Two different Orders by Two different Adjudication Officers on same issue

PJ/Case Laws/2011-12/1386

Two different Orders by Two different Adjudication Officers on same issue - which will be applicable

Case: JOHNSON CONTROLS PVT. LTD. Versus COMMISSIONER OF CUS, (AC), NEW DELHI

Citation: 2004 (178) ELT 0179 (Tri. - Del.)

Issue:- In case of two different orders by different adjudication officer on same issue for same party, the most reasoned order should be followed.

Brief Facts:- Appellants are engaged in the business of undertaking projects for high quality building automation systems, automatic temperature controls, fire alarm systems and security and access control for office etc. They have their registered office in Mumbai with branches at New Delhi, Calcutta, Hyderabad and Bangalore. Appellants are a wholly owned subsidiary of M/s. Johnson Controls International B.V. Netherlands (JCIBV). JCIBV is a subsidiary of Johnson Controls Inc. United States of America (JCT). Johnson Controls (Singapore) P. Ltd. (JC Singapore) another group entity, which provides logistics support to the appellants.

Appellants procured finished goods from JC Singapore which in turn procured the same from various Johnson Controls factories worldwide as well as other vendors. At times, the appellants imported directly from third party vendors. JC Singapore invoices the appellants on the basis of the standard Branch transfer price list, which is applicable to Johnson Control units Worldwide.

JC Singapore adds to the Branch transfer price list - freight @ 9% to 20%, packing and forwarding charges @ 5% to arrive at the invoice price. Appellants have a Sole Concessionaire Agreement with JC Singapore under which it procures orders from Indian customers and executes the same on behalf of JC Singapore on which the appellants receive a commission of 2% of the free on board (FOB) value. The appellants commenced operations in India at around July, 1996. Its registered office was shifted from New Delhi to Mumbai in August 1997.

Appellants imported goods at their respective Branches directly. They declared to the Customs authorities that JC Singapore is a related entity as per the definition of related persons under the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Accordingly the Customs Authorities directed a loading of 1% and execution of provisional duty bond.

According to the appellants, 90% of their import is through Mumbai. The Customs authorities in Mumbai referred the case to their respective SVB in April 1999. The appellants submitted their reply to the SVB questionnaire under letter dated 17-4-2000.

Finally, after verification of evidence on record and adjudication SVB Mumbai accepted the declared transaction value under order dated 11-9-2000 passed by Deputy Commissioner, SVB.

While so the appellants received order in original dated 7-1-2000 passed by Deputy Commissioner, SVB, Delhi wherein on the basis of an ex-parte assessment a loading of 20% was directed on all imports from JC Singapore.

Aggrieved by the order passed by the Deputy Commissioner the appellants filed an appeal before the Commissioner (Appeals). The Commissioner (Appeals) under the impugned order rejected the appeal on the ground that the appellants had deliberately failed to bring to the notice of Mumbai SVB the order passed by the Deputy Commissioner on 7-1-2000.

Hence, appellant is in appeal before the Tribunal.

Appellant’s Contention:- Appellant contended that it had not received the show cause notice issued by SVB Delhi or any notice regarding date of hearing. It is submitted that this would have happened as the appellants’ branch office was being shifted from place to place in New Delhi during the relevant period.

It is submitted that the Commissioner (Appeals) should have considered the case on merits. Going by the provisions of the Board’s Circular, dated 1-1-1998 and 23-2-2001 investigation has to be taken by the SVB at the place where the appellants have their registered office and that the order passed by the Deputy Commissioner, SVB, Mumbai is binding on imports in other places also.

Appellant also pointed out that the order dated 7-1-2000 is not a reasoned order, but on the other hand, the order passed by SVB Mumbai dated 11-8-2000 contains materials and reasoning supporting the finding. Under these circumstances, the Commissioner (Appeals) should have followed the view taken by SVB Mumbai.

Appellant points out that two consignments which had erroneously landed in Delhi in February, 2000; were cleared without 20% loading when the order dated 11-8-2000 was produced before the Delhi Customs authorities.

Respondent’s Contention:- Revenue contended that there is no justification on the part of the appellants for concealing order dated 7-1-2000 from SVB Mumbai when proceedings were going on in Mumbai. The Deputy Commissioner, SVB cannot be found fault with as the appellants had failed to produce any material before him in answer to the query.

Reasoning of Judgment:- The Tribunal noted that in the Circular No. 1/98, dated 1-1-1998 Board gives certain instructions regarding the procedure to be followed in the various Custom Houses in regard to cases taken up by SVB of the Custom Houses.

It was noted that on the basis of the above circular the appellants had submitted that it was the SVB Mumbai that should have enquired into the issue and not SVB Delhi as its Head office is at Mumbai. It is true that when proceedings were initiated by SVB Delhi there is nothing to show that they were aware of the fact that the appellants’ head office is at Mumbai and that its major import is also at Mumbai. As mentioned earlier, the appellants had not replied to the show cause notice nor had appeared in person for hearing before the Deputy Commissioner. It is the case of the appellants that they have never received the show cause notice or notice for personal hearing. No attempt is being made either in the order-in-original or in the appellate order to establish that the above stand taken by the assessee was false. On going through the order dated 7-1-2000 the Tribunal found that the Deputy Commissioner has not given any reason to make a loading of 20%. Since no reply was received from the appellants to show cause notice it seems that no further investigation was also made. Even in the case of best assessment the Deputy Commissioner should have followed the rules and given the grounds on which he had decided to load the value by 20%. On the other hand, the Tribunal found that the order passed by the Deputy Commissioner SVB Mumbai is the reasoned order. It is supported by materials. The Tribunal were informed that the department has accepted the above order and the finding therein was not challenged.

Above being the position, it was observed that the Commissioner (Appeals) should not have dismissed the appeal filed by the assessee only for the reason that they failed to bring to the notice of SVB Mumbai earlier order dated 7-1-2000 passed by SVB Delhi. It is not the case of the Commissioner that in view of any additional material available with SVB Delhi a different view would have been taken by SVB Mumbai if those materials were placed before SVB Mumbai. Even today the Revenue has no case that the data provided by the assessee before the SVB Mumbai were wrong and that there are additional materials in the possession of SVB Delhi which can be utilized to show that the view taken by SVB Mumbai is incorrect. Therefore, the admitted position is that a reasoned order passed in favour of the assessee by SVB Mumbai is not challenged by the Revenue. The Tribunal were of the view that the Commissioner (Appeals) should have accepted the view taken by SVB Mumbai especially in the light of the directions given by the Board in Circular dated 1-1-98. The subsequent Circular dated 23-2-2001 also contains identical provisions. The Tribunal, therefore, set aside the order impugned and directed the Deputy Commissioner, SVB Delhi, the original Adjudicating Authority to finalize the assessment by following the decision of Deputy Commissioner, SVB Mumbai dated 11-8-2000.

Decision:- Appeal allowed.

Comment:- It is very interesting case wherein two different adjudication officer has passed two different orders on same issue for the same party. The tribunal has rightly said that the most reasoned order is to be followed. Further, when the revenue has not gone in appeal against such order then it has become final and binding on the department. Hence, the tribunal has rightly allowed the appeal of assessee.

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PJ/Case Laws/2011-12/1386

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