Customs Act | Importer Accepting Enhanced Valuation Of Goods For Expeditious Clearance Not 'Waiver' Of Right To Contest Re-Assessment: Delhi HC

The Delhi High Court has held that where enhancement of valuation of goods by the proper officer for the purpose of determining Customs duty is accepted by the importer under protest, for expeditious clearance, it cannot be said that the importer has waived its right to question the reassessment. Pertinent to note that Section 17 of the Customs Act, 1962 relates to 'Assessment of duty'. Sub-section (5) provides that in a case where the importer confirms his acceptance of the reassessment in writing, the proper officer would stand relieved of the obligation of passing a speaking order in respect of such reassessment. In all other cases where the reassessment is not acceded to, the proper officer is obliged to pass a speaking order. A division bench of Justices Yashwant Varma and Ravinder Dudeja held, “In our considered opinion, the perceived concession made in respect of the opinion harboured by the proper officer cannot possibly be interpreted or construed as detracting from or depriving the importer of the right to question the decision of the proper officer in accordance with law. The right to question the correctness of the decision of the proper officer, be it with respect to the formation of opinion or even on merits, is one which is protected by statute.” In the case at hand, the Appellants, importers of polyester knitted fabrics was aggrieved by a CESAT order which held that they, having conceded to the valuation undertaken by the proper officer, would be deemed to have waived their right to question that decision. Appellants argued that they were constrained to submit concessions before the proper officer in order to expedite clearance of the imported goods however, they had throughout maintained the position that they paid the customs duty under protest. They further argued that the concession, even if assumed to have been made, could not operate as estoppel from pursuing a statutory remedy. The Department on the other hand claimed that the Appellants had abandoned their right by way of concession. Findings At the outset, the High Court noted that the Appellants had registered their protest on more than one occasion and had also sought expeditious clearance of goods subject to an exercise of provisional reassessment being undertaken. “These facts and circumstances clearly detract from the argument of a conscious abandonment of the right to question the reassessment or to accept the re-evaluation exercise undertaken without reservation of a right to challenge,” it said. The Court further observed that Cutsom's assertion of abandonment and waiver of right is “misconceived” in asmuch as the tone and tenor of the communications which were addressed by the Appellants cannot be interpreted as amounting to a conscious waiver of a right to question the reassessment further. “Not only do those documents appear to be the submission of a “without prejudice” request tendered in order to facilitate expeditious clearance of goods, the same cannot possibly be viewed or interpreted as amounting to an abandonment of the right to institute an appeal itself.” In saying so, the Court relied on Sha Mulchand & Co. Ltd. vs. Jawahar Mills Ltd. (1952), where the Supreme Court had explained that abandonment would have to be more than mere waiver, acquiescence, or laches. It proceeded further to significantly observe that a mere waiver, acquiescence, or laches which falls short of abandonment of the right itself would not disentitle the aggrieved party to question the forfeiture. Here, the Court said, the right to question the correctness of the decision of the proper officer is protected by statute. The High Court also noted that Customs had disputed the “declared value” of imported goods on the basis of contemporaneous import data obtained from the National Import Database (NIDB). However, it held that NIDB data could not form the solitary basis to reject declared value. It cited various precedents, including Commissioner vs. Agarwal Foundries (P) Ltd. (2020) where the Supreme Court dismissed Custom's appeal against a CESTAT Hyderabad order holding that customs authorities would be unjustified in enhancing the declared import values solely on the basis of NIDB data. “It becomes apparent from a reading of these decisions collectively that the Tribunal has consistently found that a valuation addition based solely on NIDB data would wholly unwarranted and that any such reassessment would have to be shored by independent and cogent evidence. The legal position so articulated would ensure fairness and transparency in the determination of import values,” High Court said. Accordingly, the appeals were disposed of in favour of the importers. Case title: Niraj Silk Mills v. Commissioner Of Customs (ICD) (and other connected matters) Case no.: CUSAA 26/2022 Click Here To Read/Download The order

Customs Act | Importer Accepting Enhanced Valuation Of Goods For Expeditious Clearance Not 'Waiver' Of Right To Contest Re-Assessment: Delhi HC

Kapil Dhyani

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