Bhuria Overseas v. Mundra

3

of the Customs Act, 1962 read with Rule 3 the Customs Valuation (Determination of Price of Imported Goods) Rules, 2007(herein after referred to as the CVR, 2007), is against the provisions of laws. He placed reliance upon the decision of Hon'ble Apex Court in the case of Eicher Tractors Limited reported in 2000 (122) ELT 321 (SC), it was argued that before rejecting the transaction value, it was incumbent upon the assessing officer to bring the case within the special circumstances mentioned under clause (i) to (iii) of the proviso to Section 14(1) of the Customs Act, 1962 where the transaction value need not be accepted. But nothing has been done in this case. The Ld. Counsel further argued that even if there was an acceptance to the assessed value by the appellant, it does not preclude him from challenging by way of appeal as there cannot be an estoppel against law as held by the Hon'ble Supreme Court in the case of Dunlop India Limited reported in 1983 (13) ELT 1566 (SC).He has also placed reliance upon the decision of Hon'ble High Court of Delhi in which while upholding the order of Hon'ble Tribunal in the case of Cisco Systems (India) Pvt. Ltd. reported at 2023 (384) ELT 165 (Del.), 2021 (375) ELT 658 (Tri.- Del) respectively, have held that the very act of filing an appeal against an order imposing customs duty is a protest against the duty as assessed. Thus, it is obvious that the assessee has not accepted the declared value of imported goods. Hence, the ground taken by Learned Commissioner (Appeals) rejecting the appeals filed by appellant against the assessment orders rejecting the declared value and enhancing the same without any speaking order, is not tenable.

4. Per Contra the learned AR appearing on behalf of the Revenue has reiterated the findings in the Order-in-Appeal that in view of CBEC Circular No. 17/2011 dated 08.04.2011, if the importer-Appellant was not satisfied with the enhanced value, he could have asked for the speaking order in terms of Section 17 of the Customs Act, 1962. By accepting the assessable value and not asking for the speaking order, the value assessed by the assessing officer had attained finality and the appellant was precluded from contesting the same.

5. We have carefully gone through the rival arguments. We are of the considered opinion that normal assessable value for import goods should be

4

the transaction value. However revenue can dispute the transaction value in appropriate circumstances. For the purpose of re-determining the assessable value, statutory mechanism has been provided which not only consist of special circumstances under which transaction value can be disputed as provided under second proviso clause (i) to (iii) under Section 14(1) of the Customs Act i.e. when the transaction is between the related persons, the price is not the sole consideration or the assessing officer has reason to doubt the declared value, but a specific procedure has been prescribed under Customs Valuation (Determination of Value of the imported Goods) Rules, 2007. Without following the above mechanism, any re- determination of value shall be violative of the statutory provisions and will be unlawful and thus void. The importer may accept re-determined value to secure an early release as he may be forced under certain business compulsions to avoid losses which may accrue due to delayed clearance of goods which may be in the nature of demurrage, cancellation of orders, fluctuation of market prices, commitments of specific orders, seasonable or festival demand of the goods and various other reasons. Therefore, mere acceptance of the price cannot justify the re-determined value which is unlawful ab-initio. We are therefore of the view that re-assessment under Section 17 of the Customs Act has necessarily to follow the statutory provisions under Section 14 of the Customs Act, 1962 and the Valuation Rules framed thereunder. If the importer does not ask for the speaking order for re-assessment under Section 17(5) of the Customs Act, still the assessing officer is under an obligation of follow the statutory provisions though these may remain on the note-sheet or the case file without passing of the speaking order. Hon'ble Apex Court in the case of 2007 (214) E.L.T. 3 (S.C.), Commissioner of Customs, Calcutta vs. South India Television (P) Limited has held that the transaction value cannot be rejected without any evidence to the contemporaneous imports at the higher value. The relevant extract is re-produced below:-

"We do not find any merit in this civil appeal for the following reasons. Value is derived from the price. Value is the function of the price. This is the conceptual meaning of value. Under Section 2(41), "value" is defined to mean value determined in accordance with Section 14(1) of the Act. Section 14 of the Customs Act, 1962 is the sole repository of law governing valuation of goods. The Customs Valuation Rules, 1988 have been framed only in respect of imported goods. There are no rules governing the valuation of export goods. That must be done based on Section 14 itself. In the present case, the

5

Department has charged the respondent-importer alleging mis-declaration regarding the price. There is no allegation of mis-declaration in the context of the description of the goods. In the present case, the allegation is of under-invoicing. The charge of under- invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. It is for the Department to prove that the apparent is not the real. Under Section 2(41) of the Customs Act, the word "value" is defined in relation to any goods to mean the value determined in accordance with the provisions of Section 14(1). The value to be declared in the Bill of Entry is the value referred to above and not merely the invoice price. On a plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or payable on such goods at the time and place of importation in the course of international trade. Section 14 is the deeming provision. It talks of deemed value. The value is deemed to be the price at which such goods are ordinarily sold or offered for sale, for delivery at the time and place of importation in the course of international trade where the seller and the buyer have no interest in the business of each other and the price is the sole consideration for the sale or for offer for sale. Therefore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Department has to find out whether there are any imports of identical goods or similar goods at a higher price at around the same time. Unless the evidence is gathered in that regard, the question of importing Section 14(1A) does not arise. In the absence of such evidence, invoice price has to be accepted as the transaction value. Invoice is the evidence of value. Casting suspicion on invoice produced by the importer is not sufficient to reject it as evidence of value of imported goods. Under-valuation has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made in the exporting country, it has to show how

6

such declaration was procured. We may clarify that strict rules of evidence do not apply to adjudication proceedings. They apply strictly to the courts' proceedings. However, even in adjudication proceedings, the AO has to examine the probative value of the documents on which reliance is placed by the Department in support of its allegation of under-valuation. Once the Department discharges the burden of proof to the above extent by producing evidence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. Section 14(1) speaks of "deemed value".

Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a higher price, the invoice price is liable to be accepted. The value in the export declaration may be relied upon for ascertainment of the assessable value under the Customs Valuation Rules and not for determining the price at which goods are ordinarily sold at the time and place of importation. This is where the conceptual difference between value and price comes into discussion.

6. The above findings of the Hon'ble Apex Court also met with approval by the Apex Court in the matter of 2017 (7) G.S.T.L. 82 (Tri.- All.) Sanjivani Non-Ferrous Trading Pvt. Limited vs. C.C.E. & S.T., Noida.

7. We also follow the decision of this Tribunal on the similar matter in the case of Sedna Impes India (P) Limited vs. Commissioner of Customs, Mundra reported under 2023 (3) TMI 1080 CESTAT Ahmedabad, the relevant extract of the same is reproduced here below:-

"4.3 The dispute in the present case is regarding the valuation of the goods imported by the Appellants. The Assessing Authority re-assessed the imported goods at values higher than what was declared by the Appellants in the Bills of Entry. The revenue enhanced value as per NIDB data. We observed that the transaction value declared by the importer should form the basis of assessment unless the same is rejected, for the reasons set out in Rules of the Customs Valuation Rules. Section 14 of the Customs Act, 1962 read with Customs Valuation Rules makes it abundantly clear that transaction value in the ordinary course of commerce is to be taken as the assessable value. The Customs Valuation Rules outlines the step-by-step methodology to be adopted for re- determination of the assessable value in certain cases. The primary requirement for re- determination of the value is that the transaction value should be rejected for cogent reasons prescribed in the Customs Valuation Rules. If the transaction value is rejected, then the Customs Valuation Rules prescribes the basis for arriving at the assessable value. However, the requirement of Section 14 and the Customs Valuation Rules need to be satisfied for enhancement of value. Nothing is forthcoming from the record of the case from which the basis for such re-assessment can be made out. Rejection of

7

declared value on Bill of Entry is a serious affair and the same could have been rejected on the basis of cogent examination of evidences and justifiable reasons. Hon'ble Supreme Court has in case of Eicher Tractors [2000 (122) E.L.T. 321 (S.C.)] laid down very categorical as follows :

"6. Under the Act customs duty is chargeable on goods. According to Section 14(1) of the Act, the assessment of duty is to be made on the Value of the goods. The value may be fixed by the Central Government under Section 14(2). Where the value is not so fixed the value has to be determined under Section 14(1). The value, according to Section 14(1), shall be deemed to be the price at which such or like goods are ordinarily sold, or offered for sale, for delivery at the time and place of importation - in the course of international trade. The word 'ordinarily' necessarily implies the exclusion of "extraordinary" or "special" circumstances. This is clarified by the last phrase in Section 14 which describes an "ordinary" sale as one "where the seller or the buyer have no interest in the business of each other and the price is the sole consideration for the sale..........". Subject to these three conditions laid down in Section 14(1) of time, place and absence of special circumstances, the price of imported goods is to be determined under Section 14(1A) in accordance with the rules framed in this behalf.

7. The rules which have been framed are the Customs, Valuation (Determination of Price of Imported Goods) Rules, 1988. The rules came into force on 16th August, 1988. Under Rule 3(i) "the value of imported goods shall be the transaction value".

"Transaction value"' has been defined in Rule 2(f) as meaning the value determined in accordance with Rule 4. Rule 4(1) in turn states :

"The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules."

8. Reading Rule 3(i) and Rule 4(1) together, it is clear that a mandate has been cast on the authorities to accept the price actually paid or payable for the goods in respect of the goods under assessment as the transaction value. But the mandate is not invariable and is subject to certain exceptions specified in Rule 4(2) namely :

(a) there are no restrictions as to the disposition or use of the goods by the buyer other than restrictions which -

(i) are imposed or required by law or by the public authorities in India; or

(ii) limit the geographical area in which the goods may be resold; or

(iii) do not substantially affect the value of the goods;

(b) the sale or price is not subject to same condition or consideration for which a value cannot be determined in respect of the goods being valued;

(c) no part of the proceeds of any subsequent resale, disposal or use of the goods by the buyer will accrue directly or indirectly to the seller, unless an appropriate adjustment can be made in accordance with the provisions of Rule 9 of these rules; and

8

(d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3)."

9. These exceptions are in expansion and explicatory of the special circumstances in Section 14(1) quoted earlier. It follows that unless the price actually paid for the particular transaction falls within the exceptions, the Customs authorities are bound to assess the duty on the transaction value.

10. The respondent's submission is that the phrase "the transaction value" read in conjunction with the word "payable" in Rule 4(1) allows determination of the ordinary international value of the goods to be ascertained on the basis of data other than the price actually paid for the goods. This, according to the respondent, would be in keeping with the overriding effect of Section 14(1). We cannot agree.

11. It is true that the Rules are framed under Section 14(1A) and are subject to the conditions in Section 14(1). Rule 4 is in fact directly relatable to Section 14(1). Both Section 14(1) and Rule 4 provide that the price paid by an importer to the vendor in the ordinary course of commerce shall be taken to be the value in the absence of any of the special circumstances indicated in Section 14(1) and particularised in Rule 4(2).

12. Rule 4(1) speaks of the transaction value. Utilisation of the definite article indicates that what should be accepted as the value for the purpose of assessment to customs duty is the price actually paid for the particular transaction, unless of course the price is unacceptable for the reasons set out in Rule 4(2). "Payable" in the context of the language of Rule 4(1) must, therefore, be read as referring to "the particular transaction" and payability in respect of the transaction envisages a situation where payment of price may be deferred.

13. That Rule 4 is limited to the transaction in question is also supported by the provisions of the other Rules each of which provide for alternate modes of valuation and allow evidence of value of goods other than those under assessment to be the basis of the assessable value. Thus, Rule 5 allows for the transaction value to be determined on the basis of identical goods imported into India at the same time; Rule 6 allows for the transaction value to be determined on the value of similar goods imported into India at the same time as the subject goods. Where there are no contemporaneous imports into India, the value is to be determined under Rule 7 by a process of deduction in the manner provided therein. If this is not possible the value is to be computed under Rule 7A. When value of the imported goods cannot be determined under any of these provisions, the value is required to be determined under Rule 8 "using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 and on the basis of data available in India." If the phrase 'the transaction value' used in Rule 4 were not limited to the particular transaction then the other Rules which refer to other transactions and data would become redundant.

14. It is only when the transaction value under Rule 4 is rejected, then under Rule 3(ii) the value shall be determined by proceeding sequentially through Rules 5 to 8 of the Rules. Conversely if the transaction value can be determined under Rule 4(1) and does not fall under any of the exceptions in Rule 4(2), there is no question of determining the value under the subsequent Rules.

15. The Assistant Collector in this case determined the value of the imported goods under Rule 8. The question is whether he should have determined the transaction value under Rule 4 at the price actually paid by the appellant for the 1989 bearings.

9

Naturally, if Rule 4 applies to the facts of this case, the Assistant Collector's reasoning under Rule 8 must, by virtue of language of Rule 3(ii), be set aside.

16. The Assistant Collector appears to have proceeded on the law as it was prior to the 1988 Rules when 'special considerations' on the basis of which a transaction was held not to be an ordinary sale in the course of international trade within the meaning of Section 14(1), had not been statutorily particularised.

17. As to what would constitute such "special consideration" has been considered in several decisions of this Court. For example, a special quotation for the importer singling him out from other importers in India was held to be a special consideration in Padia Sales Corporation v. Collector Of Customs, Bombay ., Bombay (supra) justifying the rejection of price paid as the transaction value. On the other hand in Basant Industries v. Addl. Collector of Customs, Bombay - 1996 (81) E.L.T. 195 (S.C.), a special quotation for an "old and valued customer" was upheld as not being a special.

18. The decision in Sharp Business Machines Pvt. Ltd., relied upon by the respondent is another case where the transaction value was rejected. In that case, the importer had wrongly mis-described the imported goods and sought to defraud the Revenue by attempting to surreptitiously import items prohibited under the import policy. It was found that there was justification, in the circumstances, for rejecting the price shown in the invoice. The transaction value having been rejected, assessment of value was made on the basis of the price list of the foreign vendor.

19. Both the decisions Padia Sales Corporation and Sharp Business Machines Pvt. Ltd. were distinguished subsequently in Mirah Exports Pvt. Ltd. v. Collector Of Customs . - 1998 (98) E.L.T. 3. As the facts of this case are somewhat similar to the case before us, it is dealt with in some detail.

20. Mirah Exports Pvt. Ltd. along with other importers had imported bearings at high rates of discount. The declared value was rejected by the Customs authorities, on the basis of the price list of the vendors. This Court set aside the decision of the respondent authorities accepting the argument that a discount is a recognised feature of international trade practice and that as long as those discounts are uniformly available to all and based on logical commercial bases, they cannot be denied under Section 14. It appears from the judgment that a distinction was drawn between a discounted price special to a particular customer and discounts available to all customers.

21. As already noted all these cases dealt with imports made prior to the coming into force of the Rules in 1988. Now the 'special considerations' are detailed statutorily in Rule 4(2).

22. In the case before us, it is not alleged that the appellant has mis-declared the price actually paid. Nor was there a mis-description of the goods imported as was the case in Padia Sales Corporation. It is also not the respondent's case that the particular import fell within any of the situations enumerated in Rule 4(2). No reason has been given by the Assistant Collector for rejecting the transaction value under Rule 4(1) except the price list of vendor. In doing so, the Assistant Collector not only ignored Rule 4(2) but also acted on the basis of the vendor's price list as if a price list is invariably proof of the transaction value. This was erroneous and could not be a reason by itself to reject the transaction value. A discount is a commercially acceptable measure, which may be resorted to by a vendor for a variety of reasons including stock clearance. A price list is really no more than a general quotation. It does not preclude discounts on the listed price. In fact, a discount is calculated with

10

reference to the price list. Admittedly in this case discount up to 30% was allowable in ordinary circumstances by the Indian agent itself. There was the additional factor that the stock in question was old and it was a one time sale of 5 year old stock. When a discount is permissible commercially, and there is nothing to show that the same would not have been offered to any one else wishing to buy the old stock, there is no reason why the declared value in question was not accepted under Rule 4(1).

23. In the circumstances, production of the price list did not discharge the onus cast on the Customs authorities to prove that the value of the 1989 bearings in 1993 as declared by the appellant was not the "ordinary" sale price of the bearings imported" Similar view has been expressed by the Apex Court again in case of Tolin Rubbers Pvt. Ltd. [2004 (163) E.L.T. 189 (S.C.)], South India Televisions [2007 (214) E.L.T. 3 (S.C.)], Motor Industries [2009 (244) E.L.T. 4 (S.C.)] etc.

4.4 We find that in the present matter neither the adjudicating authority nor Commissioner (Appeals), have pointed to such special circumstances warranting the rejection of the declared transaction value by the appellant on Bills of Entry. Further, Rule 12 of Customs Valuation (Determination of Price of Imported Goods) Rules, 2007 reads as below:

"12. Rejection of declared value. - (1) When the proper officer has reason to doubt the truth or accuracy of the value declared in relation to any imported goods, he may ask the importer of such goods to furnish further information including documents or other evidence and if, after receiving such further information, or in the absence of a response of such importer, the proper officer still has reasonable doubt about the truth or accuracy of the value so declared, it shall be deemed that the transaction value of such imported goods cannot be determined under the provisions of subrule

(1) of rule 3.

(2) At the request of an importer, the proper officer, shall intimate the importer in writing the grounds for doubting the truth or accuracy of the value declared in relation to goods imported by such importer and provide a reasonable opportunity of being heard, before taking a final decision under sub-rule (1). Explanation. - (1) For the removal of doubts, it is hereby declared that :-

(i) This rule by itself does not provide a method for determination of value, it provides a mechanism and procedure for rejection of declared value in cases where there is reasonable doubt that the declared value does not represent the transaction value; where the declared value is rejected, the value shall be determined by proceeding sequentially in accordance with rules 4 to 9.

(ii) The declared value shall be accepted where the proper officer is satisfied about the truth and accuracy of the declared value after the said enquiry in consultation with the importers.

(iii) The proper officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include -

(a) the significantly higher value at which identical or similar goods imported at or about the same time in comparable quantities in a comparable commercial transaction were assessed;

(b) the sale involves an abnormal discount or abnormal reduction from the ordinary competitive price;

11

(c) the sale involves special discounts limited to exclusive agents;

(d) the misdeclaration of goods in parameters such as description, quality, quantity, country of origin, year of manufacture or production;

(e) the non-declaration of parameters such as brand, grade, specifications that have relevance to value;

(f) the fraudulent or manipulated documents." From plain reading of the Rule 12 it is quite evident that the word "doubt" used in the rule has to be based on cogent reasons and evidences. No cogent evidence or reason has been put forth in the present case to justify the "doubt" of the assessing officer. Clearly, for rejection of the transaction value under Rule 12, there has to be a reasonable ground and it cannot be rejected merely on the ground that similar goods have been imported at higher value without examining the applicability of Rule 5 of Customs Valuation Rules, 2007.

4.5 The enhancement of the value done by the Customs department is only on the basis of value of contemporaneous imports. In this context we find that the relevant provisions for valuation under Customs Act are as below:

Customs Valuation (Determination of Value of Imported Goods) Rules, 2007.

Rule 12 - Explanation 1(iii) The Proper Officer shall have the powers to raise doubts on the truth or accuracy of the declared value based on certain reasons which may include -

(a) The significantly higher value at which identical or similar goods imports at or about the same time in comparable quantities in a comparable commercial transaction were assessed;

Rule 5 - Transaction of value of Similar goods :-

(l) Subject to the provisions of Rule 3, the value of imported goods shall be the transaction value of similar goods sold for export to India and imported at or about the same time as the goods being valued Provided that such transaction value shall not be the value of the goods provisionally assessed under Section 18 of the Customs Act, 1962.

(2) The provisions of clauses (b) and (c) of sub-rule (1), sub-rule (2) and sub-rule (3), of Rule 4 shall, mutatis mutandis, also apply in respect of similar goods. From the above provisions, it is clear that if there is any doubt about the transaction value declared by the assessee, then if at all the value of contemporaneous import needs to be applied, the value of identical goods or similar goods should be applied. However, in the present case though the contemporaneous import goods were relied upon, but both the adjudicating authority failed to ascertain that whether the goods of contemporaneous imports is identical or similar to the goods of the assessee . Appellants have disputed the said comparable data on the ground that contemporaneous goods provided by the revenue is for Polyester Knitted Fabrics whereas goods imported by the appellant are of Mixed lot of Polyester Knitted Fabric (Rolls of Assorted Colors & Weight), the value of the above referred type of fabrics is low because the goods are mixed lot of fabrics of different colours and different weight and quality is not same as fresh quality polyester knitted fabrics.

12

4.6 We noticed that in present matter no effort was made by the adjudicating authority to ascertain quality, quantity, characteristics of the goods of contemporaneous import. In the present import without carrying out any test to the fact that goods of contemporaneous import and the goods in question in present case are identical or similar, enhancement of the value is not legal and correct. It is also observed that other than contemporaneous import data, there is no other evidence to show that the assessee have suppressed the value.

4.7 We find that in the present case, the adjudicating authority enhanced the value as the declared value appears to be low compared to value available in NIDB data, otherwise, there is no material available. The Tribunal consistently observed that the declared value cannot be enhanced merely on the basis of NIDB data. Tribunal in the case of Neha Intercontinental Pvt. Ltd. v. Commissioner of Customs, Goa [2006

(202) E.L.T. 530 (Tri.-Mum.)] has held in the absence of rejection of transaction value, invoice value requires acceptance and when the contemporaneous import of similar goods is not established, value cannot be enhanced. In the case of Commissioner of Customs v. Modern Overseas [2005 (184) E.L.T. 65 (Tri.- Del.)] NIDB data was held to be insuffient, in the absence of clarity about various parameters. List of such decisions is unending and it is sufficient to say that NIDB data has been held to be insufficient for enhancement of value, in the absence of any other independent evidence. Admittedly in the present cases, there is no such evidence produced by the Revenue except reference to the NIDB data. In view of the discussions above, we hold that in the present case, the enhancement of value on the basis of NIDB data cannot be accepted.

4.8 Further as regard the second dispute involved in the present appeals that whether appellant are eligible for exemption Notification under Notification No. 30/2004-CE dtd. 09.07.2004 which provide exemption form Countervailing Duty (CVD), we find that identical issue has been decided by this tribunal in the appellant's own matter of M/s Sedna Impex India Pvt. Ltd. vide final Order No. A/10106-10190/2022 dtd. 18.02.2022 wherein this Tribunal has passed the following order:

"7. We have carefully considered the submissions made by both the sides and perused the records.We find that in the present case the appellant at the time of clearance of imported goods did not avail the exemption Notification No.30/2004-CE dated 09.07.2004 which provides exemption from Countervailing Duty (CVD). In order to claim the exemption notification, the appellant challenge the Bill of Entry assessment before the Commissioner (Appeals) who has rejected the appeal on the following two grounds.:-

i) The appellant has not lodged any protest at the time of assessment.

ii) The appellant has failed to fulfill the conditions of Notification No. 30/2004-CE dated 09.07.2004 as amended i.e. non taking of Cenvat Credit on inputs/capital goods. We find that the appellant in principle entitle for exemption Notification as the condition of non availment of Cenvat Credit need not to be satisfied by the importer in respect of imported goods. The same has been clarified by the Central Board of Excise and Customs vide Circular No. 1005/12/2015-CX dated 21.07.2015. The same is reproduced below:-

Circular No. 1005/12/2015-CX, dated 21-7-2015

Make in India Policy — Removal of disadvantage to domestic manufacturers vis-a-vis importers

Circular No. 1005/12/2015-CX., dated 21- 07-2015

13

F. No. 336/4/2015-TRU Government of India Ministry of Finance (Department of Revenue) Central Board of Excise & Customs, New Delhi Subject : Judgment of the Supreme Court in the case of M/s. SRF Ltd. versus Commissioner of Customs. Chennai - Clarification relating to notifications No. 30/2004- Central Excise, dated 9-7-2004. No. 1/2011-Central Excise dated 1-3-2011 and No. 12/2012-Central Excise dated 17-3-2012, as amended - Regarding. It may recalled that the Hon'ble Supreme Court, in the case of M/s. SRF Ltd. versus Commissioner of Customs, Chennai and M/s. ITC Ltd. v/s. Commissioner of Customs (I&G), New Delhi [2015 (318) E.L.T. 607 (S.C.)] relating to CVD exemption, has held that the benefit of excise duty exemption [available to final products manufactured by the domestic manufacturer, subject to the condition of non-availment of CENVAT credit of duty on inputs or capital goods used by such manufacturer for manufacture of such final products] will also be available to the importers of such final products for the purposes of CVD on the ground that the importer was not availing the credit of duty on inputs or capital goods.

2. The implication of the Hon'ble Supreme Court judgment was that all such final products when imported by manufacturer importer would have attracted concessional excise duty as CVD, while the domestic manufacturer of such final products had to forgo input tax credit to be eligible for such concessional rate. This would put the domestic manufacturers at a disadvantage vis-a-vis imports and would adversely impact the Make in India Policy of the Government.

3. The judgment of the Hon'ble Supreme Court was examined in CBEC and it was found that there were certain errors apparent on record/interpretational issues and. with the concurrence of the Ld. Attorney General, a Review Petition/Revision Application has been filed against the same.

4. However, keeping in view the adverse implications of the aforesaid judgment on the domestic industry, legal opinion was sought from the Ministry of Law & Justice as to whether pending the aforesaid Review Petition/Revision Application, such conditions in the relevant notifications be suitably amended so as to make the intention abundantly clear (that these conditions are to be satisfied by the manufacturers of such goods and not the buyer/importer of such goods).

5. In this context, opinion of the Ministry of Law & Justice was also sought. With the concurrence of the Ld. Attorney General, notifications No. 34/2015- C.E., No. 35/2015- C.E. and No. 36/2015-C.E. all dated 17-7-2015 were issued amending the conditions in notifications No. 30/2004-C.E., dated 9-7- 2004, No. 1/2011-C.E., dated 1-3-2011 and No. 12/2012-C.E. dated 17-3- 2012, respectively.

6. In the above context, apprehensions have been raised about the use of the phrase of

"appropriate duty". In this regard. Explanations have been inserted in the notifications No. 30/2004-C.E., dated 9-7-2004, No. 1/2011- C.E., dated 1-3-2011 and No. 12/2012- C.E., dated 17-3-2012 so as to clarify that the appropriate duty or appropriate additional duty or appropriate service tax for the purposes of the said notifications/entries includes nil duty or tax or concessional duty or tax, whether or not read with any relevant exemption notification for the time being in force.

14

7. It may, therefore, be noted that the domestically manufactured goods covered under these notifications/entries continue to be exempt from excise duty or subject to concessional rate of excise duty, as the case may be, as they were prior to 17th July,

2015.

8. Trade Notice/Public Notice may be issued to the field formations and taxpayers.

9. Difficulties faced, if any, in implementation of this Circular may be brought to the notice of the Board.

The above circular was issued as a consequent to the Hon'ble Supreme Court judgment in the case of SRF LTD. VS. COMMISSIONER OF CUSTOMS, CHENNAI-2015 (318) ELT 607 (S.C.) and AIDEK TOURISM SERVICE PVT. LTD Vs. COMMISSIONER OF CUSTOMS, NEW DELHI- 2015 (318) ELT 3 (S.C.). Wherein, it was held that the condition of non availment of Cenvat Credit on input/capital goods need not to be satisfied by the buyer/importer of such goods. In view of the above circular, the appellant was entitled for exemption from CVD at the time of clearance of the imported goods in terms of Notification No.30/2004- CE dated 09.07.2004. Needless to say that, it is a settled legal position by the Hon'ble Apex Court that board circular/instructions are binding on the departmental officers. Therefore, the Assessing Officers while assessing the Bill of Entry was duty bound to verify the eligibility of the exemption Notification No. 30/2004-CE and to extend the benefit of the same. However, the Assessing Officer has not given any heed in extending the benefit of the said notification. In this fact, it cannot be expected from the appellant to lodge any protest as they have also paid duty oversightly without claiming such notifications. Therefore, we do not agree with the contention of the Learned Commissioner that since the appellant have not lodged any protest the benefit of notification cannot be given. We further note that it is a settled law in various judgments that the benefit of exemption notification can be claimed at any stage, therefore, even after clearance of goods when the exemption benefit claimed the same should be extended to the assessee. As regard, the other ground of rejection by the Commissioner (Appeals) that the appellant have not satisfied the condition of non taking of Cenvat Credit on inputs/capital goods, the very same issue has been dealt in above referred board circular dated 21.07.2015 by considering as settled legal issue by the Hon'ble Supreme Court in the case of SRF LTD. (Supra). Therefore, in the present case the appellant have imported the goods, hence, the condition of notification i.e. non taking of Cenvat Credit on input/capital goods need not to be satisfied. The lower authorities have taken support of the decision in the case of PRASHRAY OVERSEAS PVT LTD-2016 (338) ELT 44 (Mad.). This Tribunal in the case of ENTERPRISES INTERNATIONAL LTD.-2017

(346) ELT 423 (TRI.-CHENNAI). Even after considering the judgment in case of PRASHRAY OVERSEAS PVT LTD (Supra) held that the exemption Notification No. 30/2004-CE in respect of CVD on imported goods is admissible. The relevant order in ENTERPRISES INTERNATIONAL LTD (Supra) is reproduced below:-

"11. We have carefully considered the submissions of both sides and also perused the records, case laws and the Revenue's grounds of appeal. The short issue in all these Revenue appeals against the admissibility of CVD exemption on the imported goods i.e. Silk Yarn and Silk Fabrics under Notification No. 30/2004-C.E., dated 9-7-2004 where LAA has allowed the benefit. We find that the respondents appealed against the assessment of Bill of Entries where CVD has been charged without giving the benefit of the notification. The LAA in the impugned orders while allowing the appeal has discussed the issue in detail and also relied on this Tribunal's Division Bench decisions in the case of Prashray Overseas Pvt. Ltd. (supra) and also relied Tribunal's decision in Nhava Sheva v. Ashima Dyecot Ltd. (supra) and Mapsa Tapes Pvt. Ltd. case (supra).

12. On perusal of the grounds of appeal already reproduced above, the Revenue's contention that LAA has not considered the Tribunal's Larger Bench decision in

15

the case of Priyesh Chemicals & Metals v. CCE, Bangalore (supra) and further contended that this Chennai Tribunal's Bench decision in the case of Prashray Overseas Pvt. Ltd. (supra) relied by LAA has not attained finality as Revenue preferred appeal against Tribunal order before the Hon'ble High Court, Madras which is still pending. Revenue also contended that notification in question should have been given effect to prospectively and the condition stipulated in the notification is only for local manufacturer of goods and not for importer. We find that this very ground advanced by the Revenue has already been dealt with in detail and decided by this Tribunal Bench in the case of M/s. Prashray Overseas Pvt. Ltd. in the orders reported in 2008 (232) E.L.T. 63 (Tri.-Chen.) and 2009 (235) E.L.T. 300 (Tri.- Chennai) where the issue of grant of CVD exemption under Notification No. 30/2004-C.E., dated 9-7-2004 has been discussed and allowed appeals. The LAA has rightly relied on the Tribunal's orders (supra) which is binding on him and allowed the appeals. Merely for the reason Revenue filed appeal before Hon'ble High Court, Madras cannot be a ground to deny the benefit allowed by this Bench as no stay granted by the High Court. Therefore, once the Tribunal has already decided the issue and the decision has not been set aside and there appears to be no error on the part of the LAA relying on this Tribunal's decision. In view of Hon'ble Supreme Court relying in the case of Union of India v. Kamlakshi Finance Corporation Ltd. - 1991 (55) E.L.T. 433 (S.C.), this Bench decision is binding on the jurisdictional lower authorities and they are bound to follow the said decision. On this account alone, the Revenue's appeals are liable to be rejected.

13. On the question of admissibility of CVD exemption, we find the Notification No. 30/2004-C.E., dated 9-7-2004 at Sl. No. 5 of table exempts excise duty on silk yarn and silk fabrics falling under Chapters 54.01 to 54.07. The proviso to the notification stipulates a condition that "nothing contained in this notification shall apply to the goods in respect of which credit of duty on inputs or capital goods has been taken under the provisions of the CCR, 2002." This very issue was discussed in the case of Prashray Overseas Pvt. Ltd. [2009 (235) E.L.T. 300 (Tri.- Chennai). The relevant Paragraph 3 of the order is reproduced as under :-

"3. We find that no Central Excise duty is payable on raw silk produced in India. Yarn manufactured from such silk is also exempt under Notification No. 30/2004 as no credit availed input is used to manufacture silk yarn. Therefore indigenous silk fabrics manufactured from indigenous silk yarn are exempt from Central Excise duty. Another stream in which silk fabrics get manufactured in India is using imported silk yarn. Neither party disputes that imported silk yarn was exempt from CVD during the material period in terms of Notification No. 20/2006- Cus., dated 1-3-2006. We find that the levy of CVD on imports is regulated by the following provisions of the Customs Tariff Act, 1975.

"3. Levy of additional duty equal to excise duty. - Any article which is imported into India shall, in addition, be liable to a (1) duty (hereafter to this section referred to as the additional duty) equal to the excise duty for the time being leviable on a like article if produced or manufactured in India and if such excise duty on a like article is leviable at any percentage of its value, the additional duty to which the imported article shall be so liable shall be calculated at that percentage of the value of the imported article." CVD is therefore payable on imported silk fabrics at the rate central excise duty is leviable for the time being on such silk fabrics produced or manufactured in India. Additional duty is imposed on imported goods to counter balance the central excise duty leviable on like articles made indigenously, this being a measure intended to safeguard the interests of the manufacturers in India. As no duty was payable on silk yarn either indigenous or imported, indigenous silk fabrics were not subject to central excise duty during the material period in terms of Notification No. 30/04-C.E. (supra). Therefore imported silk fabrics imported during the material period need not beat any CVD. The impugned imports are eligible for the exemption contained in Notification No. 30/2004.

16

This was also the ratio of our final order Nos. 941, 942/2008, dated 28-8-2008 [2008

(232) E.L.T. 63 (Tribunal)] in respect of the same appellants for 44 consignments imported earlier. The appeal is allowed."

14. We find that Revenue relied on the Supreme Court's decision in the case of Motiram Tolaram v. UOI (supra) and the Tribunal's Larger Bench decision in Priyesh Chemicals & Metals (supra). In this regard the Hon'ble Supreme Court in their recent order in the case of SRF Ltd. v. CC, Chennai (supra) held that the appellants are entitled to exemption from payment of CVD under Notification No. 6/2002 and allowed the civil appeal. The relevant Paras 3 to 8 of the said Supreme Court's order is reproduced as under :-

"3. Entry/Serial No. 122 in the Notification No. 6/2002 reads as under -

S. No. Chapter or heading No.

or

subheading No.

Description of goods

Rate under the First Schedule

Rate under the

Second Schedule

Condition No.

122 5402.10

5402.41

5402.49

402.51

5402.59

5402.61

or

5402.69

Nylon filament Yarn or

Polypropylene multifilament yarn of 210 deniers with tolerance of 6 per cent.

Nil - 20

4. As per the aforesaid entry, the rate of duty is nil. Condition No. 20 of this Notification, which was relied upon by the authorities below in denying the exemption from payment of CVD, is to the following effect : "

20. If no credit under rule 3 or rule 11 of the Cenvat Credit Rules, 2002, has been taken in respect of the inputs or capital goods used in the manufacture of these goods."

5. The aforesaid condition is to the effect that the importer should not have availed credit under rule 3 or rule 11 of the Cenvat Credit Rules, 2002, in respect of the capital goods used for the manufacture of these goods.

6. In the present case, admitted position is that no such Cenvat credit is availed by the appellant. However, the reason for denying the benefit of the aforesaid Notification is that in the case of the appellant, no such credit is admissible under the Cenvat Rules. On this basis, the CEGAT has come to the conclusion that when the credit under the Cenvat Rules is not admissible to the appellant, question of fulfilling the aforesaid condition does not arise. In holding so, it followed the judgment of the Bombay High Court in the case of Ashok Traders v. Union of India [1987 (32) E.L.T. 262], wherein the Bombay High Court had held that "it is impossible to imagine a case where in respect of raw naphtha used in HDPE in the foreign country, Central Excise duty leviable under the Indian Law can be levied or paid." Thus, the CEGAT found that only those conditions

17

could be satisfied which were possible of satisfaction and the condition which was not possible of satisfaction had to be treated as not satisfied.

7. We are of the opinion that the aforesaid reasoning is no longer good law after the judgment of this court in Thermax Private Limited v. Collector of Customs (Bombay), New Customs House [1992 (4) SCC 440] = 2002-TIOL-683-SC-CUS-LB which was affirmed by the Constitution Bench in the case of Hyderabad Industries Limited v. Union of India [1999 (5) SCC 15] = 2002-TIOL-369-SC-CUS-CB. In a recent judgment pronounced by this very Bench in the case of AIDEK Tourism Services Private Limited v. Commissioner of Customs, New Delhi (Civil Appeal No. 2616 of 2001) = 2015-TIOL-23-SC-CUS, the principle which was laid down in Thermax Private Limited and Hyderabad Industries Limited was summarised in the following manner :-

"15. The ratio of the aforesaid judgment in Thermax Private Limited (supra) was relied upon by this Court in Hyderabad Industries Ltd. (supra) while interpreting Section 3(1) of the Tariff Act itself; albeit in somewhat different context. However, the manner in which the issue was dealt with lends support to the case of the assessee herein. In that case, the court noted that Section 3(1) of the Tariff Act provides for levy of an additional duty. The duty is, in other words, in addition to the customs duty leviable under Section 12 of the Customs Act read with Section 2 of the Tariff Act. The explanation to Section 3 has two limbs. The first limb clarifies that the duty chargeable under Section 3(1) would be the excise duty for the time being leviable on a like article if produced or manufactured in India. The condition precedent for levy of additional duty thus contemplated by the explanation deals with the situation where "a like article is not so produced or manufactured". The use of the word "so" implies that the production or manufacture referred to in the second limb is relatable to the use of that expression in the first limb which is of a like article being produced or manufactured in India. The words "if produced or manufactured in India" do not mean that the like article should be actually produced or manufactured in India. As per the explanation if an imported article is one which has been manufactured or produced, then it must be presumed, for the purpose of Section 3(1), that such an article can likewise be manufactured or produced in India. For the purpose of attracting additional duty under Section 3 on the import of a manufactured or produced article the actual manufacture or production of a like article in India is not necessary. For quantification of additional duty in such a case, it has to be imagined that the article imported had been manufactured or produced in India and then to see what amount of excise duty was leviable thereon."

(Emphasis supplied)

8. We are of the opinion that on the facts of these cases, these appeals are squarely covered by the aforesaid judgments. We accordingly hold that appellants were entitled to exemption from payment of CVD in terms of Notification No. 6/2002. The appeals are allowed and the demand of CVD raised by the respondents-authorities is set aside." The ratio of the Apex Court's decision is squarely applicable to the present case where CVD exemption was denied under Notfn. No. 30/2004 where the proviso to the notification stipulated the condition that the exemption is not applicable if credit of duty on inputs or capital goods has been taken under CCR.

15. Further, we find the Hon'ble Apex Court in the case of AIDEX Tourism Services Pvt. Ltd. v. CC (supra) has not only considered the cases of Thermax Private Ltd. and Hyderabad Industries Ltd. but also discussed the Apex Court's decision in the case of Motiram Tolaram v. UOI (supra). The relevant para is extracted hereinunder :-

" ..... ... ..... ...

18

This position has been reiterated in Motiram Tolaram v. Union of India - (1999) 6 SCC 375 = 1999 (112) E.L.T. 749 (S.C.), Collector Of Central Excise, Jaipur v. J.K Synthetics . - (2000) 10 SCC 393 = 2000 (120) E.L.T. 54 (S.C.), Lohia Sheet Products v. Commissioner Of Customs, New Delhi . - (2008) 11 SCC 510 = 2008

(224) E.L.T. 349 (S.C.) and Collector Of Customs (Preventive), Amritsar v. Malwa Industries Limited . - (2009) 12 SCC 735 = 2009 (235) E.L.T. 214 (S.C.). In fact, in Lohia Sheets and Malwa Industries cases (supra), this Court was considering exemption notifications envisaging use of certain material within a "factory" and still held that an importer would be entitled to the benefit of the exemption notifications in view of Section 3 of the Tariff Act and the decisions in Hyderabad Industries and Thermal cases. As such, it is now settled that the rate of duty would be only that which an Indian manufacturer would pay under the Excise Act on a like Article. Therefore, the importer would be entitled to payment of concessional/reduced or nil rate of countervailing duty if any notification is issued providing exemption/remission of Excise duty for a like article if produced/manufactured in India.

16. We may mention that in the case of Commissioner of Central Excise, New Delhi v. Hari Chand Shri Gopal & Ors. - (2011) 1 SCC 236 = 2010 (260) E.L.T. 3 (S.C.), a three Judge Bench of this Court had raised certain doubts on the correctness of the principle contained in Thermax Private Limited (supra) as well as in J.K. Synthetics (supra) and referred the matter to a larger Bench. Reference order is reported as (2005) 8 SCC 164 = 2005 (188) E.L.T. 353 (S.C.). The Constitution Bench decided the said case, which is reported as (2011) 1 SCC 236. From the reading of paras 39 to 41 of the said judgment it becomes clear that though these cases were held not applicable to the fact situation and were distinguished, the Court did not say that the aforesaid judgments were incorrectly decided. In fact, by distinguishing the ratio of the said cases, the Constitution Bench impliedly gave its imprimatur to the principle laid down in the aforesaid judgments."

16. In view of the above ruling by Apex Court, we are unable to accept the Revenue's plea that the Apex Court decision of SRF Ltd. and M/s. Motiram Tolaram are in direct conflict. Hon'ble Supreme Court has clearly considered all the previous decisions of Apex Court including the decision in the case of Motiram Tolaram v. UOI (supra). Therefore, the Revenue relying on the above case law and also the LB decision in the case of M/s. Priyesh Chemicals & Metals (supra) are not relevant. In view of the latest decision of Apex Court in SRF case &AIDEK Tourism Services Pvt. Ltd., the issue of CVD exemption under Notfn. No. 30/2004 on imported goods has attained finality. This Tribunal Bench decisions in the case of M/s. Prashray Overseas Pvt. Ltd. v. CC, Chennai stands confirmed by the Hon'ble Supreme Court in the above decision.

17. Before parting, we wish to record that the respondents repeatedly pleaded that under ICES-EDI system the Notification No. 30/2004-C.E., dated 9-7-2004 has not yet been uploaded and not figuring in the system for assessment even after a decade. This fact was already reported in this Tribunal order dated 10-8-2010 in the case of M/S. Elegant Fabric v. Cc, Chennai . (supra). Therefore, we bring to the notice of the Chairman, C.B.E. & C. & DG (Systems), C.B.E. & C., New Delhi to rectify and upload the said notification in the EDI system at the earliest so that the Trade need not seek every time for manual assessment of Bill of Entry or file appeal against every assessed Bill of Entry under EDI before Commissioner (Appeals) as is happening at present in the Custom House.

18. By respectfully following the ratio of the Apex Court decisions (supra), we hold that the respondents are eligible for CVD exemption under Notification No. 30/2004-C.E., dated 9-7-2004. In view of the foregoing discussions, we hold that there is no infirmity in the orders of LAA and the same are upheld and all the Revenue's appeals are rejected. The cross objections filed by respondent get disposed. Copy of order be forwarded to the Chairman, C.B.E. & C. and D.G. System, New Delhi."

19

The above decision has been delivered considering the Hon'ble Supreme Court judgment in the case of SRF LTD. VS. COMMISSIONER OF CUSTOMS, CHENNAI-2015 (318) ELT 607 (S.C.) and AIDEK TOURISM SERVICE PVT. LTD Vs. COMMISSIONER OF CUSTOMS- 2015

(318) ELT 3 (S.C.), therefore, the sole reliance of the Revenue in the case of PRASHRAY OVERSEAS PVT LTD (Supra) is of no help to revenue.

8. As per our above discussion and findings and settled legal position as discussed above, the appellant are clearly entitled for the exemption Notification No. 30/2004-CE dated 09.07.2004 for exemption from CVD on the imported goods.

9. Accordingly, the impugned order is set aside. Appeals are allowed with consequential relief."

In view of the above decisions, it is settled that the appellants are entitled for the exemption from payment of CVD under notification No.30/2004-CE.

5. In view of our above discussion and settled legal position, we set aside the impugned orders and allow the appeals with consequential relief to the appellants, if any, in accordance with law."

8. We are also of the view that acceptance to the assessed value by the appellant, it does not preclude him from challenging the same by way of appeal as there cannot be an estoppel against law as held by the Hon'ble Supreme Court in the case of Dunlop India Limited reported in 1983 (13) ELT 1566 (SC). Here we may add that there is difference between an acceptance by the importer to an undervaluation which is a part of any investigation and has been recorded in a statement under Section 108 of the Customs Act, 1962. Such a statement is admissible as evidence in any legal proceedings. But mere acceptance in a letter or on the bill of entry of the re- determined value to pay duty at the time of clearance has no statutory force and cannot act as an estoppel against the importer for further legal proceedings. Further, Hon'ble High Court of Delhi in the case of Cisco Systems (India) Pvt. Ltd. reported at 2023 (384) ELT 165 (Del.) which is based on the decision of Hon'ble Apex Court in the case of Mafatlal Industries Ltd. v. Union of India — 1997 (89) E.L.T. 247 (S.C.), has held that the very act of filing an appeal against an order imposing customs duty is a protest against the duty as assessed and thus, it is obvious that the assessee has not accepted the enhancement of transaction value. Hence, the ground taken by Ld. Commissioner (Appeals) rejecting the appeals filed by appellant against assessment orders rejecting the declared value and enhancing the same without any speaking order, is not tenable.

20

9. In view of above findings, we are of considered view that the enhancement of assessable value is without any legal basis and therefore we reject the same. We accordingly set aside the impugned orders-in-appeal.

10. Thus, the appeals are allowed with consequential relief. (Pronounced in the open court on 17.10.2023)

(Somesh Arora) Member (Judicial) (Ramesh Nair) Member (Judicial) (C L Mahar)

Member (Technical)

KL