2020 (10) TMI 285 - AT - Customs

Valuation of imported goods - Cut Orchid Flowers (Dendrobium Hybrid) of various varieties and colour - undervaluation of goods - demand of duty on the enhanced value on the basis of the certain market enquiries - principles of natural justice - HELD THAT - From Public Notice No 48/2003 dated 08.12.2003, issued by the Commissioner of Customs (Import), Air Cargo Complex, Mumbai it is quite evident that the procedure of Kaccha Bill of Entry is a special procedure for facilitating the immediate clearance of consignments of certain categories of goods. Public notice makes it clear that Kaccha Bill of Entry shall be filed as a prior bill of entry and processed accordingly. It also prescribes that these Bill of Entries shall be system appraised on the basis of the declarations made by the importer and the duty payment challan shall be system generated. In case the department finds that any duty has been short levied or short paid against a Kacha Bill of Entry, then it will communicate to the importer about short payment of duty, and also initiate the legal action as per law. Importer has to pay the duty immediately or this facility of allowing clearance on the basis of Kaccha Bill of Entry shall be withdrawn. In their submission and arguments appellants submit that they have no grievance with the order of the Commissioner (Appeal) as he has remanded the matter back to the original authority to pass a fresh order (refer para 11), following the principles of natural justice. Their grievance is against the observations made by the Commissioner (Appeal) in para 7, 8 10 (reproduced above in para 3 of this order). The learned counsel submits that as per the observations made in para 10, Commissioner (Appeal) has decided the issue himself upholding the assessment orders enhancing the duty. By doing so he has seriously constrained the original authority from examining the issue afresh and passing the speaking order following the principles of natural justice. In terms of the public notice referred above, it is quite evident that allowing clearance against Kacha Bill of Entry, is a special dispensation made by the revenue for allowing speedy clearance of consignments of certain category of goods. Hence by availing this special dispensation, appellants are bound by the requirements laid down by that public notice, specifically in respect of the payment of duty as per the assessment made. Hence we do not find any merits in the submissions of the appellants that they were coerced and forced to pay the enhanced duty. Section 17(5) of the Customs Act, 1962, specifically provides that in case where the Customs Officer amends any assessment made by the importer, then Custom Officer will issue a speaking order giving the reasons for making the amendments in the assessment as made by the importer - In the present case Customs has not issued any such order under Section 17(5). In absence of any order under Section 17(5) of the Customs Act, 1962, Commissioner (Appeal) was justified in remanding the matter to the original authority for passing the order under Section 17(5). Appeal disposed off.

Issues Involved:
1. Undervaluation of imported goods.
2. Payment of differential duty without issuance of a show cause notice.
3. Justification for the increase in declared value.
4. Compliance with Customs Valuation Rules.
5. Requirement for a speaking order under Section 17(5) of the Customs Act, 1962.
6. Remand order by the Commissioner (Appeal).

Issue-Wise Detailed Analysis:

1. Undervaluation of Imported Goods:
The appellants imported Cut Orchid Flowers from Thailand and filed nineteen Kutcha Bill of Entries for clearance. The department, based on market inquiries, believed the goods were undervalued and demanded duty on an enhanced value. The appellants paid the enhanced duty due to the perishable nature of the goods but later challenged the demand, arguing that the declared value was accurate and the duty increase was arbitrary and without legal sanction.

2. Payment of Differential Duty Without Issuance of a Show Cause Notice:
The appellants contended that they paid the differential duty before the issuance of a show cause notice, which they argued was illegal and unjust. The Commissioner (Appeal) noted that under Section 28(1)(b)(ii) of the Customs Act, 1962, the proper officer can demand short-levied duty, and a notice under Section 28(1)(a) is required only if the duty is not paid. Since the appellants paid the duty, the notice requirement was not triggered.

3. Justification for the Increase in Declared Value:
The appellants argued that no reasons were provided for increasing the declared value, and no contemporaneous imports or similar goods were examined as per the Customs Valuation Rules. The Commissioner (Appeal) observed that the department conducted a market survey and used the deductive value method (Rule 7 of the Customs Valuation Rules, 2007) to determine the value. The Commissioner (Appeal) justified the department's action, noting that the appellants consented to pay the differential duty and that the goods were system appraised based on self-declaration.

4. Compliance with Customs Valuation Rules:
The Commissioner (Appeal) cited Rule 12 of the Customs Valuation Rules, 2007, which allows the proper officer to doubt the declared value and request further information. If the declared value is still doubted, it can be rejected, and the value determined sequentially as per rules. The Commissioner (Appeal) found that the department's action was justified based on the market survey and deductive value method.

5. Requirement for a Speaking Order under Section 17(5) of the Customs Act, 1962:
The appellants argued that the proper officer should have issued a speaking order under Section 17(5) of the Customs Act, 1962, explaining the reasons for enhancing the duty. The Commissioner (Appeal) remanded the matter to the original authority to pass a fresh order following the principles of natural justice, as no speaking order was issued initially.

6. Remand Order by the Commissioner (Appeal):
The Commissioner (Appeal) remanded the case to the adjudicating authority for de novo decision but made observations justifying the department's actions. The appellants argued that these observations constrained the original authority from examining the issue afresh. The Tribunal agreed, noting that the observations in para 10 of the Commissioner (Appeal)'s order were uncalled for and contrary to the remand order in para 11. The Tribunal obliterated para 10 from the impugned order and directed the original authority to adjudicate the matter without reference to it.

Conclusion:
The Tribunal disposed of all nineteen appeals by removing para 10 from the impugned order and remanding the matter to the original authority for fresh consideration, ensuring compliance with the principles of natural justice and without any reference to the obliterated paragraph.

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