Research › Search › Judgment

Bombay High Court · body

2013 DIGILAW 1104 (BOM)

Fair field Atlas Limited v. Union of India

2013-06-19

A.A.SAYED, D.Y.CHANDRACHUD

body2013
Judgment : Dr. D.Y. Chandrachud, J. 1. Rule, by consent made returnable forthwith. Learned counsel for the Respondents waives service. By consent and on the request of counsel, the petition is taken up for final disposal. 2. The Petitioner is engaged in the manufacture of transmission gears and was importing cutting tools such as hobs, broaches, cutters etc. for use as capital goods in its manufacturing operations in India from related persons. Since the suppliers of the Petitioner were related, the issue arose as to whether the relationship between the two had affected the price of goods imported. Since documents were not produced by the Petitioner despite a request by the Department, the Deputy Commissioner of Customs passed an order dated 24 December 2003 by which he directed that the declared invoice value be enhanced by 25%. The adjudicating authority, however, allowed an opportunity to the Petitioner to produce the documents within a period of three months for finalization of the case. This order was questioned in appeal. The appeal was, however, dismissed by the Commissioner of Customs (Appeals) on 12 May 2004 as being barred by limitation. The Petitioner filed a further appeal before Customs Excise and Service Tax Appellate Tribunal (`CESTAT'). By an order dated 28 June 2004, the Tribunal remanded the case for a fresh adjudication to the adjudicating authority on the ground that the Deputy Commissioner of Customs had passed an exparte order without granting time for the production of documents. 3. Upon remand, the Deputy Commissioner of Customs passed an order on 24 April 2006 by which he directed that a lumpsum of US$ 20 lakhs paid or payable by the Petitioner to its counter part in the United States was required to be added to the invoice value under Rule 9(1)(c) of the Customs Valuation Rules, 1988. The Petitioner filed an appeal before the Commissioner of Customs (Appeals) and by an order dated 31 August 2006, the order of the adjudicating authority was set aside and the proceedings were remanded back for a fresh adjudication. The Petitioner was aggrieved by the order of remand and further filed an appeal before the CESTAT. By an order dated 28 February 2007, the appeal filed by the Petitioner was allowed and the order of the Commissioner of Customs (Appeals) was set aside. The CESTAT observed as follows : "2. We have heard both sides. The Petitioner was aggrieved by the order of remand and further filed an appeal before the CESTAT. By an order dated 28 February 2007, the appeal filed by the Petitioner was allowed and the order of the Commissioner of Customs (Appeals) was set aside. The CESTAT observed as follows : "2. We have heard both sides. We find force in the submission of the appellants that while the issue to be considered by the Deputy Commissioner was whether the relationship between the appellants and the foreign company had influenced the price of the cutting tools imported by the appellants herein, the adjudicating authority has not recorded any finding on the issue which he was required to decide but has added the amount of US $ 20 Lakhs paid/payable as technical know-how fee by the appellants in India to its supplier, under the provision of Rule 9(1)(c) of the Customs Valuation Rules, 1988. In other words instead of giving any finding on the issue before him as per Tribunal's remand direction viz. on the issue as to whether the relationship had affected the price, he has entirely departed from it by giving a finding on addition of 20 Lakhs US $ by way of technical know-how fee which was not the issue to be decided by him in terms of Tribunal Order No.A/1116/WZB/2004/C-I dated 28.06.2004. We also find force in the submission of the appellants that since the Deputy Commissioner to whom the case was remanded by the Tribunal for the purpose of recording a finding as to whether the relationship had influenced the price, and no such finding has been recorded, the order dated 24.4.2006 of the Deputy Commissioner has become final in the absence of any challenge by the Revenue. Therefore, the Commissioner (Appeals) could not have sent back even this issue for fresh determination. We, therefore, set aside the impugned order and allow the appeal." 4. On 17 October 2012 the Deputy Commissioner of Customs informed the Petitioner that in terms of the order of the Tribunal dated 20 April 2006, which has attained finality, the Petitioner was liable to pay customs duty on the amount of US$ 20 Lakhs paid for technical know-how from the foreign suppliers. On 17 October 2012 the Deputy Commissioner of Customs informed the Petitioner that in terms of the order of the Tribunal dated 20 April 2006, which has attained finality, the Petitioner was liable to pay customs duty on the amount of US$ 20 Lakhs paid for technical know-how from the foreign suppliers. The Petitioner responded by its letter dated 20 October 2012 submitting that the order of the Tribunal categorically held that the Deputy Commissioner had rendered a finding on the issue of a payment of US$ 20 Lakhs which in fact was not an issue to be decided by him as per the Tribunal's order dated 28 June 2004. In this background it was stated that the question as to payment of duty on the amount of US$ 20 Lakhs by the Petitioner did not arise. However, the demand of duty was reiterated by the Deputy Commissioner of Customs on 30 October 2012. 5. The Petitioner moved an application dated 19 December 2012 for clarification of the order dated 23 February 2007 before the CESTAT on 20 October 2012. The Tribunal by an order dated 29 January 2013 dismissed the application holding that from a plain reading of the order of the Tribunal dated 23 February 2007 it is evident that the order of the Deputy Commissioner dated 24 June 2006 had attained finality. 6. The order of the Tribunal dated 23 February 2007 held firstly that the issue which was to be considered by the Deputy Commissioner was whether the relationship between the Petitioner and the foreign company had influenced the price of the imports made by the petitioner. The adjudicating authority, as the Tribunal noted, had not recorded any finding on the issue which he was required to decide. On this aspect, the order dated 24 April 2006 was, according to the Tribunal, final in the absence of any challenge by the Revenue. At this stage, the Court is not called upon to decide whether this finding of the Tribunal was justified or otherwise because admittedly the order of the Tribunal dated 23 February 2007 was accepted by the Revenue. At this stage, the Court is not called upon to decide whether this finding of the Tribunal was justified or otherwise because admittedly the order of the Tribunal dated 23 February 2007 was accepted by the Revenue. On the second aspect, the Tribunal set aside the finding as regards an addition of US$ 20 lakhs paid for technical knowhow fees on the ground that this was not the issue to be decided by the adjudicating authority in terms of the earlier order of the Tribunal dated 28 June 2004 remanding the proceedings. The Tribunal, therefore, set aside the order of the adjudicating authority and allowed the appeal. The department is evidently and manifestly in error in contending that the result of the order of the Tribunal is that the original order of adjudication would stand revived. It needs to reiterated that in the original order of adjudication dated 24 December 2003 the Deputy Commissioner had ordered the addition of a lumpsum fee of US$ 20 Lakhs payable to the counter part of the Petitioner in the United States to the invoice value under Section 9(1)(c) of the Valuation Rules. This order was challenged by the petitioner. The Revenue was not aggrieved by the order, particularly by the absence of any determination by the adjudicating authority on the issue as to whether the relationship between the parties had affected the transaction value. In appeal by the Petitioner, the Commissioner of Customs (Appeals) had remanded the proceedings and it was against that order of the Commissioner of Customs (Appeals) that the petitioner filed a further appeal before the Tribunal. The order of the Tribunal which allows the appeal specifically holds that : (i) the addition of US $ 20 Lakhs was not warranted since it was beyond the scope of the order of remand which had earlier been passed by the Tribunal on 28 June 2004; and (ii) that the department had not challenged the order of the adjudicating authority on the ground that no finding had been recorded as to whether the relationship between the parties has influenced the price. Once the appeal filed by the Petitioner was allowed with the aforesaid observations as extracted earlier, there was no basis for the Deputy Commissioner of Customs to call upon the Petitioner to pay customs duty on the amount of US $ 20 Lakhs paid for acquiring technical know-how from the foreign supplier. The Tribunal on the Miscellaneous Application preferred by the Petitioner declined by its order dated 29 January 2013 to entertain the application. 7. Be that as it may, it is apparent from a plain reading of the order dated 23 February 2007 of the Tribunal that the impugned demand which is sought to be raised on the basis of the orders dated 24 December 2003 and 24 April 2006 is unsustainable. Rule is accordingly made absolute by quashing and setting aside the impugned letters dated 17 October 2012 (Exhibit-I) and 13 December 2012 (Exhibit-L). There shall be no order as to costs.