2025 (11) TMI 541 - AT - Customs

Matter remanded to original authority to reconsider amendment of Bill of Entry under s.149 after refund claim on notional charges

Tangedco Versus. Commissioner Of Customs, Tuticorin

CESTAT remanded the matter to the Original Authority to consider the appellant's request to amend the Bill of Entry under s.149, Customs Act, 1962, after ... Refund of Customs Duty - refund sought on the ground that the BOE’s should have been assessed by adding the actual Trade Margin - rejection of refund on the grounds that the issue was not raised during assessment. - HELD THAT:- This is a case of self-assessment where the appellant subsequently claimed refund on the ground that they had mistakenly added a notional 2% as High Sea sale charges to the CIF value instead of the actual Rs.33 per MT as per the Purchase order which was also available to the department at the time of assessment. It is found that Boards Circular No. 32/2004-Cus, Dated: 11.05.2004, stated that the Hon’ble Supreme Court, in the case of M/s. Hyderabad Industries Limited [2000 (1) TMI 46 - SUPREME COURT] has held that the service charges/ high-seas-sales-commission (‘actuals’) are includable in the CIF value of imported goods. Therefore, it was clarified that the actual high-seas-sale-contract price paid by the last buyer would constitute the transaction value under Rule 4 of Customs Valuation Rules, 1988 and inclusion of commission on notional basis may not be appropriate. However, the refund claimed by the appellant on the said ground was rejected as they had not challenged the self-assessment made. The appellant has now taken an additional plea before us to permit correction of an error in the BOE as per section 149 of Customs Act 1962. Matter remanded to the Original Authority to examine the request for amendment of the BOE in terms of Section 149 of Customs Act, 1962 with all issues remaining open. The appellant may be heard in the matter and permitted to file their written submissions if they so desire, before passing a final order within 90 days of receipt of this order. The appellant should also cooperate with the Original Authority in ensuring timely disposal of the matter. Appeal disposed off by way of remand. ISSUES PRESENTED AND CONSIDERED 1. Whether refund of customs duty is admissible where self-assessment included a notional 2% high-seas-sales (HSS) commission instead of the actual trade margin evidenced in purchase order/records. 2. Whether a Bill of Entry (BOE) filed on self-assessment can be amended under Section 149 of the Customs Act, 1962 to correct an error in assessment post-clearance, when the supporting documents for the proposed amendment were available in the records at the time of assessment. 3. Whether Board Circular No. 32/2004 (11.05.2004) and the principle that actual HSS/service charges are includable in CIF value (transaction value under Rule 4, Customs Valuation Rules, 1988) preclude the notional addition of commission absent documentary proof establishing the actuals. 4. Whether this Tribunal should entertain the fresh plea for amendment of BOE or remit the matter to the Original Authority for adjudication under Section 149, keeping all contentious issues open. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Admissibility of refund where self-assessment used notional 2% HSS commission instead of actual trade margin Legal framework: Customs Act, 1962 (self-assessment regime); Rule 4, Customs Valuation Rules, 1988 (transaction value); Board Circular No. 32/2004 (11.05.2004) interpreting inclusion of actual HSS/service charges in CIF value. Precedent treatment: Board Circular relies on Supreme Court ruling recognising service charges/HSS commission actuals as includable in CIF value (referred to the decision in Hyderabad Industries). The appellant relied on later authorities (ITC Ltd. (2021) and Sony India (2021)) to support remedy via amendment/rectification mechanisms; the Tribunal noted these but did not decide the valuation question finally. Interpretation and reasoning: The Tribunal observed that the valuation principle in the Board Circular mandates establishment of actual HSS contract price by furnishing the full chain of documents, payment details and contract evidence. In the present record the department found no documentary proof showing how the Rs.33/MT trade margin was arrived at. The adjudicating authority rejected the refund as the appellant had not challenged the self-assessment earlier and had not produced documentary evidence to comply with the Circular. Ratio vs. Obiter: The observation that actual HSS charges are includable in CIF (as per the Circular and Supreme Court authority) is treated as binding legal framework (ratio in context). The finding that no documentary proof was produced is a case-specific factual ratio for denial of refund at the adjudication stage. Any broader comment on merits of valuation without fresh evidence is obiter. Conclusions: Refund cannot be sustained on the present record without documentary proof establishing the asserted trade margin; the procedural/default failure to challenge self-assessment was a factor in the authorities' rejection of the refund claim. Issue 2 - Power to amend BOE under Section 149 to correct self-assessment error where supporting documents existed at time of clearance Legal framework: Section 149, Customs Act, 1962 (amendment of documents/rectification of clerical errors); related statutory provisions for assessment/reassessment (Sections 17 and 128); Board Circular No.32/2004 as interpretative guidance on valuation. Precedent treatment: The appellant relied on Sony India (Telangana HC, 2021) upholding Section 149 as a remedial mechanism where amendments are based on documents already in existence and part of the records at time of clearance. This Tribunal also noted its own prior consideration in M/s. Valeo India Pvt. Ltd. Vs Commissioner of Customs (Final Order No. 40393/2023). The Respondent pointed to separate statutory provisions (Sections 17, 128) governing assessment and reassessment to argue against post-facto change of self-assessment. Interpretation and reasoning: The Tribunal recognised Section 149 as a potential procedural remedy to correct an error in a BOE where the proposed amendment is founded on documents that were in existence at clearance and already part of records. The Tribunal distinguished such corrective/rectificatory action from reopening of assessment under other statutory provisions, but emphasised that the Original Authority must examine the request afresh. The Tribunal concluded that the appellate role is not to usurp the Original Authority's jurisdiction on fact/findings but to remit the matter for appropriate consideration under Section 149, with all issues left open for decision there. Ratio vs. Obiter: The core holding that Section 149 can be invoked to correct BOE errors when supported by documents already in record and that such requests should be examined by the Original Authority is treated as the operative ratio for remand. Observations about the limits of appellate intervention and the distinction from reassessment provisions (Sections 17/128) are binding guidance but include analytical application to facts (ratio for procedure here); ancillary remarks about case law cited by parties are obiter insofar as they were not finally adjudicated on merits. Conclusions: Section 149 is an available remedy for correcting a BOE error of the nature alleged, subject to the Original Authority's examination of records and compliance with statutory/circular requirements; remand is appropriate where the appellant seeks amendment based on documents alleged to have been on record at assessment. Issue 3 - Applicability of Board Circular No. 32/2004 and evidentiary requirement for establishing actual HSS/service charges Legal framework: Board Circular No. 32/2004 reiterating Supreme Court position on includability of actual HSS/service charges in CIF; rules under Customs Valuation Rules, 1988 (Rule 4). Precedent treatment: Circular anchors on Supreme Court precedent (Hyderabad Industries) mandating documentary chain to establish transaction value attributable to HSS contracts and services/commissions. Interpretation and reasoning: The Tribunal highlighted the Circular's requirement that the last buyer's contract price and supporting chain of documents, details of commissions/service charges must be furnished to establish transaction value. In the absence of those documents or their production at assessment, notional addition (e.g., blanket 2%) is not appropriate for claiming actuals. The Tribunal noted that the appellant asserted the purchase order was available at assessment but the lower authorities found nondisclosure of the margin calculation. Ratio vs. Obiter: The requirement to produce the full chain of documents to establish actual HSS commission is treated as binding interpretive ratio stemming from Circular and judicial precedent; the factual finding of nondisclosure in this case is case-specific ratio for the authorities' earlier denial. Conclusions: Board Circular No. 32/2004 governs valuation of HSS transactions and mandates documentary proof of actuals; absent such proof before the Original Authority, notional additions cannot be accepted as establishing transaction value. Issue 4 - Appropriate appellate disposition: remand versus deciding afresh Legal framework: Principles of appellate function (limited scope to correct errors of lower authority without usurping primary fact-finding jurisdiction); references to hierarchical appellate principles as applied to quasi-judicial fora. Precedent treatment: The Tribunal relied on higher court guidance (scholarly distinctions in recent apex jurisprudence cited) that appellate authorities should not usurp the primary authority's function and should act within their corrective remit. The Tribunal also noted its own earlier treatment of BOE amendment issues. Interpretation and reasoning: Applying the appellate restraint principle, the Tribunal found it improper to decide the amendment request in the first instance; instead, the proper course is to remand to the Original Authority to examine the Section 149 application, permit the appellant to file written submissions, and give an opportunity to be heard. The Tribunal fixed a 90-day timeline for the Original Authority's final order and kept all issues open for fresh adjudication. Ratio vs. Obiter: The decision to remit for fresh consideration under Section 149 and to keep all issues open constitutes the operative ratio of the appeal disposition. The emphasis on not usurping the Original Authority's fact-finding and procedural functions is binding appellate principle applied here. Conclusions: The appeal is disposed by setting aside the impugned order and remitting the matter to the Original Authority to examine the Section 149 amendment request afresh within 90 days, with liberty to the appellant to file submissions; consequential relief available as per law depending on the outcome.