2017 (10) TMI 156 - AT - Customs

Tribunal limits remand scope to appeal grounds on royalty addability, excluding additional issues.

The Tribunal modified the impugned order, restricting the remand and adjudication to the grounds of appeal raised by the department concerning the ... Scope of SCN - remand beyond the parameters of the grounds of appeal - the department was aggrieved only with non-addition of royalty in the assessable value - Held that: - the Commissioner (Appeals) addressed not just the issue of addability of royalty which alone was appealed by the Department but also other issues like payment to foreign supplier in the name of professional and consultancy charges and also directed collection of extra duty deposit of 5% of value of the goods imported, which action, in our view, has surely gone beyond the grounds of appeal placed before him by the department - The Commissioner (Appeals) should not have ordered remand beyond the parameters of the grounds of appeal which he has himself taken note of at the beginning of the order - we order modification of the impugned order to the extent that the remand and de novo adjudication ordered by the Commissioner (Appeals) will only be restricted to the grounds of appeal preferred by the department - matter on remand, by way of modification in impugned order. Issues involved:1. Review of order by Deputy Commissioner (SVB) regarding transaction value and freight forwarding charges.2. Appeal against review order by Revenue before Commissioner (Appeals) focusing on royalty amount addition.3. Scrutiny of declared transaction value and professional/consultancy charges by Commissioner (Appeals).4. Department's appeal grounds regarding addability of royalty in assessable value.5. Commissioner (Appeals) exceeding the scope of appeal by addressing additional issues.6. Modification of impugned order to restrict remand and adjudication to grounds of appeal preferred by the department.Analysis:1. The case involved the import of construction equipment by the appellants from principal associates. The Deputy Commissioner (SVB) reviewed the imports and accepted the transaction value with an addition for freight forwarding charges. The Revenue appealed against this review order before the Commissioner (Appeals), specifically challenging the non-addition of royalty amount in the assessable value.2. During the hearing, the appellant's advocate argued that the Commissioner (Appeals) went beyond the department's appeal grounds by scrutinizing the declared transaction value and directing re-examination of charges to the foreign supplier. The appellant contended that the royalty amount, though recorded in the books, was never paid to the foreign supplier and was not related to the imported goods, citing a Supreme Court decision on the matter.3. The department, represented by the Assistant Commissioner, supported the impugned order and clarified that their appeal sought a remand for further examination of records and evidence by the adjudicating authority. The department's grounds of appeal primarily focused on the addability of royalty in the assessable value.4. The Tribunal found that the Commissioner (Appeals) had addressed not only the issue of royalty addition but also other matters like payments to the foreign supplier for professional and consultancy charges. This expansion of scope by the Commissioner (Appeals) was deemed beyond the grounds of appeal presented by the department.5. Consequently, the Tribunal modified the impugned order to restrict the remand and adjudication to the grounds of appeal raised by the department. The Commissioner (Appeals) was directed to limit the proceedings to the specific issues highlighted in the appeal grounds, ensuring that any additional disputes raised by the Commissioner (Appeals) were not considered in the further proceedings.6. The Tribunal clarified that the appellant's contentions regarding the non-addability of royalty would be addressed by the adjudicating authority in the subsequent proceedings, as the modification of the impugned order focused on restricting the scope of the appeal to the department's original grounds. The appeal was disposed of with these terms, emphasizing the adherence to the specified appeal issues in the upcoming adjudication.