2025 (12) TMI 379 - AT - Customs

Customs appeals dismissed after reassessment accepted in writing and adjournment cap under Sections 17(4) and 129D(1A)

The CESTAT (Allahabad) dismissed the appeals filed by the appellant challenging reassessment of bills of entry under Section 17(4) of the Customs Act, ... Adjournment of matter beyond three times which is the maximum number statutorily provided - repeated non-appearance of the appellant - reassessment of bills of entry under Section 17(4) of the Customs Act, 1962 - HELD THAT:- Hon’ble Supreme Court in the case of M/s Ishwar lal Mali Rathod [2021 (9) TMI 1301 - SUPREME COURT] condemned the practice of adjournments sought mechanically allowed by the Courts/Tribunal’s. They have categorical condemned the practice wherein adjournments were allowed in routine and mechanical manner. In the present case we observe that the matter was adjourned on at least three occasions for the reason that Appellant/ Appellant Counsel did not caused appearance in the matter. Though Section 129 D (1A), specifically provides that no adjournment beyond three times could be granted by the tribunal - there are no justification for adjourning the matter beyond three times which is the maximum number statutorily provided. It is found that the similar issue has been decided by the Hon’ble Allahabad High Court which is the jurisdictional High Court in the case of S. S. Overseas V/s Union of India [2022 (8) TMI 344 - ALLAHABAD HIGH COURT]. The Hon’ble High Court has held that 'From the facts as stated in afore quoted Paragraph 2 and its sub-paragraphs of the counter affidavit, and the own documents of the petitioner filed as Annexure-1 to the counter affidavit, leave no manner of doubt that the petitioner himself has confirmed in writing his acceptance of reassessment. Therefore, there exists no occasion to pass a speaking order on the reassessment.' There are no merits in these appeals filed by the Appellant - Appeals are dismissed for non-prosecution and on merits also. 1. ISSUES PRESENTED AND CONSIDERED 1.1 Whether, in view of repeated non-appearance of the appellant and statutory limits on adjournments, the Tribunal could refuse further adjournment and proceed to decide the appeals. 1.2 Whether reassessment of bills of entry under Section 17(4) of the Customs Act, 1962, based on written 'acceptance letters' of value enhancement by the importer, required the proper officer to pass a speaking order under Section 17(5). 1.3 Whether, after having given unconditional written acceptance to enhancement of value and reassessment, the importer could subsequently challenge such reassessment on grounds of coercion, lack of speaking order, improper rejection of declared value, or violation of principles of natural justice. 1.4 How the Tribunal should proceed when there are conflicting views of different High Courts on the legal effect of written consent/acceptance to reassessment and the requirement of a speaking order under Section 17(5), particularly in light of the jurisdictional High Court's decision. 2. ISSUE-WISE DETAILED ANALYSIS Issue 1 - Refusal of further adjournment and proceeding to hear ex parte Interpretation and reasoning 2.1 The Tribunal recorded that the appeals had been listed on multiple earlier dates and that neither the appellant nor its counsel appeared or sought adjournment. It noted that Section 129D(1A) (referred to for statutory limit) provides that not more than three adjournments can be granted by the Tribunal. 2.2 Referring to the Supreme Court's censure of mechanical adjournments in Ishwar Lal Mali Rathod, the Tribunal held that there was no justification for granting adjournment beyond the statutorily permitted three occasions. 2.3 At the same time, relying on the Supreme Court's decision in Balaji Steel Re-Rolling Mills, the Tribunal noted that it has no power to dispose of an appeal merely for default or want of prosecution; it is required to decide the matter on merits even in the absence of the appellant. The Tribunal reproduced the ratio that an appeal properly filed cannot be dismissed only for non-appearance; it must be disposed of on merits under the governing provision equivalent to Section 35C(1). Conclusions 2.4 The Tribunal held that no further adjournment could be granted beyond three, but that the appeals must nevertheless be taken up and decided on merits on the basis of the record, despite non-appearance of the appellant. The appeals were thus heard ex parte and decided on both non-prosecution and merits. Issue 2 - Requirement of speaking order under Section 17(5) when reassessment accepted in writing Legal framework discussed 2.5 The Tribunal reproduced and relied upon Section 17 of the Customs Act, 1962, particularly sub-sections (4) and (5), as discussed by the Commissioner (Appeals) and by the jurisdictional High Court: - Section 17(4): provides for reassessment of duty by the proper officer where self-assessment is found incorrect. - Section 17(5): mandates that the proper officer 'shall pass a speaking order on the reassessment' in cases 'other than those where the importer or exporter... confirms his acceptance of the said reassessment in writing'. 2.6 The Commissioner (Appeals) also referred to CBEC Circular No. 91/2003-Cus., dated 14.10.2003, and Instruction No. 7/2018-Cus., dated 05.04.2018, which clarify that where enhancement of value is resorted to with written consent of the importer, a speaking order is not required under Section 17(5). Interpretation and reasoning 2.7 The Commissioner (Appeals) found, on examination of the record, that the importer had filed explicit 'acceptance letters' in response to EDI queries regarding enhancement of value for each relevant bill of entry. In those letters, the importer: (a) acknowledged having gone through the assessing officer's details and grounds for rejection of declared value; (b) acknowledged having gone through contemporaneous data of similar/identical goods and accepted that declared value was significantly lower; (c) agreed that the declared value was liable to rejection and value to redetermination with enhancement of duty; (d) agreed to the proposed enhancement of value/duty; (e) expressly stated that no show cause notice or speaking order was required; and (f) requested reassessment of value and duty in accordance with the proposed enhancement. 2.8 The subsequent plea by the importer that duty was paid under protest due to demurrage/detention pressure and that no speaking order was issued, was examined. The Commissioner (Appeals) found no evidence that the department had compelled or forced the importer to submit such acceptance letters; instead, they were filed after departmental queries and with full awareness of the proposed basis of valuation. 2.9 The Commissioner (Appeals) distinguished the Supreme Court's judgment in Century Metal Recycling Pvt. Ltd. v. Union of India [2019 (367) E.L.T. 3 (S.C.)] on the ground that, in that case, the Court had found that authorities had compelled/forced the importer to furnish acceptance letters, thereby unlawfully avoiding the statutory scheme, whereas in the present case the importer had given voluntary, unconditional and unreserved written acceptance with full knowledge of the proposed grounds and contemporaneous data. 2.10 The Commissioner (Appeals) emphasised para 26 of Century Metal Recycling (Supreme Court), where the Court clarified that it was not issuing any general direction that transaction value must invariably be accepted, and that cases must be assessed individually. 2.11 Relying on Section 17(5) and the Board circulars/instructions, the Commissioner (Appeals) held that, once the importer confirms acceptance of reassessment in writing, the proper officer is statutorily exempted from issuing a speaking order on reassessment. On facts, the reassessment was held to have been carried out after disclosing proposed valuation, grounds of rejection of declared value, and contemporaneous/similar/identical import data; principles of natural justice were held to have been followed to the extent required by law. 2.12 The Tribunal then referred to the decision of the jurisdictional High Court in S.S. Overseas v. Union of India [2022 (382) E.L.T. 26 (All.)], which analysed Section 17, including sub-section (5), and held that where the importer has confirmed in writing his acceptance of reassessment, 'there exists no occasion to pass a speaking order on the reassessment'. The High Court therefore dismissed writ petitions challenging reassessments accepted in writing. Conclusions 2.13 In light of Section 17(5), the Board's circulars and instructions, the findings of the Commissioner (Appeals) on the content and voluntariness of the written acceptance, and the binding judgment of the jurisdictional High Court in S.S. Overseas, the Tribunal concluded that no speaking order was required in these reassessments. The reassessed values were held to be legal and binding on the appellant. Issue 3 - Effect of importer's written acceptance on ability to challenge reassessment and valuation Interpretation and reasoning 2.14 The Commissioner (Appeals) held that the importer had given absolute/unreserved written acceptance of reassessment after being informed of: - proposed valuation, - grounds for rejection of declared value, and - details and prices of contemporaneous/similar/identical imports. On this basis, he rejected the contention that the reassessment lacked basis or violated natural justice. 2.15 The Tribunal further relied on a later Tribunal decision in Century Metal Recycling Pvt. Ltd. [(2024) 23 Centax 30 (Tri.-Del)], where, in circumstances of written consent/acceptance letters: - it was held that allegations of coercion were not acceptable when letters themselves expressly recorded voluntary acceptance; - it was held that, after having accepted enhancement values based on contemporaneous data, importers could not subsequently insist that valuation must be redone strictly under the Valuation Rules, 2007; and - the Tribunal invoked the principle that admitted facts need not be proved by the department, as recognised by the Supreme Court in Systems & Components. 2.16 That decision also held that, although the statutory right of appeal under Section 128 remains, an importer who has expressly rejected the originally declared value and accepted the redetermined value cannot later challenge the enhancement on the ground that it was not properly determined under the valuation rules or that natural justice was violated. 2.17 The present Tribunal adopted this reasoning, noting that the importer had, in very categorical terms, accepted the enhanced values and waived the requirement of show cause notice or speaking order. In absence of any substantiated plea or evidence of coercion or compulsion, the importer was held to be estopped from challenging the reassessment methodology or alleging breach of natural justice. Conclusions 2.18 The Tribunal concluded that, given the importer's voluntary and unconditional written acceptance of the enhanced values and reassessment, the assessee could not subsequently assail those reassessments on grounds of lack of basis, improper application of valuation rules, absence of speaking order, or violation of principles of natural justice. The reassessment and enhanced values were upheld. Issue 4 - Approach in face of conflicting High Court decisions; binding nature of jurisdictional High Court Interpretation and reasoning 2.19 It was brought to the Tribunal's notice that the Delhi High Court, in Hanuman Prasad & Sons (CUSAA No. 27 of 2022, order dated 27.11.2024), had taken a contrary view to that of the Allahabad High Court on related questions. The Tribunal noted this contrary view but declined to follow it. 2.20 Relying on the Larger Bench decision in Kashmir Conductors [1997 (96) E.L.T. 257 (T-LB)] and subsequent Tribunal decisions (including Phil Corporation Ltd. [2002 (144) E.L.T. 585 (Tri.-Mum)] and J.K. Tyre & Industries Ltd. [2016 (340) E.L.T. 193 (Tri.-LB)]), the Tribunal summarised the settled position: - The law laid down by the High Court having territorial jurisdiction over both the assessee and the adjudicating authority (the 'jurisdictional High Court') is binding on all authorities and tribunals within that jurisdiction. - Where the jurisdictional High Court has pronounced on a question of interpretation or law, its view must be followed in all cases within its territory, even if other High Courts have taken a different view. - Only where the jurisdictional High Court has not expressed any view on a given legal issue, and there are divergent views of other High Courts, does the Tribunal have the freedom to consider and adopt the view it finds more appropriate (Atma Steels principle), subject to the overarching guidance of the Supreme Court in East India Commercial Co. Ltd. 2.21 The Tribunal observed that the jurisdictional High Court (Allahabad High Court) has, in S.S. Overseas, specifically held that where the importer has confirmed in writing his acceptance of reassessment under Section 17(5), there is no requirement to pass a speaking order. That pronouncement squarely covered the issue before the Tribunal. 2.22 The Tribunal therefore held that, in light of the binding precedent of the jurisdictional High Court, it could not place reliance on a contrary view of a non-jurisdictional High Court (Delhi High Court in Hanuman Prasad & Sons), and must follow the law as declared by the Allahabad High Court. Conclusions 2.23 The Tribunal concluded that the question raised was squarely covered by the jurisdictional High Court's decision in S.S. Overseas. Applying the doctrine of jurisdictional discipline and precedential binding force, it held that no merit remained in the appeals. The appeals were accordingly dismissed, both for non-prosecution and on merits.