2024 (5) TMI 1645 - AT - Customs

Voluntary acceptance of enhanced customs value u/s 17(4) and (5) bars later challenge, appeal dismissed

The Tribunal upheld the enhancement of the declared transaction value of imported goods and dismissed the appeal. It held that under section 17(4) and (5) ... Enhancement of value of the imported goods for payment of duty on the assessed value - enhanced value objected on the ground that merely because the value as enhanced by the department was accepted by the assessee importer, it does not preclude him from challenging the said enhancement by way of appeal - waiver of personal hearing - HELD THAT:- It is seen from a perusal of section 17(4) of the Customs Act that the proper officer can re-assess the duty leviable, if it is found on verification, examination or testing of the goods or otherwise that the self-assessment was not done correctly. Sub-section (5) of section 17 provides that where any re-assessment done under subsection (4) is contrary to the self-assessment done by the importer, the proper officer shall pass a speaking order on the reassessment, except in a case where the importer confirms his acceptance of the said re-assessment in writing. In the present case, the proper officer doubted the truth or accuracy of the value declared by the importer for the reason that data of contemporaneous import of similar/identical goods imported at or about the same time. Comparable quantities in comparable commercial transactions which were assessed at other ports too, had a significantly higher value. It was open to the importers to require the proper officer to intimate the grounds in writing for doubting the truth or accuracy of the value declared by them and to seek a reasonable opportunity of being heard - It needs to be noted that section 124 of the Customs Act provides for issuance of a show cause notice and personal hearing, and section 17(5) of the Customs Act requires a speaking order to be passed on the Bills of Entry, except in a case where the importer/exporter confirms the acceptance in writing. In view of Section 17 of the Customs Act, it is held that once the appellant had accepted the enhanced value of the goods imported by appellant, 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. It is also held that the value of the imported goods is required to be determined by proceeding sequentially through rule 4 to 9 only when the value of the imported goods cannot be determined under rule 3(1) for the reason that the declared value has been rejected under sub rule 2. Support from the decision of this Tribunal in Advanced Scan Support Technologies vs Commissioner of Customs, Jodhpur [2015 (11) TMI 31 - CESTAT NEW DELHI], wherein the Tribunal, after making reference to the decisions of the Tribunal in Vikas Spinners vs Commissioner of Customs, Lucknow [2000 (11) TMI 196 - CEGAT, COURT NO. IV, NEW DELHI] and Guardian Plasticote Ltd. v. CC (Port), Kolkotta [2007 (12) TMI 37 - CESTAT, KOLKATA], held that as the Appellant therein had expressly given consent to the value proposed by the Revenue and stated that it did not want any show cause notice or personal hearing, it was not necessary for the Revenue to establish the valuation any further as the consented value became the declared transaction value requiring no further investigation or justification. Appellant herein has not being diligent in pursuing the impugned appeals. He had voluntarily accepted the enhanced value, that too in writing and never protested before the department for his consent to be under pressure/in voluntary. There are no infirmity in the order under challenge - appeal dismissed. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether reassessment by enhancement of the declared value of imported polyester knitted fabric, based on contemporaneous Bills of Entry, was valid when the importer had given written consent to the enhanced value and waived personal hearing and speaking order. 1.2 Whether, in the facts of voluntary written acceptance of enhanced value, the proper officer was required to (a) pass a speaking order under section 17(5) of the Customs Act, 1962, (b) follow the sequential valuation mechanism under rules 3 to 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, and (c) establish the correctness of the enhanced value by further evidence or data. 1.3 Whether an importer who has voluntarily accepted the enhanced value in writing, without protest and after being shown contemporaneous import data, is estopped from subsequently challenging such enhancement in appeal on the ground that only the declared transaction value should prevail. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 & 2: Validity of reassessment by value enhancement based on contemporaneous data and effect of written consent; necessity of speaking order and application of valuation rules Legal framework 2.1 The Court considered section 17 of the Customs Act, 1962, particularly: 2.1.1 Section 17(1): obligation of importer to self-assess duty. 2.1.2 Section 17(2)-(3): power of the proper officer to verify self-assessment and to require documents/information. 2.1.3 Section 17(4): power to reassess duty where self-assessment is found incorrect upon verification, examination, testing, or otherwise. 2.1.4 Section 17(5): mandate to pass a speaking order on reassessment contrary to self-assessment, '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.' 2.2 The Court also referred to section 124 of the Customs Act (requirement of show cause notice and personal hearing) and to rule 3(1)-(2) and rules 4 to 9 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, as invoked by the appellant before the lower authority. Interpretation and reasoning 2.3 The proper officer, upon verification, doubted the truth or accuracy of the declared value (USD 1.65 per kg) on the basis of contemporaneous import data of identical/similar goods (liquid polyester/polyester knitted fabric) at or about the same time and in comparable quantities at significantly higher values (USD 1.94 per kg). This formed the basis of reassessment under section 17(4). 2.4 The Court noted that it was open to the importer to insist that the proper officer disclose in writing the grounds for doubting the declared value and to seek opportunity of being heard. Instead, after being shown the contemporaneous data, the importer: 2.4.1 Expressly agreed in writing that the value be enhanced from USD 1.64/1.65 per kg to USD 1.94 per kg; 2.4.2 Expressly stated that no right under section 124 was to be availed, and that no show cause notice or personal hearing was required; and 2.4.3 Expressly stated that no speaking order on reassessment of the Bills of Entry was required. 2.5 On this factual foundation, the Court construed section 17(5) to mean that where the importer confirms in writing acceptance of reassessment, the statutory obligation to pass a speaking order ceases; the exception clause in section 17(5) squarely applied to the case. 2.6 As to the argument that the department was still required to determine value strictly and sequentially under rule 3(1), with resort to rules 4 to 9 only upon rejection of declared value under rule 3(2), the Court reasoned that: 2.6.1 The need to undertake detailed valuation under rules 4 to 9 arises only when the value cannot be determined under rule 3(1) due to rejection of declared value under rule 3(2); 2.6.2 Once the importer has accepted the enhanced value in writing, the 'enhanced value' itself becomes the effective declared transaction value, and there is no further dispute or occasion to traverse through rules 4 to 9; and 2.6.3 In view of written consent and waiver, it was 'really not necessary' for the assessing authority to undertake any further valuation exercise under rules 4 to 9 or to justify the enhancement beyond the contemporaneous import data already shown. 2.7 Relying on earlier decisions, the Court adopted the principle that where an importer voluntarily consents to the loaded/enhanced value and waives procedural rights, the revenue is not required to further establish valuation by additional evidence or investigation. 2.8 Specifically, the Court relied upon: 2.8.1 The decision in Advanced Scan Support Technologies, which, after considering Vikas Spinners and Guardian Plasticote, held that when the importer gives express consent to the value proposed by the Revenue and states that no show cause notice or personal hearing is required, the consented value becomes the declared transaction value and no further justification of valuation is necessary. 2.8.2 The observation in Vikas Spinners that an importer having once accepted the loaded value and paid duty without protest is 'legally estopped from taking somersault and to deny the correctness of the same.' 2.8.3 The later decision in Hanuman Prasad & Sons, which held that: (i) consent to enhancement renders further valuation investigation unnecessary; (ii) acceptance of the loaded value without protest bars the importer from disputing its correctness; and (iii) voluntary acceptance of enhancement discharges the Department's burden to show that the declared value was incorrect. Conclusions 2.9 The Court held that in view of section 17(5), once the importer had confirmed in writing acceptance of the reassessed/enhanced value, the proper officer was not required to pass a speaking order on reassessment. 2.10 The Court further held that, upon voluntary written acceptance of the enhanced value after being shown contemporaneous data, there was no obligation on the department to proceed sequentially under rules 4 to 9 of the Valuation Rules or to further substantiate the correctness of the enhancement; the consented value effectively became the transaction value. 2.11 The reassessment by enhancement of value to USD 1.94 per kg, based on contemporaneous import data and importer's written consent and waiver, was found legally valid and in conformity with section 17 of the Customs Act. Issue 3: Estoppel against challenging enhancement after voluntary acceptance Interpretation and reasoning 3.1 The Court noted that the importer had, in writing, voluntarily accepted the enhancement of the declared value, waived show cause notice, waived personal hearing, and waived the requirement of a speaking order, and at no stage before the department alleged that such consent was obtained under coercion, pressure or involuntarily. 3.2 The Court accepted and applied the ratio of earlier Tribunal decisions that once an importer has voluntarily accepted a loaded/enhanced value and paid duty without protest, the importer is estopped from subsequently turning around to dispute the correctness of such value. 3.3 The Court emphasised that the importer's subsequent attempt in appeal to invoke rule 3(1) and the sequential scheme of rules 4 to 9 of the Valuation Rules, and to contend that the transaction value alone should prevail, was inconsistent with his prior unequivocal consent and waiver. Conclusions 3.4 The Court concluded that the importer, having voluntarily and expressly accepted the enhanced value in writing, was estopped from challenging the enhancement in appeal. 3.5 The burden on the Department to establish that the initially declared value was incorrect stood discharged by the importer's voluntary acceptance of the enhanced value after being shown contemporaneous import data. 3.6 Finding no infirmity in the appellate order upholding the reassessment, and noting also the importer's lack of diligence in pursuing the appeals, the Court dismissed the appeals and upheld the enhanced valuation in toto.