Case Law Details
In re Sunmarg Consultancy LLP (CAAR Delhi)
The Customs Authority of Advance Ruling (CAAR) in Delhi has recently rejected an advance ruling application filed by Sunmarg Consultancy LLP. The applicant sought clarification on the assessable value for calculating the basic custom duty and cess on rags proposed to be imported under HSN 6310. The application and the proceedings led to a definitive ruling, with implications on the uniformity of valuation practice across various ports.
Analysis:
1. Application Details: Sunmarg Consultancy LLP applied for an advance ruling regarding the valuation of imported rags, especially considering the varying customs duties charged at different ports.
2. Legal Framework: The application was examined under section 28H of the Customs Act, 1962, and related rules regarding the valuation of imported goods.
3. Hearings & Submissions: Multiple hearings were held, during which the Authorized Representative of the applicant stressed the importance of uniform valuation across all ports.
4. Commissionerate Comments: Concerns were raised that the application might not fall within the scope of section 28H of the Customs Act, with arguments relating to the law and methods concerning valuation.
5. Rejection of Application: The CAAR authority concluded that the question posed by the applicant was not in accordance with the provisions of the Customs Act, specifically section 28H. The focus on the uniform valuation of goods was deemed outside the purview of the advance ruling procedure, leading to the rejection of the application.
Conclusion: The rejection of Sunmarg Consultancy LLP’s application by CAAR Delhi illustrates the complex nature of customs regulations and the need for compliance with specific legal provisions. The case serves as a reminder that an application for an advance ruling must align with the prescribed legal framework, as any deviation from the specified criteria can lead to rejection. The rejection also highlights the underlying issues regarding the uniformity in valuation practice, a concern that may need further attention from the regulatory authorities.
FULL TEXT OF THE ORDER OF CUSTOMS AUTHORITY OF ADVANCE RULING, DELHI
M/s Sunmarg Consultancy LLP, 132/5 Bari Pahar. Panipat. Haryana-132103. having IEC No. AEWES2040E and PAN- AEWFS2040E(applicant. in short) has filed an application dated 01.02.2023, received in this office on 03.02.2023, seeking advance ruling under section 28-H of the Customs Act, 1962, before the Customs Authority for Advance Rulings, New Delhi (CAAR, New Delhi in short). The application was accordingly registered under Serial No. 04/2023 dated 03.02.2023.
2. Import of rags of cotton, woollen and synthetic, covered under ITC HS code 6310 is the proposed activity as stated in the application and the applicant, vide the aforesaid application has sought ruling on the question, namely what will he the assessable value for calculating the basic custom duty and cess on rags proposed to be imported by them under HSN 63 I 0?
3.1 The applicant has stated that, as per their understanding there is no notification, fixing tariff value for the imported goods in question; however, customs authorities at various customs ports are charging duties at the rate of .30/.32/.35 cent USD/kg which is not prescribed by any circular or notification. Further, the applicant has stated that the import of unmutilated rags is allowed only at Kandla Special Economic Zone (KASEZ); all goods imported at KASEZ are segregated; those fit for export quality are exported and leftover is mutilated and cleared in DTA; KASEZ can clear mutilated rags for DTA by charging customs duty.
3.2 Further. the applicant submitted that in DTA only mutilated rags are allowed so import in DTA whether from KASEZ or other customs port is subject to 100% inspection to avoid clearance of unmutilated rags; as per Order No. 01/2022-23 dated 27.04.2022 issued by the office of Development Commissioner, Kandla Special Economic Zone (KASEZ), valuation of rags for the purpose of calculation of assessable value has been provided; the value fixed by KASEZ by the said Order be made applicable to them,
4. Personal hearing in the matter took place on 06.06.2023 wherein the Authorized Representative (AR) of the applicant briefly explained nature of the subject goods which they have proposed to import. The AR ,further explained valuation practice in respect of the imported subject goods’ at various ports of clearance. The Authority discussed the provisions laid down under section 28H of the Customs Act, 1962 regarding question on which advance ruling can be sought vis-a-vis question posed for ruling by the applicant in the instant application 1in. advance ruling. The Authority requested AR to explain, as to how the question posed fin. advance ruling is covered under the provisions vide section 28H of the Customs Act, 1962.10 which AR requested for some more time to submit their reply, in the mailer and requested for another dale of personal hearing.
5. Comments in the matter have been received from the concerned Commissionerate wherein, it is inter-alia stated that section 2(4 I ) and section 14 of the Customs Act,1962. provide meaning of the ‘value of imported goods’ and mentioned that the methods adopted for the purpose of determination of value of goods have been specified in the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (CV R, in short): the instant application has been filed for the question of law or fact under subsection 2 (c) of section 28H of the Customs Act: however, the instant question has been raised for arriving at the assessable value of goods which clearly is not a question of law under contention; the importer has not raised any inconsistency with respect to current legal provisions used for arriving at the assessable value; therefore the question raised by the applicant is beyond the scope mentioned under section 28H (2) (c) of the Customs Act, 1962; in the instant case, it appears that the instant application does not fall under the purview of the sub-section (2) of section 28H of the Customs Act. 1962: therefore, the instant application does not appears to be maintainable.
6. Next personal hearing, in the matter was held on 05.07.2023 wherein the AR stated that they have filed the application, so that uniform valuation of the goods in question he accepted across all the ports, for their clearance; in other words, any circular issued for valuation of such goods by a port be implemented across the country so that there is uniformity in valuation practice: on the above argument, the Authority pointed out that as per mandate for advance rulings derived from the provisions under the act, ruling. in this regard is to be issued on the principles to be followed, for valuation of the goods and not to decide valuation of a particular product; however, the AR reiterated that their purpose to seek ruling is to have existence of same valuation practice across all ports.
7. The applicant has also given further additional submissions with reference to comments of the concerned Commissionerate wherein the applicant has inter-alia stated that value of imported goods shall be calculated as per section 14 of the Customs Act, 1962 according to which transaction value is price actually paid or payable for the goods: in their case the transactional value is available which means transactional value should be the value of imported goods; further, CBIC has not fixed the tariff value through a notification for the goods mentioned in the instant application; as per their understanding there is no notification to fix tariff value; however, customs authorities at various customs ports are charging duties at the rate of .30/.32/.35 cent USD/kg which is not prescribed by any circular or notification; further, the office of Development Commissioner, Kandla Special Economic Zone (KASEZ) has decided valuation of rags for the purpose of calculation of assessable value; from the above, it is clear that transaction value should be the value of imported goods; as per Section 281-I of the Customs Act, 1962, the questions on which advance ruling may be issued includes: (c) the principles to be adopted for the purposes of determination of value of the goods: from the above it is evident that the advance ruling can be sought regarding determination of value of goods and their case duly falls within the ambit of the scope of advance ruling: also, the applicant wish to know, which principle will be applicable on them for the purpose of determination of value of goods proposed to be imported by them viz. transaction value or value as per rule 4-9 of CVR rules 2007 or value as decided by the office of Development Commissioner, Kandla Special Economic Zone (KASEZ) as per order no. 01/2022-23 dated 27.04.2022.
8. Thus, having gone through the application for advance ruling, additional submissions of the applicant, comments of the concerned Commissionerate and having heard the authorized representatives of the applicant during the personal hearing, I note from the submissions of the applicant that purpose for which ruling has been sought is for the uniform valuation of the goods in question to be accepted across all the ports tbr their clearance and such submissions have been reiterated by the applicant. Whereas sub-section (2) of section 28H ‘provides for the question on which the advance ruling shall be sought and such question under clause (c) provides that question shall be in respect of the principles to be adopted for the purposes of determination of value of the goods under the provisions of this Act. It is needless to say that provisions laid down regarding, valuation of goods under the Customs Acts, 1962, under section 14 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, are amply clear and unambiguous. I also note that the question framed by the applicant for seeking advance ruling is not in accordance with the provisions under Sub-section (2) of the section 28H of the Customs Act, 1962. Accordingly, I do not find any merit in the application made by the applicant, seeking ruling on the question, namely, what will be the assessable value for calculating the basic custom duty and cess on rags proposed to be imported by them under INN 6310 and thus, I order to reject the application for advance ruling of the applicant registered under Serial No. 04/2023 dated 03.02.2023.
