By TIOL News Services

CHENNAI, NOV 28, 2014: THE appellant filed this appeal against order of Tribunal - 2005-TIOL-1416-CESTAT-MAD inter alia on the following questions of law:

(a) Whether the Tribunal can go beyond the scope of the show cause notice and the Order-in-Original No.61/2001- CAU, dated 16.3.2001 of the second respondent to hold that there had been provisional assessment in this case?

(b) Whether the Tribunal can suo motu (after hearing has been completed) come to a conclusion that there had been provisional assessment of the impugned goods, even while such an averment did not appear in the show cause notice or in the Order-in-Original or at the time of hearing?

The dispute is regarding inclusion of Technical Knowhow fee in the value of goods imported under EPCG Scheme. The Tribunal held against the appellant and partly allowed the appeal by holding that the technical know-how fee is addable to the assessable value at the time of finalisation of the bills of entry.

Since the issue of provisions assessment is a new finding of fact, which was not pleaded by the Department in the original proceedings, namely, the show cause notice or in the order of the Original Authority, was rendered by the Tribunal, the assessee has chosen to pursue the matter before the High Court on the substantial questions of law, referred above.

After hearing both sides, the High Court held:

It is apposite to refer to a decision of the Supreme Court in SACI Allied Products Ltd. v. Commissioner of Central Excise, Meerut, (2005) 7 SCC 159 = 2005-TIOL-73-SC-CX-LB, in a case relating to excise, wherein the Supreme Court held that the Tribunal ought not to go beyond the show cause notice and the order of the Original Authority.

For coming to the above said conclusion, the Supreme Court relied upon an earlier decision of the Supreme Court in Reckitt & Colman of India Ltd. v. CCE, (1997) 10 SCC 379 = 2002-TIOL-813-SC-CX, in which decision also it has been clearly held that it is beyond the competence of the Tribunal to make out a case in favour of the Revenue which the Revenue had never canvassed and which the assessee had never been required to meet.

Similar view was taken by the Supreme Court in Sanghvi Reconditioners Private Limited v. Union of India and others, (2010) 2 SCC 733 = 2010-TIOL-10-SC-CUS, where the Court held that even though an additional ground/new ground on admitted facts can be entertained, if such additional ground/new ground involves any investigation into facts, then it cannot be permitted to be raised.

In view of the above decisions, the High Court remanded the matter to the Tribunal to reconsider the issue on merits without referring to the issue relating to provisional assessment.

(See 2014-TIOL-2069-HC-MAD-CUS)