Citation Codes

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Case Number

Appeal No. C/70479, 70480, 70481, 70482, 70332 & 70971/2016-CU[DB]

Attorney(S)

Shri Bipin Kumar Garg, Advocate, & Ms. Stuti Saggi, Advocate,
Shri Rajeev Ranjan, Joint Commissioner (AR),

Judges

Anil Choudhary, Member (Judicial)
Anil G. Shakkarwar, Member (Technical)

Acts

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Smart Summary

Structured Summary of the Tribunal Opinion

Factual and Procedural Background

These appeals were heard together because they involve the same appellant and common issues. The appeals arise from various Orders-in-Appeal passed by the Commissioner of Central Excise & Service Tax (Appeals), Meerut-II, Noida (dated 12-2-2016 and 30-6-2016) and include Appeal Nos. C/70479/2016, C/70480/2016, C/70481/2016, C/70482/2016, C/70332/2016 and C/70971/2016.

In Appeal No. C/70332/2016, during the period 27-8-2013 to 29-12-2014 the appellant imported 843 consignments of various varieties of "Aluminium Waste & Scrap" falling under Customs Tariff Item No. 7602 00 10. For each consignment the appellant filed Bills of Entry and self-assessed the assessable value on the basis of transaction value supported by purchase orders and invoices. The Assessing Officer rejected the self-assessment and enhanced the assessable value, resulting in aggregate additional Customs duty of Rs. 10,88,10,346/- over the self-assessed amount.

The appellant filed Writ Tax No. 72 of 2015 before the Hon'ble High Court of Allahabad. The High Court disposed the writ on 28-1-2015 directing the authority to pass a speaking order on the re-assessment of assessable value. Pursuant to that direction, the Deputy Commissioner of Customs passed Order-in-Original No. 01/DC/CUS/2015 dated 25-3-2015 rejecting transaction value for the 843 Bills and enhancing the assessable value. The appellant appealed that Order-in-Original before the Commissioner (Appeals), who decided the appeal by Order-in-Appeal No. NOI-CUSTM-000-APP-0310-15-16 dated 12-2-2016.

In the other appeals there was no formal Order-in-Original, but value was enhanced through the Bills of Entry. The appellant preferred appeals challenging the enhanced valuation before Commissioner (Appeals). The Commissioner (Appeals) issued a common order (NOI-CUSTM-000-APP-0311 to 0314-15-16 dated 12-2-2016) rejecting multiple appeals on the ground that the appellant had challenged the assessment in a large number of Bills of Entry through single appeals and therefore the appeals were not maintainable. In Appeal No. C/70971/2016 the Commissioner (Appeals) confirmed the reassessment through respective Bills of Entry and rejected the appeal (Order-in-Appeal No. NOI-CUSTM-000-APP-0276 to 0280-16-17 dated 30-6-2016). The appellant brought these matters before the Tribunal.

Legal Issues Presented

Whether the enhancement of assessable value (rejection of transaction value) for imported aluminium waste & scrap complied with Section 14 of the Customs Act, 1962 and was supported by proper evidentiary and statutory grounds.
Whether the Commissioner (Appeals) correctly held that appeals challenging multiple Bills of Entry filed together are not maintainable and therefore properly rejected such appeals on maintainability grounds.

Arguments of the Parties

Appellant's Arguments

The imported goods comprised various varieties of aluminium waste & scrap (e.g., "Twitch, Tense, Taint, Tabor, Troma, Tally, Zorba, Tough, etc.") whose prices depend on negotiation, condition, demand and supply, aluminium-content and expected recovery; thus quality and price vary consignment-to-consignment.
Section 14 of the Customs Act requires assessable value to be based on transaction value — the price actually paid where buyer and seller are not related and price is sole consideration. The Original Authority failed to demonstrate compliance with Section 14 when enhancing value.
The proper officer under Section 17 must examine contracts, insurance and other relevant documents; the department had accepted the documents filed by the appellant for valuation.
The Order-in-Original (25-3-2015) enhanced value by reference to Valuation Alert No. 14/2005 (dated 16-12-2005) issued by DG Valuation (CBEC), which the appellant contended has no authority under Section 14 to decide value of a particular consignment.
The appellant relied on prior Tribunal orders (Prayas Woollen Pvt. Ltd.; Venture Impex Pvt. Ltd.; PNP Polytex Pvt. Ltd.) to contend that: residual products (like rags or scrap) vary in quality and cannot be assumed standard; comparability must account for detailed parameters; and transaction value should be rejected only when the price is shown not to be the price actually paid or the buyer and seller are related and price is not sole consideration.
On these bases, the appellant submitted that the enhancement of assessable value in the impugned assessments is unsustainable.

Respondent's Arguments (Department)

The departmental representative (ld. DR) supported the Orders-in-Appeal passed by the Commissioner (Appeals).

Table of Precedents Cited

Precedent	Rule or Principle Cited For	Application by the Court
Prayas Woollen Pvt. Ltd. v. Commissioner of Customs (Import), Mumbai (Tri.-Mumbai)	That goods which are residual products (e.g., rags) cannot be of standard, uniform quality; characteristics vary consignment-to-consignment and comparability must be approached with care.	The Tribunal relied on this principle to support the appellant's submission that aluminium scrap consignments vary in quality and recovery potential and therefore comparability-based enhancements require detailed, item-specific examination which was not done.
Venture Impex Pvt. Ltd. v. Commissioner of Customs (Import & General), New Delhi (Tri.-Delhi)	Referenced as an authority on valuation/comparability principles used by the Tribunal in similar matters (valuation of non-standard goods).	The Tribunal treated this decision as part of the body of case law indicating that reassessment must be supported by appropriate evidential comparison; it informed the Tribunal's conclusion that the Original Authority did not undertake the required evidential exercise.
PNP Polytex Pvt. Ltd. v. Commissioner of Customs, Nhava Sheva (Tri.-Mumbai)	That a declared value can be rejected only if it is established that the price was not actually paid or that buyer and seller are related and price is not the sole consideration.	The Tribunal invoked this principle to hold that the Original Authority did not establish either that the declared price was not actually paid or that parties were related; hence the transaction value could not be rejected and the assessable value could not be enhanced on the record before it.

Court's Reasoning and Analysis

The Tribunal examined the sequence of events and the statutory requirements for valuation under Section 14 of the Customs Act, 1962. Key points in the Tribunal's analysis were:

The High Court of Allahabad had directed the Original Authority to pass a speaking order on the re-assessment of assessable value. The Tribunal found that although an Order-in-Original dated 25-3-2015 was passed in compliance, that order merely "passed comments on the grounds of writ petition" and did not properly examine the departmental evidence required to justify enhancement of assessable value.
The Tribunal reiterated the statutory principle under Section 14 that assessable value must be based on the price which is actually paid, where buyer and seller are not related and price is the sole consideration. Transaction value can be rejected only after establishing that the price was not the price actually paid or that buyer and seller are related and price is not the sole consideration.
The Tribunal considered the appellant's contention that aluminium waste & scrap are not uniform products and that comparability must take into account parameters such as quality and recovery potential. It noted the cited Tribunal precedents supporting that residual products vary and that valuation adjustments require detailed and consignment-specific justification.
The Tribunal found that the Original Authority did not perform the necessary exercise — i.e., it did not establish the requisite factual basis (such as relatedness or absence of sole consideration) before rejecting transaction value nor did it properly examine other evidence relevant to valuation under Section 14.
Because the statutory conditions for rejecting transaction value were not satisfied and the evidentiary exercise mandated by law and supported by precedents was not carried out, the Tribunal concluded that the enhanced assessable values could not be sustained on the record before it.

Holding and Implications

Holding: The Tribunal set aside all the impugned Orders-in-Appeal and allowed all the appeals. The Tribunal restored the assessable values as declared by the appellant in the respective Bills of Entry and held that the appellant shall be entitled to consequential relief, if any, in accordance with law.

Implications:

The direct effect is that the enhancements of assessable value made by the Original Authority (and confirmed or left undisturbed by the Commissioner (Appeals)) are rejected and the transaction values declared by the appellant are restored for the contested Bills of Entry.
The Tribunal's decision emphasizes that authorities must follow the statutory framework under Section 14 before rejecting transaction value and must undertake the necessary evidentiary comparisons and findings (for example, establishing that price is not the price actually paid or that the parties are related) before enhancing value.
The opinion does not announce or claim to establish a new legal precedent; it applies existing statutory principles and prior Tribunal decisions to the facts at hand. No broader legal rule, beyond the application of Section 14 and the cited precedents to these facts, is set out as a novel precedent in the text.

Dictated and pronounced in Court.

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M/S Sanjivani Non Ferrous Trading Pvt. Ltd. v. Commissioner Of Central Excise & Service Tax, Noida .

[Order per : Anil G. Shakkarwar, Member (T)]. - The abovestated these appeals are having same issue involved where the appellant is same and therefore they are taken together for decision. The Appeal Nos. C/70479/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0311 to 0314-15-16, dated 12-2-2016, C/70480/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0311 to 0314-15-16, dated 12-2-2016, C/70481/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0311 to 0314-15-16, dated 12-2-2016, C/70482/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0311 to 0314-15-16, dated 12-2-2016, C/70332/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0310-15-16, dated 12-2-2016 & C/70971/2016, is arising out of Order-in-Appeal No. NOI-CUSTM-000-APP-0276 to 0280-16-17, dated 30-6-2016 passed by Commissioner of Central Excise & Service Tax (Appeals), Meerut-II, Noida.

2. The brief facts of Appeal No. C/70332/2016 are that during the period from 27-8-2013 to 29-12-2014 the appellant imported 843 consignments of ‘Aluminium Waste & Scrap’ such as “Twitch, Tense, Taint, Tabor, Troma, Tally & Zorba, etc.” falling under Customs Tariff Item No. 7602 00 10. The appellant filed Bills of Entry for each consignment along with copy of purchase order and invoice. The appellant self-assess the goods in the said Bills of Entry on the basis of transaction value. The Assessing Officer rejected the self-assessment of duty made by the appellant and re-assessed the duty by increasing assessable value and levying Customs duty aggregating to Rs. 10,88,10,346/- more than duty self-assessed by the appellant put together in respect of 843 Bills of Entry. The appellant filed a writ petition before the Hon’ble High Court of Allahabad bearing Writ Tax No. 72 of 2015. The said writ petition was disposed of by the Hon’ble High Court by order dated 28-1-2015. The Hon’ble High Court directed for passing the speaking order on the re-assessment of the assessable value through said order dated 28-1-2015. In compliance of said order passed by the Hon’ble High Court of Allahabad, Deputy Commissioner of Customs passed Order-in-Original No. 01/DC/CUS/2015, dated 25-3-2015 wherein he rejected transaction value in respect of 843 Bills of Entry and enhanced assessable value for assessment of duty to the some extend to which value was enhanced originally. Aggrieved by the said Order-in-Original No. 01/DC/CUS/2015, dated 25-3-2015 appellant preferred appeal before Commissioner (Appeals). The said appeal was decided through Order-in-Appeal No. NOI-CUSTM-000-APP-0310-15-16, dated 12-2-2016 passed by Commissioner of Central Excise & Service Tax (Appeals), Meerut-II, Noida.

3. In respect of remaining appeals there was no formal Order-in-Original passed but the value was enhanced through the Bills of Entry and appellant preferred appeal for such enhancement of value for the purpose of assessment before Commissioner (Appeals). In Order-in-Appeal No. NOI-CUSTM-000-APP-0311 to 0314-15-16, dated 12-2-2016 the Commissioner (Appeals) passed common order in respect of 4 appeals filed before him against 119 Bills of Entry filed during 23-5-2015 to 30-6-2015, 85 Bills of Entry filed during 1-7-2015 to 31-7-2015, 61 Bills of Entry filed during 25-7-2015 to 30-8-2015 & 70 Bills of Entry filed during 24-8-2015 to 28-9-2015, respectively involving enhanced Customs duty of Rs. 1,73,77,573/-, 78,02,765/-, 25,59,112/- & Rs. 25,56,432/-. The Commissioner (Appeals) has held that appellant have filed appeal for challenging assessment in large number of Bills of Entry through a single appeal and therefore the said appeal is not maintainable. On the basis of such findings he has rejected all the appeals, stated above. In Appeal No. C/70971/2016 through said Order-in-Appeal No. NOI-CUSTM-000-APP-0276 to 0280-15-16, dated 12-2-2016, Commissioner (Appeals) confirmed the re-assessment order through respective Bills of Entry and rejected the appeal filed by the appellant. Aggrieved by said Orders-in-Appeal the appellant is before this Tribunal.

4. The grounds of appeal are as follows :-

(A) There are various varieties of ‘Aluminium Waste & Scrap’ such as “Twitch, Tense, Taint, Tabor, Troma, Tally & Zorba, Tough, etc.” and the price of each variety of aluminium scrap depends on the negotiation between the buyer and the seller and that the price is fixed on the basis of the marked condition, demand and supply, content of aluminium and the expected recovery of aluminium from such scrap.

(B) Section 14 of Customs Act provides for arriving at assessable value on the basis of transaction value which means that the price actually paid at the time and place of importation goods and where the buyer and seller of the goods are not related and price is the sole consideration for sale.

(C) The proper officer as provided under Section 17 of the Customs Act, 1962 has to examine the contract, insurance policy and other documents whereby the duty leviable on the imported goods may be ascertained. The proper officer accepted the documents filed by the appellant for ascertaining the value of the goods for the purpose of levy of duty thereon as correct.

(D) The Order-in-Original dated 25-3-2005 did not decide the value as provided by said Section 14 of Customs Act, 1962 but as stated in the said order the said value was enhanced for assessment taking into consideration Valuation Alert No. 14/2005, dated 16-12-2005 issued by Directorate General of Valuation (CBEC) which do not have any authority under Section 14 of Customs Act, 1962 to decide value of a particular consignment.

5. The ld. Counsel for the appellants has submitted that in the Order-in-Original the ld. Original Authority has failed to establish as to how the enhancement of assessable value was in accordance with the provisions of said Section 14 of Customs Act, 1962 and that the value was enhanced for the purpose of assessment on the basis of considerations which have no authority of law and that the ld. Commissioner (Appeals) also did not interfere with the same and that the enhancement of the assessable value was in violations of the provisions of law. He has relied on following final orders passed by this Tribunal.

(1) Prayas Woollen Pvt. Ltd. v. Commissioner of Customs (Import), Mumbai reported at (Tri.-Mumbai).

(2) Venture Impex Pvt. Ltd. v. Commissioner of Customs (Import & General), New Delhi reported at (Tri.-Delhi).

(3) PNP Polytex Pvt. Ltd. v. Commissioner of Customs, Nhava Sheva reported at (Tri.-Mumbai).

Further, he contended that as held in the case of Prayas Woollen Pvt. Ltd. goods viz. rags being a residual product, cannot be of standard quality and characteristics, quality, size, shape, colour, etc. of rags varies from consignment to consignment and same is applicable to Aluminium Waste & Scrap where the quality of each lot of scrap is different and the quality and recovery potential of each consignment is different. He argued that unless the parameters of quality and parameters related to the recovery of Aluminium Waste & Scrap are compared with the consignment for which the data was collected by the DG Valuation value adopted for such consignments cannot be adopted for the goods imported. He has contended that it was held in the case of PNP Polytex Pvt. Ltd. that the value declared by the importer was required to be established to be the price which was not actually paid and that the buyers and sellers were related persons and the price was not a sole consideration then alone the transaction value can be rejected and that in the present case without establishing any such aspect the Original Authority has rejected the transaction value. He has further argued that the enhancement of assessable value in all the cases is not sustainable.

6. Heard the ld. DR who has supported the Orders-in-Appeal.

7. Having considered the rival contentions and on perusal of record, we find that the Original Authority was directed by the Hon’ble High Court to pass speaking order on the enhancement of assessable value. We find that the Original Authority in its Order-in-Original dated 25-3-2015 has passed comments on the grounds of writ petition and did not properly examine the evidence available with the department required to be examined for enhancement of assessable value. Further, we find that as held in the case laws stated above and as provided by Section 14 of Customs Act, 1962, the assessable value has to be arrived at on the basis of the price which is actually paid and in a case the price is not sole consideration or if the buyers and sellers are related persons then after establishing that the price is not sole consideration the transaction value can be rejected and taking the other evidences into consideration the assessable value can be arrived at. Such exercise has not been done in these cases on hand. Therefore, we reject the enhancement of assessable value in respect of the Bills of Entry which are involved in all the appeals being decided and we restore the assessable value as declared by the appellant in said Bills of Entry.

8. In result, we set aside all the impugned Orders-in-Appeal and allow all the appeals. The appellant shall be entitled for consequential relief, if any, in accordance with law.

(Dictated and pronounced in Court)

M/S Sanjivani Non Fe... v. Commissioner Of Cent...