions from jurisdictional High Court by way of writ of Mandamus under Article 226 of the Constitution of India. That the Assessment of Bill of Entry on provisional basis under Section 18 of the Customs Act, 1962 will not only treat the deposited amount as security which shall be kept refundable subject to the outcome of the Adjudication Proceedings but also enable the Importer/Assesse to deposit an amount that shall not exceed 20% of the provisional duty in terms of Regulation 2 of Customs (Provisional Duty Assessment) Regulations, 1963 and will therefore help in maintaining liquidity of the importer/assesse. Reliance is placed upon the judgment passed by Hon’ble High Court of Gujarat at Ahmedabad in the matter of Platinum Investment Service Corporation versus Union of India reported as 2010 (257) ELT 161 .
Therefore the importer should request the department to pass a speaking order in pursuance of loading of value at the time of assessment by not giving his voluntary acceptance in lieu thereof or try and get the consignment assessed provisionally so that in both the cases, remedy of challenging the value so enhanced by the department still remains with the importer/assesse under the provisions of the Customs Act, 1962.
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