SEPTEMBER 17, 2024

(Part 2 of series of 3 articles)

By S K Rahman, IRS, working as Principal Commissioner (AR) at CESTAT Delhi

RECENTLY, in the month of August and September 2024, the Hon'ble CESTAT has passed the following Final Orders on Departmental appeals against Orders- in-Appeal on under-valued imports of Aluminium scrap

Each of these Orders is discussed as below:

2024-TIOL-855-CESTAT-DEL AND 2024-TIOL-853-CESTAT-DEL

2. BRIEF FACTS OF CASES :

2.1 The Respondent importer has imported Aluminium scrap vide the impugned eight Bills of Entries. The Respondent self-assessed the duty, but the Assessing Officer prima facie did not accept the value and put a query to the respondent that the value of the aluminium scrap did not match the contemporary import data available on NIDB. The respondent was, therefore, asked to submit evidence in support of the accuracy of the price declared in the Bills of Entry. The respondent submitted a reply to the aforesaid query and pointed out that the price declared was true and correct and that in case the Assessing Officer wanted to enhance the value, then the Assessing Officer should pass a speaking order, but show cause notice may not be issued nor personal hearing be provided.

2.2 In respect of the eight Bills of Entry, a speaking order was passed by the Assessing Officer wherein the value declared by the respondent was rejected as per Rule 12 of Customs Valuation (Determination Of Value Of Import Of Goods) Rules. 2007 (referred as CVR'07) and was re-determined under Rule 5 of CVR'07. Feeling aggrieved, the respondent filed an appeal before the Commissioner (Appeals), which appeal has been allowed by the Order-in-Appeal dated 06.05.2021.

2.3 In respect of the four Bills of Entry, a speaking order was passed by the Assessing Officer wherein the value declared by the respondent was rejected as per Rule 12 of CVR'07 and was re-determined under Rule 9 of CVR'07. Feeling aggrieved, the respondent filed an appeal before the Commissioner (Appeals), which appeal has been allowed by the Order-in-Appeal dated 06.05.2021

2.4 It is this order dated 06.05.2021 that has been assailed by the department in all these eight appeals

3. DEPARTMENTAL APPEAL: The Authorized Representative for the Department submitted that though detailed reasons had been given by the Assessing Officer for rejecting the value and re-determining it under the CVR'07, but the Ld. Commissioner (Appeals) had not examined the said reasons and has allowed the appeal. It is pleaded by him that the order passed by the Commissioner (Appeals) should be set aside and the order passed by the Assessing Officer should be maintained.

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

5. REJECTION OF TRANSACTION VALUE :- The assessing officer rejected the declared transaction value as the "value declared by the importer is very much low in comparison to the contemporaneous imports of Aluminium Scrap Taint Tabor at or near the time of import in comparable quantities, in comparison to the price of London metal exchange on the date of lading" under Rule 12 of CVR'07.

6. REDETERMINATION OF VALUE FOR 08 Bs/E covered in CESTAT FINAL ORDER NO. 56202-56209/2024 dt.08-07-2024 2024-TIOL-855-CESTAT-DEL: After rejecting the declared transaction value, the officer has proceeded sequentially from Rule 4 of CVR 07. Imported goods are aluminium scrap. As there are no identical goods, the redetermination of value could not be done under rule 4 CVR 07. For some consignments Contemporaneous imports of similar goods have been found. The similar goods may not alike in all respects, but found to have like characteristics and like component materials which enable them to perform the same functions and to be commercially interchangeable with the goods being valued having regard to the quality. Hence, the value has been redetermined under Rule 5 of CVR 07. The redetermination has been done on the basis of the lowest value of Aluminium Scrap Taint Tabor as per ISRI comes of contemporaneous imports made vide Bill of Entry No. 6823508 dated 10.2.2020 imported from port INSNI-6 at or near the time of import in comparable quantities.

7. REDETERMINATION OF VALUE FOR 04 Bs/E covered in CESTAT FINAL ORDER NO's. 56211-56214/2024 dt.08-07-2024 2024-TIOL-853-CESTAT-DEL: After rejecting the declared transaction value, the officer has proceeded sequentially from Rule 4 to rule 8 of CVR 07. No two used goods such as Aluminium scrap are similar or identical in nature. Hence the redetermination of value could not be done under rule 4 of identical goods and under Rule 5 of similar goods. The Rule 7 deductive value method says that if the goods being valued or identical or similar imported goods are sold India. In the instant case, as already mentioned, aluminium scrap does not have any similar identical codes being sold in India. Hence, rule 7 could not be adopted for redetermination of value. The Rule 8 Computed value method requires information about cost of manufacturing, cost of Labour and other expenses. The imported goods are used goods such as aluminium scrap. As such information about cost of manufacturing is not available; this method under rule 8 could not be adopted for redetermination of value. Hence the redetermination of the value was done is under Rule 9 residual method.

8. The Hon'ble CESTAT in its both Final Orders dt. 08-07-2024 has stated that (Ref Para 12 of both Orders). "12. It clearly transpires from the speaking order passed by the Assessing Officer and the order passed by the Commissioner (Appeals) that the reasons given by the Assessing Officer for redetermining the assessable value have not been considered by the Commissioner (Appeals) at all. In fact, the Commissioner (Appeals) has addressed issues which were not even considered by the Assessing Officer in the speaking order. The Commissioner (Appeals), has not even examined the Bills of Entry referred to by the Assessing Officer which formed the basis for rejection of the transaction value and the re-determination of the assessable value."

8. Considering all the above the Hon'ble CESTAT vide FINAL ORDER NO's. 56202-56209/2024 dt.08-07-2024 2024-TIOL-855-CESTAT-DEL and FINAL ORDER NO's 56211-56214/2024 dt.08-07-2024 2024-TIOL-853-CESTAT-DEL has remanded back the appeals pertaining to all the 12 Bs/E to the Commissioner (Appeals) with a direction to pass a fresh order after examining the contentions raised by the Respondent and the Department in the appeals.

2024-TIOL-856-CESTAT-DEL

9. BRIEF FACTS OF CASES:

9.1 The Respondent importer has imported Aluminium scrap vide the impugned eight Bills of Entries. The Respondent self-assessed the duty, but the Assessing Officer prima facie did not accept the value and put a query to the respondent that the value of the aluminium scrap did not match the contemporary import data available on NIDB. The respondent was, therefore, asked to submit evidence in support of the accuracy of the price declared in the Bills of Entry. The respondent submitted a reply to the aforesaid query and pointed out that the price declared was true and correct and that in case the assessing officer wanted to lower the value, then the assessing officer should pass a speaking order

9.2 In respect of the eighteen Bills of Entry, a speaking order was passed by the Assessing Officer wherein the value declared by the respondent was rejected as per Rule 12 of Customs Valuation (Determination Of Value Of Import Of Goods) Rules. 2007 (referred as CVR'07) and was re-determined under Rule 5 of CVR'07. Feeling aggrieved, the respondent filed an appeal before the Commissioner (Appeals), which appeal has been allowed by the Order-in-Appeal dated 06.05.2021.

9.3 It is this order dated 06.05.2021 that has been assailed by the department in all these eighteen appeals.

10. DEPARTMENTAL APPEAL: The learned authorised representative for the department has pointed out that the aforesaid finding recorded by the Commissioner (Appeals) that speaking orders were not passed is factually incorrect and in this connection he has placed all the 18 speaking orders passed by the assessing officer. It is, therefore, his contention that the matter should be remanded to the Commissioner (Appeals) to pass a fresh order after examining the speaking orders that were passed by the assessing officer.

11. The learned counsel for the respondent, however, pointed out that as the speaking orders were not in the knowledge of the respondent, they could not place this fact before the Commissioner (Appeals) and that is why the Commissioner (Appeals) recorded such a finding.

12. In the O-i-O after rejecting the declared transaction value, the officer has proceeded sequentially from Rule 4 of CVR 07 and the value has been redetermined under Rule 5 of CVR 07. The Hon'ble CESTAT in its Final Order has stated that (Ref Para 15 of Order). "……The Commissioner (Appeals), however, proceed to imagine grounds for enhancement of the value and dealt with them. This exercise was really not required to be undertaken by the Commissioner (Appeals)."

13. The Hon'ble CESTAT in its Final Order has stated that (Ref Para 17 of Order). "17. It is in these appeals that the department has placed the speaking orders covering the 18 Bills of Entry. It is, therefore, considered appropriate to remand the matters to the Commissioner (Appeals) to pass a fresh order after taking into consideration the speaking orders passed by the assessing officer covering the 18 Bills of Entry, which orders shall be placed on record by the department before the Commissioner (Appeals)."

14. Considering all the above, the Hon'ble CESTAT in its FINAL ORDER NO 58519-58536 /2024 dt 02-09-24 2024-TIOL-856-CESTAT-DEL setting aside the impugned O-i-A dated 06.05.2021 passed by the Commissioner (Appeals) in relation to these 18 Bills of Entry, with a direction to the Commissioner (Appeals) to pass a fresh order after examining the speaking orders passed by the assessing officer on the re-assessment covering the 18 Bills of Entry

2024-TIOL-854-CESTAT-DEL

15. BRIEF FACTS OF CASES:

15.1 The importer has imported Zinc Die Cast Scrap and Aluminium Scrap vide the impugned six Bills of Entries. The respondent self-assessed the duty, but the Assessing Officer prima facie did not accept the value and put a query to the respondent that the value of the aluminium scrap did not match the contemporary import data. The respondent was, therefore, asked to submit evidence in support of the accuracy of the price declared in the Bills of Entry. The respondent submitted a reply to the aforesaid query and pointed out that the price declared was true and correct and that in case the Assessing Officer wanted to lower the value, then the Assessing Officer should pass a speaking order. In respect of these six Bills of Entry, the value declared by the respondent was rejected and was re-determined. A speaking order was not passed by the Assessing Officer. Feeling aggrieved, the respondent filed six appeals before the Commissioner (Appeals), which appeals have been allowed by the order dated 06.05.2021.

15.2 It is this order dated 06.05.2021 that has been assailed by the department in all these six appeals.

16. DEPARTMENTAL APPEAL: The Authorised Representative for the Department submitted that the Commissioner (Appeals) was not justified in allowing the appeals filed by the assessee and he should have remanded the matter to the assessing authority to pass an order.

17. The Section 17 (5) of the Customs Act, 1962 deals with assessment of duty states that, "(5) Where any re-assessment done under sub-section (4) is contrary to the self-assessment done by the importer or exporter and in cases other than those where the importer or exporter, as the case may be, confirms his acceptance of the said re-assessment in writing, the proper officer shall pass a speaking order on the re-assessment, within fifteen days from the date of re-assessment of the bill of entry or the shipping bill, as the case may be." In the instant case, there was no acceptance of the importer for the re-assessment done. Hence, the Assessing Officer should have passed speaking order. The physical import was at ICD Kanakpura, Jaipur but the Bs/E were re-assessed in ‘faceless assessment' at other ports.

18. The Hon'ble CESTAT in its Final Order has stated that (Ref Para 14 of Order). "….. The consequence of not passing a speaking order within 15 days is that the entire exercise undertaken by the assessing officer for enhancement of the value would be rendered futile and the transaction value mentioned by the respondent in the Bills of Entry would have to be taken as correct."

19. Considering all the above, the Hon'ble CESTAT in its FINAL ORDER NO 58539-58544 /2024 dt.02-09-24 2024-TIOL-854-CESTAT-DEL has dismissed the six appeals filed by the Department. But while passing the Final Order the Hon'ble CESTAT has stated that (ref para 17 of the Order)

"17. Thus, though we agree with the operative part of the order passed by the Commissioner (Appeals) accepting the transaction value, but do not subscribe to the views expressed by the Commissioner (Appeals) for accepting the transaction value."

20. The takeaways from the above Orders are:

(i) Whenever, undervaluation is noticed, rejection of transaction value and re-determination of value shall be done as per Customs Valuation (Determination Of Value Of Import Of Goods) Rules. 2007 read with Section 14 of Customs Act, 1962.

(ii) The Ld. Commissioner (Appeal) should have passed his O-i-A by carefully considering the contents of O-i-O passed by the assessing officer and discuss the same in his O-i-A. In few cases, he has not even acknowledged the presence of O-i-O which gives an impression that he has assumed that there was no speaking order.

(iii) In the Departmental appeals, apart from the impugned O-i-A, the copies of O-i-O shall also be placed on record for consideration of Appellate authority.

(iv) Whenever, there was no acceptance of importer in writing for the re-assessment done, the Assessing Officer should pass speaking order.

21. In the next article of the same series, details of Hon'ble CESTAT Orders with respect to import of Al Scrap where detailed speaking Orders have been given but countering the same has not been properly done by the Appellate authority would be discussed

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