JUDGMENT
K.K. Usha, J. (President)
1. In this appeal at the instance of the importer-assessee grievance is that neither the Deputy Commissioner of Customs, Special Valuation Branch (SVB), Delhi nor the Commissioner of Customs (Appeals) has considered the appellants’ case on merits. It is also contended that in the light of the directive given in Board’s Circular No. 1/98 dated 1.1.98 followed by Circular No. 11/2001 dated 23.3.2001 the Commissioner (Appeals) should have followed the view taken by the Deputy Commissioner, SVB, Mumbai in his order dt. 11.1.2000
2. The 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. The 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.
3. The appellants procure finished goods from JC Singapore which in turn procures 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. The 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
4. The 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.
5. 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.
6. While so the appellants received Order-in-Original No. 35/99/ACD 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. It is the case of the appellant that it had not received neither the show cause notice issued by SVB Delhi nor 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. 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.
7. It is submitted by the learned counsel for the appellants that the Commissioner (Appeals) should have considered the case on merits. Going by the provisions of the Board’s Circular dated 1.1.98 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. He 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. The learned counsel 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.
8. The learned DR, on the other hand, would contend that there is no justification on the part of the appellants for concealing order dated 7.1.2000 from SVB Mumbai when proceeding 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.
9. In the Circular No. 1/98 dt 1.1.98 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. Sub-clause (1) of Clause 2 reads as follows:
“2. On the basis of this review, the Board has taken the following decisions:
(1) The ‘Special Valuation Branch’ (SVB, for short) as an institution specialising in investigating transactions involving special relationships and certain special features should be continued. However, these SVBs would be located only at four Custom Houses, i.e. at Chennai, Calcutta, Delhi and Mumbai. Any decision taken in respect of a particular case in any of the four major Custom Houses shall be followed by all other Custom Houses/formations.
(2) The SVB of any one of the four Custom Houses, located proximate to the Head or Corporate Office of the importer or as requested by the importer would handle the investigation of such a case. Where in the declaration prescribed under the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 (hereinafter referred to as “Valuation Rules, 1988″), the importer has himself made an averment that the transactions are between related persons in accordance with Rule 2(2) of the Valuation Rule, 1988 and there is a prima facie justification for further enquiry, the concerned case of import may be referred to the SVB of the concerned Custom House, where a separate case file would be opened and a registration number assigned to the case.”
It is on the basis of the above circular the appellants submit 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 appellant’s 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 we find 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, we find that the order passed by the Deputy Commissioner SVB Mumbai is the reasoned order. It is supported by materials. We are informed that the department has accepted the above order and the finding therein was not challenged.
10. Above being the position, 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. Whether such an order could be preferred to the order dated 7.1.2000 which does not contain any reasoning at all to load the value by 20%? We are 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. We, therefore, set aside the order impugned and direct 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. The appeal stands allowed as above.