Case Law Details
Metal Powder Company Ltd. Vs Commissioner of Customs (CESTAT Chennai)
Introduction: The case of Metal Powder Company Ltd. Vs Commissioner of Customs at CESTAT Chennai involves the enhancement of the declared value of imported aluminium powder, leading to an increase in customs duty. The Department re-determined the value due to perceived undervaluation, and because the foreign supplier was a related party to the appellant. The CESTAT Chennai has directed the matter to be reconsidered.
Analysis:
1. Enhanced Value: The appellant imported aluminium powder and declared certain costs. The Department increased the value per Kg, leading to a five-fold increase in the duty, which the appellant paid under protest.
2. Related Party Transaction: The foreign supplier being a subsidiary of the appellant led to suspicions that the transaction might not have been conducted at arm’s length, further complicating the assessment.
3. Lack of Speaking Order: The original authority did not provide a speaking order, explaining the basis for the enhancement, a key point raised by the appellant.
4. Ignored Evidence: The appellant provided evidence, including details of similar transactions, that was ignored by the authorities below.
5. Appeal and Re-Consideration: The Commissioner (Appeals) upheld the enhancement. However, CESTAT found the assessment lacking in detailed analysis and directed a remand for re-consideration.
Conclusion: This case emphasizes the importance of a thorough and transparent assessment process in customs duty determination, especially when related parties are involved. The lack of a speaking order and the failure to consider evidence led to a ruling that sent the case back for re-consideration. It demonstrates the necessity for customs authorities to follow due process and provide clear reasoning for their decisions, even when the importers waive their right to Show Cause Notices and personal hearings. The judgment reaffirms the principles of fairness and transparency in tax assessments.
FULL TEXT OF THE CESTAT CHENNAI ORDER
1. Brief facts are that the appellants imported 20 MT of Aluminium powder 99.7% declaring the total cost as USD 50920 and 20 MT of Aluminium Powder 96% at total cost of USD 50740. The Department was of the view that the value declared was very low and further the foreign supplier M/s Sterling Metal Power Company, Malaysia being subsidiary of the appellant is a related party transaction. The Department re-determined the value @ 764.37 per Kg. Against this the appellant filed appeal before the Commissioner (Appeals) who upheld the enhancement of value. Hence this appeal.
2. The Ld. Consultant Shri G. Shivakumar appeared and argued for the appellants. It is submitted that the original authority did not pass any speaking order. The authorities below have erroneously held that the appellant has accepted the enhancement of value and paid the duty. It is submitted that the duty was paid under protest. The Department has enhanced the value five times the declared value which is without any basis. The appellant had waived the Show Cause Notice and personal hearing. However, when the value is being enhanced the appellant ought to have been intimated as to the basis for enhancement. The appellant is not aware on what basis the value has been re-determined by the Department. In fact, the appellant had furnished price details of the same supplier, of import of identical goods. The Department did not consider any of these. It is submitted that the price declared is genuine and goods are sold to others also by the foreign supplier at similar price and the relationship has not influenced the price. The appellant has paid duty under protest which has been noted in the impugned order. The authorities below ought not to have concluded that appellant has accepted the enhancement of value. The Ld. Consultant prayed that the appeal may be allowed.
3. The Ld. Authorized Representative Shri R. Raja Raman and M/s Anandlakshmi Ganesh appeared and argued for the Department. They supported the findings in the impugned order.
4. Heard both sides.
5. It is not disputed that the overseas supplier is a related party. The appellant had waived the Show Cause Notice as well as PH and requested for assessment. They also furnished details of contemporaneous imports. However, the authorities below have not considered any of these evidences. The Commissioner (Appeals) has stated that appellant accepted the enhancement and paid duty under protest. There is no detailed discussion as to how the enhancement has been arrived at by the assessing authority. For this reason we are of the considered view that the matter has to be remanded to the adjudicating authority for re-considering the assessment of the imported goods. The appellant is at liberty to furnish details of contemporaneous imports before the adjudicating authority who shall look into these evidences also.
6. In the result, the impugned order is set aside. The appeals are allowed by way of remand.
(Order pronounced in the open court on 03.08.2023)
