Dept. Can't Challenge Customs Duty Demand, Below Threshold Limit Prescribed By CBIC: CESTAT

The Chandigarh bench of the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT), while dismissing the department's appeal, held that the department is precluded from challenging the commissioner's order if customs duty demand is below the threshold limit prescribed by the Central Board of Indirect Taxes and Customs (CBIC).

The bench of S. S. Garg (Judicial Member) and P. Anjani Kumar (Technical Member) has observed that the amount of duty involved in the appeal is below the threshold limit prescribed in the circular dated November 2, 2023, issued by the CBIC. The circular provides that if the duty amount involved is less than Rs. 50 lakhs, then no appeal shall be filed before the CESTAT, and if already filed, it will be withdrawn by the department.

The respondent-importer had imported different types of “fabrics” and filed three Bills of Entry at ICD Ballabhgarh on a self-assessment basis. The declared value of the goods in these Bills of Entry was found inadequate by the Assessing Officer as compared to the contemporaneous data on the import of similar goods.

The declared value of the goods was rejected in terms of Rule 12 of the Customs Valuation Rules 2007 (CVR, 2007), and the assessable value was enhanced in view of contemporaneous import data for similar goods. The importer accepted the enhanced value voluntarily in his reply to the queries raised by the assessing officer to justify the declared value. The importer filed an appeal against the said assessment of Bills of Entry with enhanced value before the Commissioner (Appeals), who remanded the matter back, directing the Assessing Authority to pass a speaking order under Section 17(5) of the Customs Act, 1962.

In compliance with the Commissioner (Appeals)'s order, the Deputy Commissioner of Customs passed a speaking order specifying the reasons for rejecting the self-declared value under Rule 12 of the CVR, 2007 and re-determining the assessable value on the basis of contemporary import under Rule 5 of the CVR, 2007, specifying as to why the provisions of Rule 4 of the CVR, 2007 were not applicable and why re-determination was done under Rule 5.

The importer again filed the appeal before the Commissioner (Appeals), who set aside the re-assessment of goods at enhanced value and consequently allowed the appeal filed by the importer.

The department filed the appeal challenging the order mainly on the ground that the Commissioner (Appeals) did not appreciate that the importer in the case, after seeing the contemporaneous import data (prevailing during that period), had agreed to re-determination of value in their reply to the query in the EDI system and voluntarily forfeited their right to show cause notice and the opportunity of personal hearing.

The importer contended that the appeal is not maintainable in view of the directions, instructions, and circulars issued by the Ministry or Board prohibiting the filing of appeals below the stipulated monetary threshold limit of Rs. 50 lakhs. The Ministry of Finance clearly stated in its instructions dated November 2, 2023, that it does not want to pursue any litigation before the CESTAT where an appeal involves duty of less than 50 lakhs. The delegatee or agent of the Ministry of Finance cannot seek to file an appeal in defiance of and contrary to the instructions of its master, i.e., the Ministry of Finance.

The tribunal noted that in order to reduce litigation and streamline the process of litigation management, the Ministry of Finance, Department of Revenue, and CBEC had introduced a national litigation management policy. As per the National Litigation Management Policy, if a matter involved disputed tax less than a specified amount, then the officers were not required to challenge orders before the CESTAT, the High Courts, or the Supreme Court, and if they had already challenged, then they were required to withdraw those appeals that were less than the prescribed monetary limit and pending before various tribunals.

The tribunal dismissed the appeal and held that the appeal filed by the department is not maintainable in view of the instructions dated November 2, 2023, issued by the Board.

Counsel For Appellant: Pawan Kumar

Counsel For Respondent: R.K. Hasija

Case Title: Commissioner of Customs Versus Sedna Impex India Pvt Ltd

Case No.: Customs Appeal No. 60396 of 2022

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