First appellate authority exceeded remand jurisdiction by directing 5% royalty addition without section 28 show cause notice

CESTAT Mumbai held that the first appellate authority exceeded its remand jurisdiction by directing the proper officer to add 5% royalty to assessable value of precipitated calcium carbonate imports between related persons. The court found that without a show cause notice under section 28 of Customs Act, 1962, the imports remained provisional pending Special Valuation Branch finalization under section 18. The Deputy Commissioner's advisory opinion created no grievance warranting appellate remedy before assessment completion. The appeal was premature as no final assessment order existed to challenge. The impugned order was set aside and matter remanded to first appellate authority for disposal according to Customs Act scheme.

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Issues involved:
The judgment involves the addition of royalty to the assessable value of imported goods u/s rule 10(1)(c) of Customs Valuation Rules, 2007 based on a license agreement, jurisdiction of Special Valuation Branch (SVB) in customs valuation, and the appellate authority's competence in directing remand.

Addition of Royalty to Assessable Value:
The appellant challenged the first appellate authority's decision to add royalty to the assessable value of imported goods based on a license agreement. The order lacked details of imports and did not follow the necessary procedures u/s 28 of Customs Act, 1962 for proposed additions. The appellate proceedings raised questions about the authority for such enhancement and its relevance to the agreement between related parties.

Jurisdiction of Special Valuation Branch (SVB):
The judgment delved into the role of SVB in customs valuation, highlighting that SVB is not the proper officer u/s 17 or 28 of Customs Act, 1962. The SVB's advisory competence does not extend to determining duty liability or recovery post-clearance for home consumption. The order's origin from SVB raised concerns about its legal grounding and authority to enhance the value for assessment.

Competence of Appellate Authority:
The appellate authority's decision to direct remand for adding royalty to the assessable value was deemed premature. The judgment emphasized that the opinion of the Deputy Commissioner, SVB, was not binding on the proper assessing authority. The appeal before the first appellate authority was considered premature as it did not align with the scheme of Customs Act, 1962. The judgment set aside the impugned order and remanded the appeal for proper disposal.

(Order pronounced in the open court on 04/04/2024)

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