Peak Scientific Instruments (India) ... vs Commissioner Of Customs

CUSTOMS, EXCISE & SERVICE TAX APPELLATE TRIBUNAL SOUTH ZONAL BENCH CHENNAI

Appeal No.C/42511/2014

[Arising out of Order-in-Appeal No.1561/2014 dt. 26.8.2014 passed by the Commissioner of Customs, (Appeals), Chennai]

Peak Scientific instruments (India) Pvt. Ltd. Appellant

Versus

Commissioner of Customs, Chennai Respondent

Appearance:

Shri B. Kumar, Advocate For the Appellant

Shri M. Rammohan Rao, DC (AR) For the Respondent

CORAM :

Honble Shri R. Periasami, Technical Member Honble Shri P.K. Choudhary, Judicial Member

Date of Hearing/Decision : 14.5.2015

FINAL ORDER No.40540/2015

Per R. Periasami

The present appeal is filed against impugned order dt. 26.8.2014 passed by Commissioner of Customs (Appeals), Chennai.

2. The issue relates to determination of valuation of imported goods on related party transaction and differential customs duty leviable on account of loading of invoice value. The appellant is a 100% of subsidiary of Peak Scientific Instruments Ltd. UK and imported spares for laboratory gas generators for their U.K Company. The Special Valuation Branch, Customs House, Chennai ordered for provisional assessment of the goods as both the parties are related in terms of Rule 2 (2) (i) (ii) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. The Deputy Commissioner of Customs, Special Valuation Branch vide OIO No.21345/2013 dt. 23.7.2013 rejected the declared value and redetermined value and ordered for enhancement of invoice value to 39% under Customs Valuation (Determination of Imported Goods) Rules, 2007 and directed the Assessing Group to finalise the provisional assessment. The appellants preferred appeal against the said SVB order and the Commissioner (Appeals) in his impugned order dt. 26.8.2014 upheld the order and also enhanced the percentage of loading from 39% to 65.125% and rejected the appeal.

2. Heard both sides. Ld. Advocate for the appellants submits that they preferred appeal with a prayer to set aside the enhancement of value ordered by original authority whereas the LAA has enhanced the percentage of loading from 39% to 65.125% without giving opportunity to them. They are were not aware of the proposed enhancement of value and no notice issued as per proviso to Section 128A (3) of Customs Act. He submits that even though appellant appeared for personal hearing before LAA during the hearing they were not made aware of percentage of loading. He submits that they contested the percentage of loading of 35% but the LAA has not correctly calculated the value. He relied on the Tribunal's decision in the case of Anand Kumar Gupta Vs CC Mumbai  2000 (1200 ELT 407(Tri.-Del.) and submits that they have submitted volumes of third party invoices which has not been verified by the original authority as well as by the LAA. He further submits consequent on the enhancement of 69% in the above order, all their live consignments are being assessed after loading to 65.125%. Therefore, the enhancement of value directly affected on all subsequent imports and pleaded for setting aside the order and to remand the case to LAA. He relied the following citations :-

(i) Ambica fashion Vs CCE Ahmedabad 2014 (300) ELT 424 (Tri.-Ahmd.)

(ii) Avon Meters Pvt. Ltd. Vs CCE Chandigarh-II 2013 (292) ELT 94 (Tri.-Del.)

(iii) Adhavan Processors (P) Ltd. Vs CCE Salem 2004 (178) ELT 709 (Tri.-Che.)

(iv) Anand Kumar Gupta Vs CC Mumbai 2000 (120) ELT 407 (Tri.-Del.)

3. On the other hand, Ld. AR submits that Commissioner (Appeals) in the impugned order enhancing the percentage of loading is not in violation of Section 128A (3) as it is not applicable to SVB cases and no fresh demand has been made. He also submits that appellant have not submitted any documents/evidences even before the adjudicating authority to prove their bonafide claim. Therefore, the adjudicating authority has correctly loaded by taking into consideration all third party imports. Commissioner (Appeals) has upheld the said order and in continuation he has only increased the percentage and it is only an arithmetical calculation which cannot be compared with enhancement of value or change of classification.

4. Heard both sides. On perusal of the adjudication order, we find that the DC (SVB) has finalized the valuation under Rule 2 (2) (i) (ii) ofo CVR and rejected their invoice value and ordered for 39% loading. On perusal of the impugned order at page 5, I find that appellant was given an opportunity of hearing on 14.7.2014 before LAA. The LAA has held in the impugned order that rejection of the transaction by the adjudicating authority was right and further held that loading of 39% of the invoice value by the adjudicating authority is not correct and the correct loading should be 65.125%. We find the appellant's main contention before LAA is to set aside the loading of 39% ordered by adjudicating authority whereas the LAA before enhancing the percentage of loading from 30% to 65.125% ought to have given an opportunity to the appellant to put for their defence. Further, the appellants have submitted entire records of third party invoice which has not been taken into consideration. The AR's contention that Section 128A not applicable is not acceptable for the reasons that under Section 128(A) the Commissioner (Appeals) has the power to confirm, modify or annul the order suject to the first and second proviso of Section 128A of Customs Act.

If the LAA wants to enhance the penalty, fine or demand any duty such order shall be passed only after the appellant is given notice. In the present case even though there is no demand of customs duty but by enhancing the value of loading from 39% to 65.125% which has extra duty liability on the appellants and the enhancement had direct bearing on the increase of duty. The Tribunal decision relied by the appellants in the case of Ambica Fashion Vs CCE (Supra) and Anand Kumar Gupta Vs CC Mumbai( supra) squarely applicable to the present case. Therefore, we are of the considered view it is mandatory on the LAA to follow principles of natural justice before proposing for enhancement of value from 39% to 65.125% which the LAA has not followed in this case and the case needs to be remanded to LAA. Accordingly, impugned order is set aside and the matter is remanded to Commissioner (Appeals) with a direction to decide the issue on merits after giving sufficient opportunity to the appellant. The appellant is directed to co-operate with the proceedings and produce all the relevant documents before LAA.

The LAA shall pass appropriate orders on merit within a period of 6 months from the date of this order. Appeal is remanded in the above terms.

(Dictated and pronounced in open court)

(P.K. CHOUDHARY) (R. PERIASAMI) JUDICIAL MEMBER TECHNICAL MEMBER

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