SEPTEMBER 09, 2024

(Part 1 of series of 3 articles )

By S K Rahman, IRS, working as AR at Delhi CESTAT

RECENTLY, in the month of August 2024, the Hon'ble CESTAT Principal Bench Delhi has passed the following Final Orders on Departmental appeals against Orders- in-Appeal on under-valued imports of Aluminium scrap. In the part 1 of Series, the cases of aluminium scrap appeals where consent letter has been given by the importer are covered.

Each of these Orders is discussed as below:

2024-TIOL-777-CESTAT-DEL CENTURY METAL RECYCLING PVT LTD & CENTURY NIKKEI PVT LTD:

2. BRIEF FACTS OF CASES :

2.1. Aluminum scrap of various grades was imported at ICD Kanakpur Jaipur and the importers have filed Bills of Entry for clearing the consignment on the basis of self-assessment of duty on the transaction value. The Assessing Officer doubted the correctness of the value declared in the Bills of Entry and when confronted with contemporaneous data by the Assessing Officer, the importers not only submitted letters stating that the value declared in the Bills of Entry should be rejected, but also accepted the value proposed by the Assessing Officer. The value was, accordingly, enhanced by the Assessing Officer and the importers paid the differential duty of customs. The goods were also cleared after the out of charge order was issued by the Assessing Officer. Thereafter, the importers filed appeals before the Commissioner (Appeals), Jaipur, challenging the enhancement of the value by the Assessing Officer.

2.2. The Commissioner (Appeals) has passed various Orders-in-Appeal allowing the appeals and the enhancement of the value has been set aside by the Commissioner (Appeals) and the value declared by the importers in the Bills of Entry has been accepted. This order has been assailed by the Department and appeals are filed before Hon'ble CESTAT. These Departmental appeals have come up for hearing and the Hon'ble CESTAT has passed Final Orders setting aside these Orders-in -Appeal as detailed above

3. MONETARY LIMIT :The Importer filed one appeal for each Bill of Entry before Commissioner (Appeal ) as assessment in Bill of Entry is treated as assessment Order. So Department also filed one appeal for each Bill of Entry before Hon'ble CESTAT. Initially when these appeals came up for hearing on 15-12-2023, being Departmental appeal, before even the Revenue started making submissions, the learned counsel of the Respondent has raised objections that the each of the 57 appeals pertaining to C/51976/2019 to C/52003/2019 of CENTURY METAL RECYCLING PVT LTD and C/52004/2019 to C/52032/2019 of CENTURY NIKKEI PVT LTD = 2024-TIOL-777-CESTAT-DEL are below the threshold limit for filling appeals as per CBIC Instruction F-390/Misc/163/2010-JC dtd.17-08-2011 further updated by 17-12-2015 and 30-12-2016. After hearing the arguments on both sides on this issue alone, the Hon'ble CESTAT has passed INTERIM ORDER No. 1-30/2024 and ORDER No. 31-62/2024 both dt. 21-03-2024 2024-TIOL-311-CESTAT-DEL in which it was held the CBIC Instruction prescribing monetary limit for filing appeals before this Tribunal is not mandatory in view of the facts and circumstances of the present case (where Revenue could not pass Order), and Departmental Appeals shall be heard on merits.

4. DEPARTMENTAL APPEAL : The Departmental Authorised Representative representing the department, submitted the following:

(i) The Assessing Officer doubted the undervalued Bills of Entry and re-determined the value based on importers' acceptance under the 2007 Valuation Rules, leading to re-assessment of duty. The goods were cleared after paying the enhanced duty.

(ii) Appeals were filed after the out-of-charge order, so Century Metal and CMR Nikkei cannot challenge the assessed value.

(iii) What is admitted need not be proved. In support of this contention, reliance has been placed on the judgment of the Supreme Court in Commissioner of C. Ex., Madras vs. Systems & Components Pvt. Ltd

(iv) Natural justice wasn't violated as importers accepted the proposed value, supported by DJP International vs. Commissioner of Customs (ICD), New Delhi.

(v) The value re-determination basis was explained to importers.

(vi) Post out-of-charge, value cannot be contested due to the inability to re-inspect goods Advanced Scan Support Technologies vs. Commissioner of Customs, Jodhpur.

(vii) The Commissioner (Appeals) incorrectly cited a Circular as the reason for value enhancement.

(vii) The Commissioner (Appeals) erred in stating that the value of imported goods was enhanced based on a Circular issued by the Director General of Valuation.

5. The Hon'ble CESTAT has issued a detailed 51 page Final Order covering all the aspects of this appeal.

6. ACCEPTANCE OF ENHANCED VALUE: The Respondent submitted a letter with each Bill of Entry at the time of assessment, accepting the enhancement of value.After being informed of the reasons for rejecting the declared value in the Bills of Entry and reviewing the contemporaneous import data, they accepted that their declared value was lower than that of similar goods imported at the same time in comparable quantities. After rejecting the declared transaction value, the officer has proceeded sequentially. The redetermination of value was done under Rule 9 residual method of Customs Valuation (Determination of Value of Import of Goods) Rules. 2007 (referred as CVR'07)as explained below

The Commissioner (Appeal) is under wrong impression that "The value of imported goods have been enhanced on the basis of DGoV circular….".

7. DISTINGUISHING SUPREME COURT JUDGEMENT : The Commissioner (Appeals), in view of the decision of the Hon'ble Tribunal 2017-TIOL-3396-CESTAT-ALL and the Hon'ble Supreme Court in Sanjivani Non-Ferrous Trading, 2018-TIOL-447-SC-CUS case set aside the enhancement made during the assessment. The Hon'ble CESTAT in the present Final Order dt.19-08-2024 has held that in the aforesaid judgment of the Supreme Court in Sanjivani Non-Ferrous Trading, the importers had not submitted any letters to the Assessing Authority to the effect that the value stated in the Bills of Entry can be enhanced. the Supreme Court held that it would be incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected, and to give reasons supported by material on the basis of which the Assessing Officer arrives at the assessable value. In the present case, the importers had made a categorical statement that they were accepting that the value declared by them in the Bills of Entry was lower than the value at which identical/similar goods had been imported at or about the same time in comparable quantities and in comparable commercial transactions. The Hon'ble CESTAT, in the present Final Order dt.19-08-2024 in paras 25-26 has held that,

"25……The Assessing Officer was, therefore, not required to give reasons for rejection of the transaction value and determination of the assessable value.

26. The judgment of the Supreme Court in Sanjivani Non-Ferrous Trading is, therefore, clearly distinguishable and would not be applicable to the facts of the present case"

8. Considering all the above, for the reasons stated above, the Hon'ble CESTAT in the present Final Order dt.19-08-2024 2024-TIOL-777-CESTAT-DEL has set aside the impugned Order-in-Appeal dated 05.04.2019 passed by the Commissioner (Appeals) allowing the 57 Departmental appeals.

2024-TIOL-826-CESTAT-DEL SANJIVANI NON FERROUS TRADING PVT LTD:

9. BRIEF FACTS OF THE CASE:

9.1. Aluminum scrap of various grades was imported at ICD Kanakpur Jaipur and the importers have filed 12 Bills of Entry for clearing the consignment during the period November 2016 to May 2017 on the basis of self-assessment of duty on the transaction value. The Assessing Officer doubted the correctness of the value declared in the Bills of Entry and the value was enhanced by the Assessing Officer and the importers paid the differential duty of Customs. The goods were also cleared after the out of charge order was issued by the Assessing Officer. Thereafter, the importers filed appeals before the Commissioner (Appeals), Jaipur, challenging the enhancement of the value by the Assessing Officer.

9.2. The Commissioner (Appeals) by an order dated 07.09.2017, directed the Assessing Officer to pass a speaking order giving grounds for enhancement of the value. Pursuant to the aforesaid order passed by the Commissioner (Appeals), the Assessing Officer passed a fresh order dated 07.03.2019 but assessing the value of the goods at the value declared by the respondent contrary to the enhancement done by the Appraising officer. It is against this order that an appeal was filed by the Department before the Commissioner (Appeals), who by order dated 31.01.2020, dismissed the appeal.

9.3. This appeal has been filed by the Department to assail the Order-in-Appeal dated 31.01.2020 passed by the Commissioner (Appeals).

10. ACCEPTANCE OF ENHANCED VALUE: The Respondent Importer at the time of import has given consent letter stating that : "kindly assess the item e.g. @USD 1619 PER MTS. The above material is urgently required for use in manufacture of finished goods. We are therefore agreeable to pay the duty which may be assessed by your good self. Kindly make the assessment of duty as desired by you and release the goods on priority"

11. NOT A SPEAKING ORDER : Pursuant to the remand order dated 07.09.2017 of the Commissioner (Appeals), the Deputy Commissioner decided the issue by order dated 07.03.2019 in only one paragraph stating that, "..I find that the issue has attained finality in terms of Hon'ble Supreme Court judgment dated 10.12.2018 passed in the importer's own case. I find that the issue involved and facts of the instant case are identical to the case decided by Hon'ble Supreme Court vide judgment dated 10.12.2018 and respectfully following the Hon'ble Supreme Court judgment dated 10.12.2018…."

12. The Hon'ble CESTAT in its Final Order dt 19-08-2024 in this case at para No 13 stated that "The Assessing Officer was required to pass a detailed order after stating the facts of the matter before him and giving reasons as to whether the judgment of the Supreme Court in Sanjivani Non-Ferrous Trading would be applicable since the matter was decided in terms of this judgment. The Commissioner (Appeals), however, without any examination of facts and law has merely held that the matter stands covered by the judgment of the Supreme Court in Sanjivani Non-Ferrous Trading".

13. The Hon'ble CESTAT, by Final Order dt.19-08-2024 in Customs Appeal No. 51976 of 2019 (Commissioner of Customs (Preventive) vs. Century Metal Recycling Pvt. Ltd.) = 2024-TIOL-777-CESTAT-DELcovered above, has laid down the principles which would govern matters when the importers give their consent in writing to the enhanced value. The Bench also examined at length the decision of the Supreme Court in Sanjivani Non-Ferrous Trading and stated that the same may not be applicable when consent letter if given by the importers. Hence The Hon'ble CESTAT in its Final Order dt 19-08-2024 at para No 16 stated that "Thus, while passing the fresh order, the Assessing Officer shall take into consideration the principles laid down by this bench in Century Metal Recycling."

14. Considering all the above, for the reasons stated above, the Hon'ble CESTAT, has passed 2024-TIOL-826-CESTAT-DEL Final Order dt.19-08-2024 in this case setting aside the order dated 31.01.2020 passed by the Commissioner (Appeals) and remanded the case to the Assessing Officer with directions to pass a fresh speaking order in the light of the decision of the CESTAT in Customs Appeal No. 51976 of 2019 (Commissioner of Customs (Preventive) vs. Century Metal Recycling Pvt. Ltd.) = 2024-TIOL-777-CESTAT-DEL

15. Similar are the orders in the other two cases also as shown below:

16. The Take aways from the above four Final Orders of Hon'ble CESTAT are :

a) What is admitted need not be proved. Once the importers submitted letters not only stating that the value declared in the Bills of Entry may be rejected, but also accepted the value proposed by the Assessing Officer,they can not challenge the enhancement of the value by filing appeal. Even if appeal is filed, the same may not stand judicial scrutiny

b) The Hon'ble Tribunal 2017-TIOL-3396-CESTAT-ALL and the Hon'ble Supreme Court 2018-TIOL-447-SC-CUS in Sanjivani Non-Ferrous Trading, have held that it would be incumbent upon the Assessing Officer to give reasons as to why the transaction value declared in the Bills of Entry was being rejected, and to give reasons supported by material on the basis of which the Assessing Officer arrives at the assessable value.

c) In the cases where consent letter for acceptance of enhancement of value has been given, the Assessing Officer is not required to give reasons for rejection of the transaction value and need not do the determination of the assessable value. They can directly adopt the agreed upon value

d) In the instant case of Sanjivani Non-Ferrous Pvt Ltd, the Deputy Commissioner has issued order dated 07.03.2019 in only one paragraph. When ever speaking orders are not issued by adjudicating authorities, the appellate forums remand the case back to the original adjudicating authority.

17. In the part 2 of Series, the cases of aluminium scrap appeals where Speaking orders have been issued by the assessment officers, but the Learned Commissioner Appeals has not discussed about it and completely ignored in his Order-in-Appeal would be covered.

(The views expressed are personal and not in official capacity)