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TMI Blog2024 (7) TMI 16X X X X Extracts X X X X X X X X Extracts X X X X ..... the MEPZ, Special Economic Zone which is a wholly owned subsidiary of M/s Tokyo Chemical Industry Company Limited, Japan from whom products are imported and distributed in India. The Appellant was engaged in trading of these chemicals to Customers located in SEZ & 100% EOU Units and also into the Domestic Tariff Area (DTA). Before July 2018, the Appellant had supplied goods to its branch in DTA. However, from July 2018 onwards, the Appellant supplied goods to its wholly owned subsidiary Viz. Tokyo Chemical Industry (India) Private Limited, a DTA unit and also to SEZ & 100% EOU. The Appellant supplied goods to DTA unit at a value higher than the value of importation which appears to have been approved by SVB. 2.2 Since, the Appellant and their holding company i.e., Tokyo Chemical Industry (India) Private Limited holding 100% shares are related in terms of Customs Valuation Rules, 2007, they had applied to the Special Valuation Branch (SVB), Custom House, Chennai for determining the assessable value of the goods imported by the Appellant. The SVB vide Order-in-Original No. 22881/2013 dated 11.12.2013 held that the value declared by the Appellant was at arm's length and could be acce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Appeals) who vide Order-in-Appeal No. 152/2020 dated 22.06.2020 rejected the appeal on the principle of res judicata, mentioning the earlier Order-in-Appeal No. 82/2018 dated 18.06.2018. 2.5 Aggrieved, the Appellant came on appeal before this forum. 3. The Appellant's submissions as found in their Grounds of Appeal are summarized as follows :- (i) That the impugned order does not satisfy the provisions of the Customs Act,1962 read with Customs Valuation Rules, 2007 and that the assessing officer has to record reasons for rejecting the declared transaction value of imported goods before proceeding further in the light of the decisions in:- (a) Commissioner of Customs, Calcutta Vs. M/s. South India Television (P) Ltd. [2002 (145) ELT A159 (SC)] (b) Commissioner of Central Excise and Service Tax, Noida Vs. Sanjivani Non-Ferrous Trading (P) Ltd. [2018 (11) GSTL J84 (SC)] (c) Commissioner of Customs Vs Bayer Corp. Science Limited [2015 (324) ELT 17 (SC)] (d) Century Metal Recycling Pvt. Ltd. Vs. Union of India. (ii) It was pointed out that the Impugned Order is a cryptic and non-speaking Order, devoid of any analysis, rationale or basis for confirming the demands against the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n record. The Commissioner (Appeals) having failed to do the required exercise in the matter in hand, his order cannot be sustained." (iii) The Appellant further averred that the Department erred in as much as it sought to adopt the price on the basis of price charged to a prospective customers for determination of assessable value of the imported goods. It was pointed out that the impugned order did not properly provide the evidence available for enhancement of assessable value by 90%. The impugned order does not provide the rule referred by the Specified Officer to arrive at the enhanced assessable value relying on the following case law. (a) Commissioner of Central Excise and Service Tax Noida v. M/s Sanjivani Non Ferrous Trading Pvt Ltd [2018 (11) G.S.T.L. J84 (S.C.)] (b) Anil Kumar Anand vs Commissioner of Customs [2018 (361) E.L.T. A233 (S.C.)] "Once the statutory Rules exist and provide for sequential implementation, the assessing authority has no option but to proceed in accordance with those Rules, in that manner. We did put this squarely to learned senior counsel for the respondent, who really could not persuade us, or give a satisfactory answer as to why the con ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elf-assess the duty. However, on verification, if the proper officer finds that the self-assessment is not done correctly, then he may re-assess the duty leviable on such import of goods. If the re-assessment is contrary to the self-assessment done by the importer, the proper officer is required to pass a speaking order on the re-assessment, within 15 days from the date of re-assessment of the Bills of Entry as per section 17(5) of the Customs Act. The adjudicating authority is under obligation to pass a speaking order disclosing the grounds for loading or enhancement in the declared value under section 17(5) of the Customs Act. The impugned order has erred by rejecting the appeal, stating it is barred by the period of limitation. Without issuance of speaking order the Specified Officer cannot assess the duty leviable on importation of goods. The limitation for filing appeal under Section 128 would start only from the date of communication of the decision or order to the petitioner. BOE is not a decision or order contemplated under Section 128 of the Act. In this regard, reliance is placed on the following instruction and judicial precedents: (a) The Central Board of Indirect Tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 8) E.L.T. 125 (Mad.)]:- "27. The submission of the revenue that the petitioner should have filed an appeal after entering the BOE's does not impress me, as without a speaking order, the appeal, if any, preferred before the concerned authority under Section 128 of the Act, would clearly be inefficacious. A non-speaking order would present the appellate authority with a situation akin to, in a manner speech, "an inscrutable face of a sphinx" (d) Commissioner of Customs, Patparganj vs. M/s Artex Textile Private Limited [2018 (360) E.L.T. 382 (Tri. - Chan.)] "The assessment of imported goods have to be done as per transaction value in view of Rule 3 read with Rule 12 of Customs Valuation Rules and adjusted in accordance with the provisions of Rule 10. Unless the particular transaction falls within the exceptions in Rule 3(2) of CVR, the Customs authorities are bound to assess the duty on the transaction values. The adjudicating authority is under obligation to pass a speaking order disclosing the grounds for loading or enhancement in the declared value" (e) M/s. Karan Associates v. Commissioner of Customs (Import) [2015 (330) E.L.T. 321 (Tri. - Mumbai)] "By inserting se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... authority would be required to give reasons in support of its conclusion. This would undoubtedly curtail/reduce unwarranted litigation. The above process of natural justice is only in compliance with elementary principles of Rule of law. The above process may not be elaborate but must meet the essence of fair play so that no person is left with a feeling of being a target of arbitrary and unfair behavior on the part of the authorities". even after having finalized the said BOE there is no communication from the Assessing officer indicating the reasons for enhancing the duty payable on final assessment. In case reasons are given, it is likely that the petitioner/importer may see merit in the same and accept it. However, in the absence of reasons, the party does not know why its contention/explanation was not acceptable. This alone prevents the authority from exercising unbridled powers in arbitrary manner while finalizing the BOE arbitrarily. Therefore, we hold that the assessment of the said BOE are in breach of natural justice and bad in law" (b) Ram Niwas Bansal vs. State Bank of Patiala & Another I [(1999) IILLJ 126 P H], [(1998) 119 PLR 7681] "The main grievance of the pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iance was placed on the following decisions:- (a) Tilokchand Motichand & Ors. Vs. H.B. Munshi & An [1970 AIR 898 (SC)] held that if a petition under Art. 226 is dismissed not on merits but because an alternative remedy was available to the petitioner or that the petition was dismissed in limine without a speaking order such dismissal is not a bar to the subsequent petition under Art. (b) Apex court in Virudhunagar Steel Rolling Milis vs The Government Of Madras [1968 AIR 1196, 1968 SCR (2) 740] held that while negativing the contention on the facts of the case this Court reaffirmed that if the petition is dismissed in limine without passing a speaking order then such a dismissal cannot be treated as creating a bar of res judicata. (ix) It was submitted that the SVB had confirmed in the Order-in-Original No. 22881/2013 dt. 11 December 2013 and also vide their renewal order dated 31 August 2017, that the relationship of the exporter and the importer has not influenced the valuation of the goods. The Appellant had obtained clearance from Special Valuation Bench regarding the fairness of the value of the imported goods. The Appellant has further added value to the import price and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ence of any judgement, degree, order or direction of the Appellate Authority, Appellate Tribunal or any Court, the limitation of six months shall be computed from the date of such judgement, decree, order or direction. Both these provisions require to be read harmoniously. It was held that the dispute in assessment came to finality once the matter was decided in favour of the appellants by the lower appellant authority and the department choose not to file any further appeal against the same. Once the very cause of the protest came to an end by the resolution of the assessment dispute at the hands of the Lower Appellate Authority, it cannot be held that the protest would survive beyond the date of the order passed by the lower appellate authority in favour of the appellants. Thereafter, it was the duty of the appellants to take steps to file necessary refund claims within the time limit prescribed. The forth proviso prescribing limitation of six months from the date of a judgment order of the appellate authority, applicable in this case. The appellant had only six months time from 24.5.2007(Date of decision in favour of the appellant) to file a refund claim. As they have not filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ility of the price. Accordingly, the declared price should have been accepted as the transaction value. Reliance was placed on the following decisions in support of this contention:- (a) Commissioner of Customs (Import), Mumbai Vs. Viacom Electronics Pvt. Ltd. [2017 (357) ELT 754 (Tri-Mumbai)]:- "4. We have carefully considered the submissions made by ld. AR and perused the records. It is observed from the original order that except the allegation that the respondent has not submitted any documents, no reason was given for enhancement of 20%. Even there is no whisper of relationship between the importer and the foreign supplier. Since no material was available, even though the appellant has not produced any documents, the adjudicating authority could not have enhanced 20%. The Commissioner (Appeals) rightly allowed the appeal of the respondent. Considering the fact that, there is no incidence of any agreements such as joint venture, transfer of technical know-how, patents, trademarks, etc., the result of which could have influenced the invoice value. Thus, there is absolutely no tip of evidence by which the declared value of the respondent can be doubted. On going through the g ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 481 (SC)] "11. In the present case that is not so. The respondent here had conceded before the appellate authority that the two companies are related. We make it clear that merely because the two parties are related to each other will not amount to undervaluation per se. It will depend on the facts and circumstances of each individual case." 5. The Ld. Authorised representative Sh. Anoop Singh representing the department justified the enhancement of value of import clearances to a related DTA Unit and prayed for dismissal of appeal filed by the Appellant. 6. Heard both sides and carefully considered the submissions and evidences on record. 7. The following issues arise for decision in this appeal:- i. Whether the order of enhancement of the declared values by the specified officer, MEPZ-SEZ in respect of DTA clearances by the Appellant to their wholly owned branch / subsidiary is legal and proper in terms of provisions of Section 14 of the Customs Act, 1962 read with the Customs Valuation Rules, 2007? ii. Whether the payments made by the Appellant are to be treated as payments under protest? 8.1 The Appellant has cleared the goods to DTA unit at a value higher than the va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... p or any other material facts affecting the valuation of goods under Rule 2(2) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 read with Section 14(1) of the Customs Act, the importer of the concerned assessing Group shall inform the same to SVB immediately so as to enable the review of the decision in force. The imported goods thereafter will be assessed provisionally with Extra Duty Deposit (EDD) equivalent to 1% of the Assessable Value. In case, there is any factual error or omission, the same shall be brought to the notice of this office suomoto by the importer without delay. 7. This order does not take into account any suppression or mis-declaration affecting the invoice value, which shall be dealt with appropriately under the law and procedure as and when noticed. 8. This decision is subject to a periodical review after a period of 3 years. To facilitate prompt and timely review, the importer is directed to come forward with necessary data before 3 months from the date of the expiry period. 9. On expiry of 3 years period, if no renewal is done, the Order will stand expired and the Assessing Groups shall resort to Provisional Assessment wi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority, prima facie, without going into the merits of the case, dismissed the appeal on the ground of limitation where no speaking order was issued by the Assessing Authority. The Appellant inadvertently failed to exercise the option of "Duty Payment under Protest" and discharged the duty on the said Bill of Entry dated 05.10.2016 on self-assessment basis. In spite of the Appellant intimating the assessing authority of MEPZ-SEZ vide letter dated 05.10.2016 that they are not in agreement with the valuation determined by the department and are discharging duty on higher value only to service their customers, the Specified Officer, MEPZ has not issued any speaking order justifying the enhancement of value. The appellant has been communicating that they are not in agreement with the enhancement of the values by the specified officer, MEPZ-SEZ vide their Letter dated 05.10.2016 which is extracted below as a ready reference:- 11. Subsequently, this was followed up with Letters dated 17.01.2018 and 27.06.2018 asking for provisional assessment and also for passing a speaking order. Similarly, they have represented to the Development Commissioner, MEPZ-SEZ, Chennai (Letter dated 17.07.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cer finds that the self-assessment is not done correctly, then he may re-assess the duty leviable on such import of goods. If the re-assessment is contrary to the self-assessment done by the importer, the proper officer is required to pass a speaking order on the re-assessment, within 15 days from the date of re-assessment of the Bills of Entry as per section 17(5) of the Customs Act. The adjudicating authority is under obligation to pass a speaking order disclosing the grounds for loading or enhancement in the declared value which was never complied with. We also find that the Instruction No. 07/2018-Customs dated 05 April 2018 providing for issuance of speaking order was never followed by the Specified Officer from 05.10.2016 to the year 2020. Instead, the specified officer, MEPZ-SEZ enhanced the value relying solely on the worksheet provided by the Appellant. It is a settled law that orders which are cryptic and non-speaking without going into the merits of the case and without considering the points which arise for determination are illogical not being supported by any reasoning and are blatantly illegal and required to be set aside. In this regard, we find that the ratio of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er, which was not issued, we order that all the payments made since 05.10.2016 at enhanced values are to be treated as having been made under protest and the time limit prescribed under Section 27 of the Act will not be applicable and the refund application cannot be considered as time barred. CESTAT Bangalore in the case of Commissioner of Cus, C. Ex. & ST., Guntur Vs. Fairway Trading Company Pvt. Ltd. [2014 (10) TMI 506 - CESTAT Bangalore] held as follows:- "2. The facts in this case are very peculiar. The assessment is contrary to the law and the declaration filed was not accepted and subject to verification by the Revenue, higher duty was collected. That being the position, the correct procedure to be followed by the appellant was to pay duty under protest, in which case it would have meant that assessment is not final. Further, there is no procedure prescribed for payment under protest in Customs law. Therefore, the letter written by the appellant wherein they have specifically stated that they have been compelled to pay higher duty by the Customs and therefore they are paying it with an understanding that the amount will be refunded has to be treated as protest. Therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds are imported at higher prices or for any other reason, the specified officer must have taken it up with the SVB, Chennai for review. 17. In view of the aforesaid discussion and appreciating the above case laws unilaterally enhancing the assessable value without issuing any speaking order though repeatedly asked for is in blatant violation of the procedures and absolutely bad in law. As such, the impugned order dated 22.06.2020 issue by the Lower Appellate Authority is devoid of any merits and is required to be set aside. We are of the considered view that the entire issue of enhancement of the values of clearances to the DTA Unit by the appellant is required to be looked into afresh, and so, ordered to be remanded to the Original Authority for issuing a well-reasoned Speaking Order for determination of the values in terms of Section 14 of the Customs Act, 1962 read with Customs Valuation Rules, 2007. No need to mention that there should be strict observance of principles of natural justice before passing such an order. The duty payments made at enhanced rates since 05.10.2016 are treated as payments made under protest and no limitation could be applicable while processing the r ..... X X X X Extracts X X X X X X X X Extracts X X X X
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