Valuation enhancement without a speaking order fails; duty paid after repeated objection may be treated as under protest.

Enhancement of the declared value for DTA clearances to a related unit was unsustainable because the proper officer had not issued a reasoned speaking order, had not disclosed the basis for rejecting the declared transaction value, and had not complied with natural justice. The prior SVB determination had accepted the declared value subject to conditions, so the valuation had to be reconsidered afresh in accordance with the Customs Act and Valuation Rules. Duty paid at the enhanced value was treated as paid under protest because the assessee consistently objected and sought a speaking order while continuing clearance to avoid disruption. The order was set aside and the matter remanded for fresh determination.

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Issues: (i) Whether the enhancement of the declared value for DTA clearances to a related unit was lawful under the Customs Act, 1962 and the Customs Valuation Rules, 2007. (ii) Whether the duty payments made by the appellant at the enhanced value were payments under protest.

Issue (i): Whether the enhancement of the declared value for DTA clearances to a related unit was lawful under the Customs Act, 1962 and the Customs Valuation Rules, 2007.

Analysis: The value adopted by the specified officer was enhanced without a properly reasoned speaking order, without disclosing the basis or methodology for rejecting the declared value, and without compliance with the requirement of fair hearing. The prior SVB determination had accepted the declared transaction value subject to the stated conditions, and the later enhancement could not be sustained merely by reference to earlier assessments or to the DTA selling price without the statutory exercise required for valuation.

Conclusion: The enhancement was not sustained and the valuation dispute was required to be reconsidered afresh by a reasoned order after observance of natural justice.

Issue (ii): Whether the duty payments made by the appellant at the enhanced value were payments under protest.

Analysis: The appellant had repeatedly objected to the enhancement and sought a speaking order, while continuing to clear goods to avoid disruption. In these circumstances, the payments made from 05.10.2016 at the enhanced value were treated as payments made under protest, with the consequence that limitation under the refund provision would not defeat a lawful claim if excess duty were found payable.

Conclusion: The payments were treated as payments under protest.

Final Conclusion: The lower appellate order was set aside and the matter was remanded to the original authority for fresh determination of value by a speaking order in accordance with law and after observance of natural justice.

Ratio Decidendi: Enhancement of assessable value cannot be sustained unless the proper officer records a reasoned speaking order identifying the basis for rejection of the declared value and complies with the requirements of natural justice; where the assessee has consistently objected to the enhancement, the duty paid to secure clearance may be treated as paid under protest.

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