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TMI Blog2025 (3) TMI 1074X X X X Extracts X X X X X X X X Extracts X X X X ..... informed that the specialized unit is designated as 'Special Valuation Branch (SVB)' or 'GATT Cell (GVC)' and, from the records, we find that the impugned order [ order-in-appeal no. MUM-CUS-RN-IMP-186/2018-19 dated 27th December 2018 ] of Commissioner of Customs (Appeals), Mumbai Zone - I arises from a designated authority of the specialized wing having determined that, on valuation of '12 NEA parts', '14 NEA services' and 'new machines' imported between 2003-04 and 2013-14, 'licence fee' and 'advertising expenses' were liable to be added for finalization of all pending provisional assessments besides the said addition to subsist prospectively for three years beyond the date of the order. The first appellate authority directed re-calculation of two of the charges that were to be added in addition to holding that '13(ii). The demand of duty, interest, penal action etc. in cases of already finally assessed bills of entry in pursuance of Order-in-Original No. 1466/DC/SVB?JPB/JPS/05-06 dated 29.03.2006 shall be limited to a period of 5 years only as provided under Section 28(4) of the Customs Act in terms of paragraph 12 above.' following which this appeal came to be filed. 2. Le ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mports that were to be burdened with 'additions' to assessable value, in accordance with rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, at the time of import, on finalization in terms of section 18 of Customs Act, 1962 or under section 28 of Customs Act, 1962 would be in order. The impugned order is far from clear about to the reasons for limiting the additions to five years if, as stated in the order impugned before that authority, intent was to enable finalisation of provisional assessments. On the other hand, if the intent was to recover duty short-paid by reasons of evidence of the ingredients enumerated in section 28 of Customs Act, 1962 for invoking the period beyond the normal period of limitation, there should have been a finding of evidence to that effect consequent upon the importer being placed on notice of intent to invoke extended period of limitation as well as the consequential penalties specifically noted in such finding. 7. As we have premised supra, this lack of clarity is a consequence of lack of show cause notice, which is the essence of every detrimental consequence under Customs Act, 1962, and there being nothing on recor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Imported Goods) Rules, 1988 was notified but it did incorporate a series of alternatives for value to be applied in 'intramural' transactions and stipulation, that, even circumscribed, certain accomp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... -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 arbitrariness in assessment. 7. In effecting the transition from the Brussels Definition of Value (BDV) and into its final form, two hiccups came to be legislatively acknowledged of which the fi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ds. - (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 charges to the extent and in the manner specified in the rules made in this behalf : Provided further that the rules made in this behalf may provide for,- (i) the circumstances in whic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f .........' 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 with appropriate additions and adjustments. The final provision, though, expressed as '8. If the value of the imported goods cannot be determined under the foregoing provisions, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ermination of short-levy or short-paid under section 28 of Customs Act, 1962, the Tribunal, then, went on to observe that '14. It is noticed that the order of acceptance of 'invoice value' as reliable enough guide to the 'proper officer' for assessing future imports under section 17 of the Customs Act, 1962 was disputed by reviewing authority. By setting aside that order, the first appellate authority has effectively exercised power of assessment and has confined the 'proper officer' to such assessment on goods that were yet to be imported. On a query, Learned Counsel admitted that the proceedings which culminated in the impugned order had been initiated without a show cause notice; apparently, the prevailing practice is for all transactions between related persons to be subjected to such scrutiny, evaluation and direction to assessing authority. Thus, it is the appeal before the lower authority that took on the appearances of show cause notice. 15. The internal procedures for providing expert consultation to the statutorily empowered assessing officers, even if of long standing existence, do not vest the institution, established by executive fiat for such purpose, with the sam ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... accord approval or disapproval at this stage, we would be appropriating the exercise of powers under section 18 of Customs Act 1962 for finalization of the assessment to ourselves and, thereby, would also erase one level of remedial jurisdiction that would, otherwise, be available to either side. This, in our view, is not the intent of section 129A of Customs Act, 1962. Therefore, it is not within the jurisdiction of the Tribunal to exercise the options in section 129B of Customs Act, 1962. 17. Chapter XV of Customs Act, 1962 contains the design and hierarchy of appeals and that entrusted with Commissioner of Customs (Appeals) is one of the sources of appellate jurisdiction of the Tribunal. The same hesitancy that informs our jurisdictional dilemma attaches also to the first appellate authority. The first appellate authority should also have similarly desisted from intervening before any provisional assessment had been finalised. The impact of the impugned order has been to transfigure a final assessment of the future to provisional assessment at the instance of the Commissioner of Customs. Any grievance arising from finalization does have appellate remedies commencing with the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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