Case Law Details
Victor Reinz India Pvt Ltd Vs Commissioner of Customs (Bombay High Court)
Bombay High Court held that dismissal of appeal without hearing the case on merits merely on the ground that matter is remanded back by Commissioner (A) unjustified as remand was only for limited purpose of re-quantification of customs duty.
Facts- Vide the present appeal, it is mainly contested that the Tribunal has erred in dismissing the appeal filed by the Appellant without hearing the case on merits on the ground that the Commissioner (Appeals) had remanded back to the original authority for re-adjudication, when in fact the remand was only for a limited purpose of re-quantification of customs duty.
Conclusion- Held that the Tribunal has merely got carried away by the remand, without realising that there was a finding on merits against the Appellant and which was challenged before the Tribunal. In our view, the Tribunal ought to have adjudicated the appeal of the Appellant on merits and was not justified in observing that no adjudication on merit is warranted because of the matter having remanded to the original authority.
FULL TEXT OF THE JUDGMENT/ORDER OF BOMBAY HIGH COURT
The present appeal is fled under Section 130(1) of the Customs Act, 1962 (hereinafter referred as ‘the Act’) from an order passed by the Customs, Excise & Service Tax Appellate Tribunal, Mumbai (for short “the Tribunal”) in Customs Appeal No.87534 of 2013 dated 3rd January 2020.
2. The Appeal is admitted on the following substantial questions of law:-
“(a) Whether the Tribunal has erred in dismissing the appeal filed by the Appellant without hearing the case on merits on the ground that the Commissioner (Appeals) had remanded back to the original authority for re-adjudication, when in fact the remand was only for a limited purpose of re-quantification of customs duty, after deciding the issues on merits against the Appellant?
(b) Whether the Tribunal was right in refusing to correct the error apparent on record in its final order on the ground that the order was dictated in the presence of the counsel?”
3. By consent of the parties, the appeal is heard finally at the admission stage.
4. Narrative of the relevant events :-
(i) The Appellant is a start-up company engaged in the business of buying and selling of products related to the automative industry. The Appellant is a joint venture between a German Company – Reinz Dichtung – GmbH (for short ‘Reinz’) and Indian promoters. The German Company is holding 51% of shares and Indian promoters are holding 49% of shares in the Appellant-Company.
(ii) On 11th August 2006, the Appellant entered into a Technical Assistance Agreement with the Reinz.
(iii) The Appellant had imported goods from the Reinz.
(iv) On 16th November 2007, an Order-in-Original was passed by the Commissioner of Customs (Import), GATT Valuation Cell, New Custom House, Ballard Estate, Mumbai (for short ‘Commissioner of Customs’). After analysing the shareholding pattern, the Commissioner came to a conclusion that the Appellant is importing goods from related party in terms of Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Commissioner after analysing various documents and evidence came to a conclusion that the imports are made at the correct invoice value and no adjustment under Rule 10(1)(c) of the Customs Valuation Rules, 2007 is required to be made. The Commissioner also recorded a finding that although the Appellant and the supplier are related party, but the price of the imported goods are at arm’s length and invoice value as declared is acceptable as “transaction value” under Rule 3(3)(a) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. In the said order, it is noted that the order was subject to review after a period of three years.
(v) On 2nd February 2011, on an application made by the Appellant for review of the above Order-in-Original dated 31 st October 2007, passed by the Commissioner of Customs, the said authority after reviewing the Order-in-Original and various documents fled in the course of the review proceedings did not find any reason to interfere with the earlier Order-in-Original dated 31st October 2007, accepting the declared invoice value of the goods imported by the Appellant from Reinz and the declared invoice value was directed to be accepted by the assessing group after usual check, scrutiny and verification of the declared invoice value.
(vi) Against the aforesaid order in review, the revenue fled an appeal with the Commissioner of Customs (Appeal) challenging the review order passed on 2nd February 2011.
(vii)On 6th March 2013, the Commissioner of Customs (Appeals) gave a finding that the Appellant has paid the royalty for transfer of technology and knowhow and lump sum fees towards technical assistance and which are required to be added under Rule 10(c) of the Customs Valuation Rules, 2007. The Commissioner of Customs, however, for the purpose of quantification of addition to be made to the value, remanded the matter back to the valuation authority. Para 5 and 6 of the order of Commissioner of Customs (Appeals) dated 6th March 2013, reads thus:-
“5. The importer has paid the royalty for transfer of technology and knowhow and lump sum fee towards technical assistance. These additions are covered under Rule 10(c) of CVR, 2007. The order-in-original has not discussed the inclusion of these payments, as per changed situation, from earlier SVB order in his review thereof. The technical knowhow is also for preparation of phonotypes and testing of goods and is thus related to the imported goods. Further it is also on record that products are supplied on payment of lump sum fee. Hence this payment has to be ascertained in relation to the imports in order to determine its inclusion as per CVR 2007. The order-in-original has not recorded any verification of the facts and submissions made by the importer.
6. In view of the above discussion, I set aside the impugned order as not proper or correct. The additions sought in the appeal are allowed. However, a reasonable opportunity shall be given to the respondent before any further adjudication by the SVB so that the importer/respondent could put forth the appropriate documentary evidence regarding the quantum of loading as per CVR 2007, before any review order is passed by the SVB.”
(emphasis supplied)
(viii)Aggrieved by the aforesaid order, the Appellant filed an appeal on 19th June 2013, before the Tribunal raising various grounds and more particularly, the grounds relating to the valuation and prayed for no adjustment to be made under Rule 10 of Customs Valuation Rules, 2007. This is evident from the appeal memo filed before the Tribunal.
(ix) On 3rd January 2020, the aforesaid Customs Appeal No.87534 of 2013 was disposed of by the Tribunal in a brief order which reads thus:-
“2. We find that the Ld. Commissioner (Appeals) vide impugned order dated 06.03.2013 has disposed of the appeal filed by the Revenue on the ground that the original authority has not properly examined the records and submissions made by the respondent therein (appellant herein) at the time of assessment of the imported goods. In view of the fact that the learned Commissioner (Appeals) has remanded the matter to the original authority for a detailed fact finding based on the available records, we are of the view that the appeal filed by the appellant cannot be considered on merits at this juncture.”
(x) Against the aforesaid order, the Appellant made an application for rectification of mistake in the said order. The Tribunal vide order dated 30th June 2022 rejected the application for rectification of the order dated 3rd January 2020 on the ground that the order was pronounced in the open court in the presence of the Advocates of the respective parties and hence there is no mistake apparent from record.
(xi) It is against the aforesaid two orders passed by the Tribunal on 3rd January 2020 and 30th June 2020 then the present appeal is filed.
5. The Appellant would contend that the Tribunal is not correct in observing in the impugned order that since the Commissioner (Appeal) has remanded the matter to the Original Authority for a detailed fact finding based on the available records, the appeal filed by the Appellant cannot be considered on merits. The Appellant would contend that the Commissioner (Appeal) in her order has given a categorical finding on merits that the royalty under the Technical Assistance Agreement is required to be added under Rule 10(c) of the Customs Valuation Rules, 2007 for arriving at the correct value and it is only for the quantification purpose of the said finding which was remanded to the Original Authority. The Appellant contend that they were aggrieved by the finding of the Commissioner (Appeals) on account of addition to be made under Rule 10(c) of Customs Valuation Rules, 2007 and, therefore, the Tribunal ought to have adjudicated the Appeal on merits.
6. Per contra, the revenue would support the order of the Tribunal, however, the Respondents contended that they have no objection if the matter is remanded back to the Tribunal for adjudication on merits.
7. Heard learned counsel for the Appellant and learned counsel for the Respondents and with the assistance of the parties have perused the record.
8. We are of the view that the Appellant is correct in contending that the Commissioner (Appeal) had given a finding on merits against the Appellant by observing that royalty under the Technical Assistance Agreement is required to be added under Rule 10(c) of the Customs Valuation Rules, 2007 rejecting the contention of the Appellant that same cannot be added under the Customs Valuation Rules, 2007. The Commissioner (Appeal) after having given a finding on merits against the Appellant remanded the matter to the Original Authority for ascertaining the quantum of the amount to be added for arriving at the transaction value. The Appellant in its appeal before the Tribunal has challenged the said finding of the Commissioner (Appeal) on merits that no addition could be made on payments made under the Technical Assistance Agreement for under the Customs Valuation Rules, 2007. If the Appellant succeeds on the merits, then the question of quantification would not arise. In our view, the Tribunal has not considered paras 5 and 6 of the Commissioner Appeal’s order (which is reproduced hereinabove) in proper perspective, and has merely got carried away by the remand, without realising that there was a finding on merits against the Appellant and which was challenged before the Tribunal. In our view, the Tribunal ought to have adjudicated the appeal of the Appellant on merits and was not justified in observing that no adjudication on merit is warranted because of the matter having remanded to the original authority.
9. In view of above, we pass the following order:-
(a) The Tribunal’s orders dated 3rd January 2020 and 30th June 2022 are hereby set aside.
(b) The Customs Appeal No.87534 of 2013 is restored back to the file of the Tribunal with a direction to decide the said appeal on merits.
(c) The Tribunal to decide the appeal as expeditiously as possible.
(d) The question of law is answered in favour of the Appellant and against the revenue. No order as to costs.
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