1988 (4) TMI 264 - AT - Central Excise

Summary

Issues:
Customs valuation rules - Rule 8 and Section 14(l)(b) of the Customs Act, 1962; Additional evidence in appeal; Violation of Rule 5 of the Customs (Appeals) Rules, 1982; Loading percentage on imported goods; Remand of the matter for fresh decision.

Customs Valuation Rules and Loading Percentage:
The case involved a dispute regarding the loading percentage on imported goods by the respondents, who had a joint-venture agreement with a foreign collaborator. The Assistant Collector initially ordered a 20% loading for capital equipment and machinery and a 13% loading for components. However, the Collector (Appeals) set aside the loading for capital equipment and machinery and reduced the loading for components to 1% only. The department appealed against this decision, arguing that the Collector (Appeals) heavily relied on additional evidence without giving the department an opportunity to examine and rebut it, thus violating Rule 5 of the Customs (Appeals) Rules, 1982.

Additional Evidence and Violation of Rule 5:
The department contended that the Collector (Appeals) based the decision on additional evidence, including certificates and letters, which came into existence after the Assistant Collector's order. The department argued that the Collector (Appeals) should have allowed them to examine and counter this evidence before making a decision. The respondents opposed the department's plea for remand, stating that the 1% loading ordered by the Collector (Appeals) was within the limit proposed in the show cause notice. However, the department emphasized that Rule 5 of the Customs (Appeals) Rules, 1982 was a statutory requirement concerning the right to examine and rebut evidence.

Remand for Fresh Decision:
After careful consideration, the Tribunal accepted the department's plea, noting that the violation of Rule 5 of the Customs (Appeals) Rules, 1982 caused substantial prejudice to the department's case. The Tribunal emphasized the importance of principles of natural justice and remanded the matter to the Collector (Appeals) for a fresh decision. The Collector (Appeals) was directed to pass a new order within four months from the date of the Tribunal's decision, ensuring compliance with the rules and allowing both parties a fair opportunity to present their case.