Introduction: The case of Lakshami & Co Vs Commissioner of Customs recently presented at CESTAT Chennai reveals an important observation regarding the role of the Commissioner (Appeals) in customs duty assessment. The matter at hand involved a second-hand car and two split air conditioner compressors imported by the appellant, Lakshami & Co. v
Analysis: The appellant, Lakshami & Co, had imported a second-hand car and two split air conditioner compressors. The declared value of the imported goods became a point of contention when the Commissioner (Appeals) decided to interfere with the valuation of the car originally accepted by the customs authority. The Commissioner (Appeals) revaluated the car at a significantly higher amount, resulting in a demand for differential customs duty.
This action by the Commissioner (Appeals) was challenged by the appellant, asserting that without a cross-appeal filed by the Department, the Commissioner (Appeals) had no right to revise the value of the car. The counsel for the appellant referred to the judgment in the case of Servo Packaging Ltd. v. CESTAT, Chennai [2016 (340) E.L.T. 6 (Mad.)] to support their argument.
Conclusion: CESTAT Chennai accepted the appellant’s argument, agreeing that the Commissioner (Appeals) should not have enhanced the value of the car without notice and a cross-appeal by the Department. Thus, the Tribunal set aside the Commissioner (Appeals)’s revised valuation, marking a crucial precedent for future cases involving the valuation of goods for customs duties. The appeal was partially allowed, maintaining the reduced fine and penalty but discarding the revised car value.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Brief facts are that the appellant filed Bill-of-Entry No. 554840 dated 01.07.2010 for the clearance of 1 no. car declaring it to be TD 2000 Petrol Car (unused) with the declared value of USD 9375 (C&F) and two nos. of used split air conditioner compressors without gas with the declared value of USD 95 (C&F).
2.1 The goods were examined by the Chartered Engineer, who certified that the split air conditioner were old, used and not reconditioned / refurbished and appraised the value at US$300.
2.2 Regarding the car, it was found that the year of manufacture was not available. The appellant informed that the car was purchased in an auction held in Malaysia for an amount of RM 61200 in the year 2005 and since it could not be sold, the same was kept in stock for more than five years and was finally sold to the appellant for USD 9375. After calculating the depreciation, it was found that the value worked out to only USD 310 more that the declared value.
3. The original authority accepted the declared value of the car, rejected the value of the split air conditioner compressors and re-determined the same. It was held that the import of used or second-hand vehicles is subject to conditions laid down under Licensing Note No. 1 of Chapter 87 of ITC (HS) Classifications of Import Export Items 2004-2009 and the car had not been registered for use in any country but had been sold in auction prior to importation in India. Thus, it was concluded that the vehicle had been imported in violation of the Foreign Trade Policy. The original authority ordered for confiscation of the second-hand TD 2000 car and the used air conditioner compressors, giving an option to the importer to redeem the same on payment of Rs.25,000/-under Section 125 of the Customs Act, 1962; a penalty of Rs.3,00,000/- under Section 112(a) of the Customs Act, 1962 was also imposed.
4. Against such order of imposition of redemption fine and penalty, the appellant filed an appeal before the Commissioner (Appeals), who vide order impugned herein held that the penalty was excessive and was required to be reduced to Rs.25000/-. However, the Commissioner (Appeals) interfered with the valuation of the car, redetermining the same at USD 32283 and directing the adjudicating authority to quantify the differential duty payable.
5. Aggrieved by such order, the appellant is now before the Tribunal.
6. The Ld. Counsel Shri N. Viswanathan appeared and argued for the appellant. It is submitted that the appellant had filed the appeal before the Commissioner (Appeals) only against the imposition of redemption fine and penalty, but the Commissioner (Appeals) has redetermined and enhanced the value of imported car; when the Department has not filed any appeal against the order passed by the original authority, the Commissioner (Appeals) ought not to have enhanced the value of the car so as to demand higher duty.
6.2 The decision of the Hon’ble High Court in the case Servo Packaging Ltd. v. CESTAT, Chennai [2016 (340) E.L.T. 6 (Mad.)] to argue that an assesse cannot be put in worst condition for filing an appeal unless there is a cross–appeal by the Department.
7. The Ld. Authorized Representative Shri R. Rajaraman supported the findings in the impugned order.
8. Heard both sides.
9. It has been argued by the Ld. Counsel for the appellant that the order passed by the Commissioner (Appeals) revising the value of the car is against the provisions contained in Section 128A of the Customs Act, 1962. We find that the appellant was not put to notice with regard to the issue of enhancing the declared value of the car. Thus, without having an opportunity to defend the enhancement of the value of the car, as decided by the original authority, the Commissioner (Appeals) has revised the value of the car to demand differential duty.
10. It is brought out from the records that the original authority had accepted the value declared for the car, being a second-hand car and not a popular branded car. The declared value of the air conditioner compressors was rejected and re-determined as USD 300 (C&F). Though the Department has not filed any appeal against such order, the Commissioner (Appeals) has, without giving any notice to the appellant, enhanced the value of the car so as to demand differential duty. In the absence of an appeal filed by the Department, the Commissioner (Appeals) ought not to have interfered with the findings with regard to the valuation. We therefore find that the order passed by the Commissioner (Appeals) revising the value of the car requires to be set aside, which we hereby do.
11. The Commissioner (Appeals) has reduced the penalty to Rs.25,000/-. We do not disturb the redemption fine of Rs.25,000/- or the reduced penalty of Rs.25,000/-.
12. The impugned order is modified to the extent of setting aside the enhancement of the value of the imported car.
13. The appeal is partly allowed in the above terms.
(Order pronounced in the open court on 07.2023)