Woodstruck Furniture Pvt. Ltd. vs Union of India

P.N. Ravindran, J.—The petitioner is a private limited company engaged in the business of import of furniture from various South Asian countries and its sale within India. The petitioner imported various items of furniture as per Ext. P1 bill of entry for sale within India. Along with the bill of entry the petitioner had filed copies of the invoice and the packing list issued by the foreign supplier to corroborate the declaration made in the bill of entry with regard to the description of the goods as also the transaction value in respect of the goods imported. Copies of the invoice and packing list issued by foreign supplier are on record as Exts. P2 and P3. For the purpose of levying customs duty on the goods described in Ext. P1 bill of entry, the respondents added a load factor of 28.37% on the invoice value of U.S. $ 12,352 and on that basis the total assessable value of the consignment was worked out at Rs. 8,18,172/- and the sum of Rs. 2,19,667/- was assessed as customs duty. It is the case of the petitioner that instead of passing a reasoned order, the assessment was made on the original of the bill of entry and in view of the urgency it paid the duty of Rs. 2,19,667/- on 14-5-2010 itself and obtained Ext. P5 out of charge order. The petitioner submits that thereafter it had sent Ext. P6 letter to the 3rd respondent requesting him to pass a reasoned order setting out the reason why a load factor of 28.37% was added to the invoice value for the purpose of levy of customs duty. This writ petition was thereafter filed on 13-9-2010 seeking the following reliefs :-

(1) Issue a writ of mandamus or such other writ, order or direction directing the 3rd respondent to issue a speaking order, stating the reasons for the enhancement of the declared transaction value, by load factor of 28.37%, as indicated by Exhibit P1 bill of entry.

(2) To declare that the respondents cannot unilaterally proceed to enhance the transaction value declared by the petitioner, without first rejecting the same on grounds that are specified under the Customs Act, 1962.

The main contention raised by the petitioner is that in view of Section 17(5) of the Customs Act 1962 (hereinafter referred to as ''the Act'' for short) except in cases where the importer or the exporter, as the case may be, has not confirmed in writing his acceptance of the assessment made by the Customs authorities as regards the valuation of the goods, classification or exemption or concessions of duty availed consequent to any notification issued under the Act, the assessing officer has to pass a speaking order within 15 days from the date of assessment of the bill of entry or the shipping bill, as the case may be. The petitioner contends that as it has not confirmed in writing the assessment made by the 3rd respondent, the 3rd respondent was bound to pass a speaking order within 15 days from 10-5-2010, the date on which the assessment was made. It is contended that in view of the failure of the 3rd respondent to act in terms of Section 17(5) of the Act, the petitioner has been deprived of the right to file an appeal u/s 128 thereof.

The respondents have filed a counter affidavit contending inter alia that the assessment made by the assessing officer, namely, the 3rd respondent, itself can be subjected to appeal, that it is not necessary that an assessment order should be passed setting out the reasons and that failure to pass a reasoned order will not deprive the importer of the right to file an appeal.

I heard Sri A.K. Jayasankar Nambiar, learned standing counsel appearing for the petitioner and Sri. Thomas Mathew Nellimoottil, learned standing counsel appearing for the Central Board of Excise and Customs. I have also gone through the pleadings and the materials on record. The applicability of Section 17(5) of the Act to the goods imported by the petitioner, more particularly described in Ext. P1 bill of entry, Ext. P2 invoice and Ext. P3 packing list is not in dispute. It is also not in dispute that the petitioner has not accepted in writing the assessment made by the 3rd respondent on the first page of Ext. P1 bill of entry. It is also not in dispute that assessment of duty was made in the instant case applying Section 17 of the Act. Sub-section (5) of Section 17 of the Act stipulates that where any assessment done under sub-section (2) is contrary to the claim of the importer or exporter regarding valuation of goods, classification, exemption or concessions of duty availed consequent to any notification therefore issued under the Act and in cases other than those where the importer or the exporter, as the case may be, confirms his acceptance of the said assessment in writing, the proper officer shall pass a speaking order within fifteen days from the date of assessment of the bill of entry or the shipping bill, as the case may be. The dispute raised by the petitioner in the instant case is as regards the valuation of the goods imported by him. While the petitioner contends that the value declared by him based on Ext.P3 price list furnished by the supplier (exporter) represents the correct value of the goods, the contention of the Department is that the value assessed by the Department represents the correct value of the goods. Ext.P1 bill of entry discloses that the value of the goods imported was assessed by adding a load factor of 28.37% to the transaction value. As noticed earlier, the respondents have no case that the petitioner has confirmed the assessment of the 3rd respondent in writing. In such circumstances as the dispute is regarding the valuation of the goods imported by the petitioner and the petitioner has not confirmed in writing the assessment made by the 3rd respondent on the original of Ext.Pl bill of entry, it was obligatory for the 3rd respondent to pass a speaking order within 15 days from the date of assessment, namely 15 days from 10-5-2010. Such an order has not admittedly been passed.

Though the learned standing counsel appearing for the respondents contended relying on the decision of the Central Excise, Customs, Service Tax Appellate Tribunal in 2005 (192) ELT 246 , that an appeal would lie from the assessment order passed by the 3rd respondent even if the order is not a speaking order, I am of the opinion that, that cannot be a reason to decline to act in terms of Section 17(5) of the Act. The procedure prescribed in Section 17(5) can be departed from only in a case where the importer or the exporter, as the case may be, confirms in writing his acceptance of the assessment made by the assessing officer. Section 17(5) was introduced with effect from 13-7-2006, the date on which Act 29 of 2006 came into force. The decision relied on by the learned standing counsel appearing for the respondents was delivered on 31-3-2006, prior to the introduction of Section 17(5) of the Act. In view of the amendment brought about by Act 29 of 2006 the decision relied on by the learned standing counsel can have no application. In such circumstances as the dispute is regarding the value of the goods and the importer has not accepted in writing the assessment of the 3rd respondent I am of the opinion that the 3rd respondent was bound to pass a speaking order within 15 days from the date of assessment of the bill of entry, namely within 15 days from 10-5-2010. In the instant case, the said period of 15 days has expired. u/s 128 of the Act an appeal lies from the order of assessment made by the 3rd respondent to the Commissioner (Appeals). The period of limitation prescribed for filing the appeal is 60 days from the date of communication of the order. The Commissioner (Appeals) is also empowered to condone the delay in filing the appeal subject to the condition that the delay does not exceed the period of 30 days. In the instant case no speaking order in terms of Section 17(5) of the Act has been passed till date or communicated to the petitioner. In the view that I have taken it has to be necessarily held that it will be open to the petitioner to challenge the assessment made by the 3rd respondent by filing an appeal within the period of 60 days computed from the date on which a speaking order is passed u/s 17(5) of the Act.

I accordingly dispose of the writ petition with a direction to the 3rd respondent to pass a speaking order giving reasons for the assessment of duty made by him on the goods described in Ext. P1 bill of entry within a period of 30 days from the date of receipt of a certified copy of this judgment and communicate the same to the petitioner by registered post. It will be open to the petitioner to work out its remedies within the time limit stipulated in Section 128 of the Act.