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TMI Blog2023 (9) TMI 825X X X X Extracts X X X X X X X X Extracts X X X X ..... ate it - rendering by lower authorities, the Hon'ble High Court, with prefacing observations on the ideal of harmonious consistency among coordinate benches - contemporarily and chronologically - as the foundation of functioning by the Tribunal, ventured to suggest that the rival sides had not enlightened the Tribunal on disposals in the past, directed a fresh look at the issue flagged in the earlier decision and to proceed with disposal on merits should the Tribunal be satisfied on that score. The issue, simply put and manifested as 'premature appeal', is the dismissal of challenge without examining the merit of the impugned order for not being, as yet, an appealable order despite insinuation of detriment therein that the Deputy Commissioner had not saddled the appellant with. 2. The cavil of the appellant over the sustaining of such detriment befalling them at the secondary level, on appeal filed at the instance of jurisdictional Commissioner of Customs, and unwillingness to be the 'prototype' for, and on behalf of, similarly placed importers is not unnatural but their plea of disposal on merit in similar disputes in the past is no salve to our continued disquiet for several rea ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... known as Brussels Definition of Value (BDV), informed Customs Valuation Rules, 1963 framed under the authority of section 14 in the recently legislated Customs Act, 1962. Relative inadequacy in communication systems impeded righting of deliberate suppression of real values of goods as well as the shifting of compensation to services appended to commercial engagement in goods and the inherent inequity of unconstrained and less than specific formulation of the concept and scheme of valuation prompted negotiations under the aegis of the General Agreement on Trade and Tariffs (GATT) effected through 'Rounds' corresponding to timelines coinciding with significant milestones. Hence, before the 'Tokyo Round' concretized the Agreement on Customs Valuation (ACV), incorporating 'transfer pricing' of a sort as well as absorption of value of specified services in 1980, executive units, broadly endowed with investigative jurisdiction as 'officers of customs', known as Special Valuation Branch (SVB) were established in the major custom houses of the time. It was with much reluctance, and even then not entirely adhering to the Agreement, that the Customs Valuation (Determination of Price of Impo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1963. That, though setting in motion a process of international consultation, was found to be insufficient, both in affirmation of concept of value for benchmarking and in the rules affording re-determination, as framework for uniformity of treatment across customs jurisdictions and even within. The Tokyo Round of negotiations for the General Agreement on Trade and Tariffs (GATT) - as it then was - was able to evolve consensus on Article VII in 1980 as a roadmap to Agreement on Customs Valuation (ACV) in the Uruguay Round. The redrawing of section 14 of Customs Act, 1962 and notification of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 coincided with India going on board with the first of the two milestones to be followed thereafter by further re-design of section 14 of Customs Act, 1962 concurrently with coming into force of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 as most recent. The significance of the nomenclature adopted for the subordinate legislation, intended as machinery provision for re-appraisal of value, is not drafting preference; it is a reflection of increasing regimentation of value for mitigating risk of ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on as well as the additions. 8. By amendment that came into effect from 10th October 2007, the valuation mechanism in Customs Act, 1962 was set on the foundation of '14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behalf : Provided that such transaction value in the case of imported goods shall include, in addition to the price as aforesaid, any amount paid or payable for costs and services, including commissions and brokerage, engineering, design work, royalties and licence fees, costs of transportation to the place of importation, insurance, loading, unloading and handling ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce is the sole consideration for sale; (b) where such price is not ascertainable, the nearest ascertainable equivalent thereof determined in accordance with the rules made in this behalf .........' of Customs Act, 1962 governed determination of assessable value with recourse to Customs Valuation Rules, 1963 and rule 3 therein having permutations - of same manufacturer selling goods to other importers in India, of the same manufacturer selling goods to importers elsewhere, by other manufacturers in exporting countries to buyers in India or by the same manufacturer in its domestic market adjusted for specified factors and local taxes - with any of these acceptable only upon being transacted in 'competitive conditions' that meant 'Explanation -In this rule sale under competitive conditions means a sale in the ordinary course of trade between a seller and a buyer who have no interest in the business of each other and where price is the sole consideration.' below rule 3 of Customs Valuation Rules, 1963. 10. Furthermore, rule 5, rule 6 and rule 7 dealt with specific transactional equation of agent/distributor and branch/subsidiary, use of trademark and sale on behalf of exporter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... td challenges order-in-appeal no. 400/ MCH/AC/SVB/2012 dated 5th July 2012 of Commissioner of Customs (Appeals), Mumbai Zone - I which has included 'royalty' and 'lumpsum fees' in the assessable value of imports effected by them from a related person, M/s TDK Toshiba Limited, Japan. The original order dated 2nd February 2006, accepting the invoice value, came up for review on expiry of three years and renewal thereof, in order of continuance for a further period of three years, was sought to be quashed in appeal filed on behalf of the jurisdictional Commissioner of Customs who had proceeded in the manner permitted in section 129D (2) of Customs Act, 1962 and presumably on the supposition that the official in the Special Valuation Branch (SVB) had undertaken adjudicatory function vested in 'proper officer' intended by section 17 or section 18 of Customs Act, 1962. The finding of the first appellate authority, who ordered the addition of royalty of 3% and 5% of the selling price along with the lumpsum fees of ¥ 14,000,000, is cause of grievance to the appellant. 13. We have heard Learned Counsel for appellant and Learned Authorized Representative at length. It is on record that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... no import had been subject to it. Nor is there any record of any detriment to importers thereafter and, if an irreversible detriment had been imposed, appeal would have been resorted to as surely as night follows day. Customs Act, 1962 is concerned with levy of duty, as well as the enforcement of prohibitions, under law, on import/export goods. Other consequences such as differential duty, refund, drawback, fines and penalties may arise but only in consequence. The possible detriment that may arise on a future date is not a grievance that should be entertained unless and until it does translate as one upon occurrence of import or export of goods. We do not interfere with proceedings under section 18 of Customs Act, 1962 except if terms of such assessment is a cause of grievance. Even so, no incidence of provisional assessment is impugned before us either. We are also not vested with authority to approve or disapprove an 'advance ruling' which has yet to place burden on goods under Section 46 of Customs Act, 1962. 16. Further, for the Tribunal to render a decision on goods that are, as yet provisionally assessed, would be a premature intervention. The time of finalization that sho ..... X X X X Extracts X X X X X X X X Extracts X X X X
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