2024 (4) TMI 1265 - AT - Customs

Voluntary acceptance of enhanced customs value waives procedural rights under Valuation Rules 4-9

SINGLA SALES CORPORATION Versus COMMR. OF CUS. (APPEALS), NEW DELHI

CESTAT NEW DELHI dismissed the appeal where the appellant challenged enhancement of assessable value of imported goods. The appellant had voluntarily ... Enhancement of assessable value of imported goods after voluntarily accepting the enhancement and paying the differential customs duty and penalty - rejection of declared value based on NIDB data - HELD THAT:- The issue is considered in detail by a Division Bench of the Tribunal in Hanuman Prasad & Sons [2020 (12) TMI 1092 - CESTAT NEW DELHI] where it was held that 'The very fact that the importers had agreed for enhancement of the declared value in the letters submitted by them to the assessing authority, itself implies that the importers had not accepted the value declared by them in the Bills of Entry. The value declared in the Bills of Entry, therefore, automatically stood rejected. Further, once the importers had accepted the enhanced value, it was really not necessary for the assessing authority to undertake the exercise of determining the value of the declared goods under the provisions of Rules 4 to 9 of the Valuation Rules.' In view of the aforesaid decision of the Tribunal in Hanuman Prasad, the contention raised by Learned Counsel for the appellant that the enhancement of the value was not correctly done in accordance with Rule 12 of the Valuation Rules cannot be accepted - Learned Counsel for the appellant is, however, justified in submitting that in terms of the order passed by the Joint Commissioner, only 25 per cent of the penalty was required to be deposited since the amount was deposited within 30 days. Conclusion - The appellant's voluntary acceptance and waiver of procedural rights precluded any challenge to the enhanced assessable value. The procedure under Rule 12 was effectively complied with by virtue of the waiver. The NIDB data is a valid basis for valuation adjustment. The penalty imposed is justified, with the appellant entitled to the prescribed reduction for timely payment. Appeal dismissed. 1. ISSUES PRESENTED and CONSIDERED- Whether the appellant can challenge the enhanced assessable value of imported goods after voluntarily accepting the enhancement and paying the differential customs duty and penalty.- Whether the Joint Commissioner of Customs correctly applied Rule 12 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, in rejecting the declared transaction value and re-determining the assessable value under Rule 4 read with Section 14 of the Customs Act, 1962.- Whether the procedure prescribed under Rule 12 was followed by the Joint Commissioner in rejecting the declared value.- Whether the National Import Database (NIDB) data can be the sole basis for rejecting the declared transaction value.- Whether the penalty imposed under Section 114A of the Customs Act was correctly calculated and whether the appellant was entitled to any reduction in penalty amount.2. ISSUE-WISE DETAILED ANALYSISIssue 1: Challenge to enhanced assessable value after voluntary acceptanceRelevant legal framework and precedents:The Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, particularly Rule 12, provide the procedure for rejecting the declared transaction value if the proper officer doubts its truth or accuracy. Section 124 of the Customs Act, 1962, mandates issuance of a show cause notice and personal hearing before passing an order enhancing value. Section 17(5) requires a speaking order on Bills of Entry unless the importer consents otherwise in writing.The Tribunal's Division Bench decision in Hanuman Prasad & Sons clarified the position where an importer voluntarily accepts enhancement of declared value and waives rights to show cause notice and personal hearing. The Tribunal held that such acceptance implies rejection of the initially declared value, and the enhanced value becomes the declared transaction value, obviating the need for further valuation proceedings under Rules 4 to 9.Court's interpretation and reasoning:The Court emphasized that the appellant, by letter dated 12-4-2017, accepted the enhancement of value and expressly declined any show cause notice or personal hearing. The Tribunal in Hanuman Prasad was cited extensively, noting that once the importer consents to enhancement, the burden on the department to prove incorrectness of declared value is discharged. The appellant's voluntary acceptance precludes subsequent challenge to the enhanced value.Key evidence and findings:The appellant's letter accepting the enhanced value and waiving procedural rights was pivotal. The appellant had also paid the differential duty and redemption fine accordingly.Application of law to facts:The Court applied the principle that voluntary acceptance of enhanced value equates to rejection of the declared value. Hence, the appellant cannot challenge the enhanced valuation subsequently.Treatment of competing arguments:The appellant argued that voluntary payment does not bar challenge and that the Tribunal decision in Hanuman Prasad was distinguishable. The Court rejected this, holding the precedent squarely applicable and emphasizing the procedural waiver by the appellant.Conclusions:The appellant cannot challenge the enhanced assessable value after voluntary acceptance and waiver of procedural rights.Issue 2: Correctness of valuation procedure under Rule 12 and use of NIDB dataRelevant legal framework and precedents:Rule 12 of the Valuation Rules provides the procedure for rejecting declared value, requiring the proper officer to record reasons and provide an opportunity to the importer. Rule 4 permits determination of value if transaction value is rejected.Court's interpretation and reasoning:The Court found no merit in the appellant's contention that Rule 12 procedure was not followed. The appellant had accepted the enhanced value without demanding a show cause notice or hearing, effectively waiving the procedural safeguards. The use of NIDB data as a basis for doubting declared value was not challenged on procedural grounds due to the waiver.Key evidence and findings:The record showed the goods were examined, value doubted based on contemporaneous data, and the appellant accepted enhancement. The Joint Commissioner passed a speaking order rejecting the declared value and re-determining it under Rule 4.Application of law to facts:Given the appellant's acceptance, the Court held that the procedural requirements of Rule 12 were effectively satisfied by the waiver. The NIDB data was a valid reference point for valuation.Treatment of competing arguments:The appellant disputed the sole reliance on NIDB data and procedural compliance. The Court dismissed these arguments in light of the appellant's explicit acceptance and waiver.Conclusions:The valuation procedure under Rule 12 was properly followed in substance, and the NIDB data was a legitimate basis for rejecting the declared value.Issue 3: Penalty imposition and entitlement to reductionRelevant legal framework and precedents:Section 114A of the Customs Act authorizes penalty for undervaluation or mis-declaration of value. The order dated 23-5-2017 provided for penalty with an option for reduction if paid within 30 days.Court's interpretation and reasoning:The appellant contended that only 25% of the penalty was payable since the amount was deposited within 30 days. The Court accepted this submission as justified and consistent with the order.Key evidence and findings:The order itself specified the penalty reduction scheme, and the appellant had complied with the payment timelines.Application of law to facts:The Court applied the penalty provisions and recognized the appellant's entitlement to reduced penalty payment.Treatment of competing arguments:The department did not dispute the appellant's entitlement to penalty reduction.Conclusions:The appellant was entitled to pay only 25% of the penalty amount as per the order.3. SIGNIFICANT HOLDINGS'When an importer consents to the enhancement of value, it becomes unnecessary for the revenue to establish the valuation as the consented value, in effect, becomes the declared transaction value requiring no further investigation.''When an importer accepts the loaded value of the goods without any protest or objection, the importer cannot be permitted to deny its correctness.''The burden of the Department to establish the declared value to be incorrect is discharged if the enhanced value is voluntarily accepted.'The Court concluded that the appellant's voluntary acceptance and waiver of procedural rights precluded any challenge to the enhanced assessable value. The procedure under Rule 12 was effectively complied with by virtue of the waiver. The NIDB data was a valid basis for valuation adjustment. The penalty imposed was justified, with the appellant entitled to the prescribed reduction for timely payment.