By TIOL News Service

CHENNAI, NOV 10, 2015: THE issue relates to valuation of related party transaction. The Assistant Commissioner (SVB) in his Order-in-Original dated 27.6.2014 accepted the transaction value of imported goods under Rule 3(3)(a) read with Rule 10(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. However, he ordered that the royalty fee paid to their overseas principal to be added to the transaction value under Rule 10(1) of the said Rules. The appellant filed appeal before Commissioner (Appeals) contesting the order in respect of addition of royalty amount to the transaction value. The Commissioner (Appeals), in the impugned order, while upholding the order on royalty amount has set aside the order relating to acceptance of transaction value on imported goods and directed the original authority to reconsider the acceptance of transaction value. The appellant importer is before the Tribunal contending that the Commissioner (Appeals) had no jurisdiction to decide the issue as the Revenue is not in appeal against the acceptance of the transaction value.

After hearing both sides, the Tribunal held:

+ The appellant have preferred appeal before Commissioner (Appeals) against the order dated 27.6.2014 relating to addition of royalty amount to transaction value. The adjudicating authority has decided various issues on the valuation of related parties. At para 28(b) the adjudicating authority has accepted the transaction value. At para 28(c) he has ordered for loading of royalty amount payable to the foreign suppliers to the transaction value. We find that the appellant has accepted the adjudication order insofar as it related to acceptance of transaction value and related party transaction and they preferred appeal only against addition of royalty amount to the transaction value. We also find that it is not the case where the Revenue has filed any appeal against the adjudication order against the acceptance of the transaction value. The Commissioner (Appeals) in terms of power vested under second proviso to Section 128A of the Customs Act can pass order enhancing the duty or penalty but only after giving notice to the appellant and then pass order. In the present case, the Commissioner (Appeals) has not followed the principles of natural justice and has violated the procedure by going beyond the grounds of the appeal preferred by the appellant and suo moto set aside the order relating to acceptance of the transaction value which is not the grounds before lower appellate authority.

Accordingly, the Tribunal set aside the order and remanded the matter to the Commissioner (Appeals) with a direction to follow the provisions of Section 128A of the Customs Act and pass appropriate order after giving a reasonable opportunity of hearing to the appellant and decide the appeal afresh.

(See 2015-TIOL-2361-CESTAT-MAD)