Humour in Adjudication Order - sadly
IF a caveman is given a sophisticated gun to shoot, instead of learning how to shoot and use the weapon he will throw the gun itself on the opponent, thus, using the sophisticated gun as a mere stone.
Recently we came across an eminently readable order by an Appellate Commissioner of Customs against an order of a learned Assistant Commissioner who has not obviously learnt anything about Customs Law. The Commissioner (Appeals) sweetly calls him the LAA - Learned Adjudication Authority. The Appellate Commissioner, for a change, was not impressed by the convoluted brilliance of the LAA.
Extracts from the loudly speaking order of the Commissioner (Appeals).
The facts in this case are that the LAA sitting as assessing officer has enhanced the value of the imported goods. The goods are apples which are perishable and stored in refrigerated containers. The LAA was going about the procedure of valuation as per his own law (not law of the land) and went about enhancing the assessable value of the goods probably as per the minimum average value theory expounded by him. The importer / citizen was following the customs law as enacted by the Parliament. He gave a simple letter of protest by post / Tapal (I do not know what are the other methods of handing over the letters). Meanwhile, container detention charges and the demurrage charges for keeping the apples cold and fresh inside the refrigerated container were mounting day by day. Along with this rising charges towards the demurrage and detention, the anxiety and blood-pressure of the importer was also rising. Finally not able to accept the law as propounded by the learned lower authority, the importer blinked first and paid the duty as per the enhanced value but while doing so he was clear in his mind that he is paying the duty on enhanced value only to get the goods cleared and he was reserving his intention to fight for upholding the law of the land for a later date. Towards this end, he wrote clearly in a letter dated 28.08.2013 that he is making the payment only to avoid continuing detention and demurrage charges and that the enhancement of value is unacceptable to him. On receipt of this letter, our learned lower authority should have issued a speaking order as per Section 17(5) of the Customs Act, 1962.
The strange situation is that the LAA is alleging that the importer has not followed the procedure as per the PN whereas as it obtains from facts, it is the LAA who has not followed the procedure of passing a speaking order. This entire litigation is on account of LAA not wanting to pass a speaking order because if he were to pass a speaking order he has to unveil his theories of valuation which he was compelled to bring out in the para-wise comments to the grounds of appeal.
The story does not stop here. Having not received a speaking order, the importer also doggedly pursued this case and filed a W.P. to High Court for issuance of speaking order. He gets an order to that effect from the Hon'ble High Court still the LAA does not want to pass a speaking order, then the importer sends a legal notice only then the LAA reluctantly passing the impugned order.
I really wonder as to why this LAA is so contemptuous of a simple letter. Why does he want a complicated letter from the importer? This simple letter should suffice for the purpose of Section 17 (5). Subsequently, the LAA should have passed a speaking order.
The LAA appears to be without any clue regarding the valuation procedures under the Customs Act, 1962. The contention of the appellant is fully valid and his comment that, "The Assistant Commissioner has made a statutory provision on his own to say that wherever the imports had taken place at a higher price then that price will prevail for all the imports made by any importer and he will go on changing the assessment as and when he found still higher price" makes at once a humourous and sad reading. Humourous because if one were to think of a situation where the above thinking of the learned Assistant Commissioner is implemented across the country then the kind of chaos that shall prevail over customs valuation and sad because if this type of ignorance is exhibited while assessing bills of entry in major custom house then the image of the Department will take an unnecessary beating.
Further, the LAA goes on compounding his folly by evolving new theories in customs valuation. His contention that Directorate of Valuation and individual Customs Commissionerate studies the trends of imports and analyse the import data and a minimum value is worked out for the purpose of verification of the assessing groups is again exposing the Department ' s internal working unnecessarily. The studies by Directorate of Valuation and various Custom Houses is to understand the trends in valuation. These studies and the conclusions are for empowering the assessing officer with good data but it cannot be a basis for ignoring the Customs Valuation Rules, 2007. These are strong weapons in the form of database which the assessing officer should know how to use in conjunction with the Customs Valuation Rules.
If a cave-man is given a sophisticated gun to shoot, instead of learning how to shoot and use the weapon he will throw the gun itself on the opponent, thus, using the sophisticated gun as a mere stone.
It is interesting to note how a sophisticated tool like NIDB database and studies being conducted by Directorate of Valuation and other Customs formations can be rendered useless.
The concept of 'basic minimum average price' cannot replace the legal requirements in customs valuation. It is a tool in the form of database/alert to aid the assessing officer. The LAA states that basic minimum average price shall govern over even higher prices. These concepts are beyond my comprehension and, therefore, I do not want to tax my brain about it. The LAA comes out with further details about the working of his Group and he states that when the price of imported goods falls short of this minimum average price then the Groups (his Group) asks for justification of declared value.
There is no concept of 'minimum average price'. The interesting question which arises here is suppose if the declared value is higher than the minimum average price, will the Group reduce the assessable value from the declared value to the minimum average price. Reading the comments of the LAA, I seriously doubt whether this officer has ever heard of the concept of transaction value as enshrined in Section 14 of the Customs Act, 1962.
The LAA does not stop there. He goes on to state that when the importer accepts their (whose?) minimum values in writing, bills of entry are assessed adopting the minimum value. " If no written consent has been given by the importer, action can be taken following the procedure laid down in the Customs Act, 1962 and CVR, 2007 as applicable. " This clearly shows the mind of the LAA that in his scheme of things, ' common minimum average price ' is the most sacrosanct value for the customs purpose. The Customs Act, 1962 and CVR, 2007 are subsidiary to the minimum average price. But unfortunately as a Government authority, we are bound by the Customs Act and the rules made thereof and not by some minimum average price concept propounded by the learned lower authority.
The LAA does not stop there. He is fairly bent upon extending the ridiculous to farce. He states that, "It is up to the importer to contest Department's minimum average price and justify the declared transaction value by submitting contracts/LC/PO/ bank remittances, etc., at the time of assessment and to register their protest as per the procedure prescribed in the PN, Circular, etc. which will save the time and energy and unnecessary litigation".
The LAA has failed to explain as to at what point of assessment all this should take place when assessment is done in an EDI environment. Is the EDI geared up for this minimum average price concept? Has the Department published the minimum value for various commodities/sub-heading wise? I fail to understand the significance of contracts/LC/PO/ bank remittances, etc. to justify the transaction value when as per the LAA a minimum value is already staring at the importer. The LAA has successfully put the entire concept of valuation in Customs stand on its head.
It is for the proper officer to reject the declared value if he so feels as per Rule 12 of the Customs Valuation Rules, 2007 and then it is for him to take upon himself the burden of arriving at a new assessable value as per CVR Rules 4 to 9. But strangely, as per this LAA, the procedure is somewhat like this - whenever an importer files bills of entry and declares a transaction value, he will immediately be shown a minimum value by the assessing officer. The importer has to immediately give a written acceptance/ consent for this 'minimum average value' being adopted as the assessable value. If the importer does not accept and if he prefers to contest the Department's minimum value and justify his own declared transaction value then he has to submit contracts/LC/PO/ bank remittances, etc. This should be done at the time of assessment. The exact time is not clearly stated by the LAA. After showing all these documents, the importer should register their protest as per procedure prescribed in unrelated Public Notice No.07/2002 and circulars, etc. This according to him will save the time, energy and unnecessary litigation. The LAA is silent on one thing that after receiving the protest, on what value the Group will assess the bill of entry, will they assess it as per the declared value (transaction value) or will they assess under the minimum average value?.
Finally, the LAA delivers his knock-out punch by stating that, "in the subject case, importer at one hand accepted the value at the time of clearance and gave a simple letter by post / tapal without following the prescribed procedure is a clear violation and abuse of the legal process and is an unnecessary litigation."
I do not see anything speaking in this speaking order
. The LAA has not adhered to any procedures or rules of valuation while enhancing the value of the goods. Except for stating that he has seen 3 Bills of Entry, (contents of which, he has not disclosed to the appellant to rebut as envisaged in the rules), he has not given any reason whatsoever in his entire Order-in-Original. This order is contrary to law and procedures laid down and cannot be accepted. In view of this, I set aside the Order-in-Original and allow the appeal with all consequential relief.
Will the Learned Assistant Commissioner learn something now?