Whether loading the transaction value is permissible when there is no evidence of additional flow of funds?

PJ/CASE LAW/2015-16/2621

Case:-GEISSEL INDIA PVT. LTD. VERSUS COMMISSIONER OF CUSTOMS (IMPORT), MUMBAI

Citation:-2015(315) E.L.T.479(Tri. –Mumbai)

Brief Facts:-The appellants are subsidiary of M/s. Geissel Gmbh who is having 100% shares of the appellant company since May, 2008. Before 2008, the supplier was related with the importer Geissel Jakap Pvt. Ltd. which was in joint ventures and from the date of subsidiary of M/s. Geissel Gmbh, M/s. Geissel Jakap became M/s. Geissel India Pvt. Ltd. As the supplier and the importer were the related person, therefore, as per Rule 2(2) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, the declared value of the imported goods by the appellants was influenced by the relationship. Accordingly, the impugned order was passed. Against the said impugned order the appellant was before Tribunal.

Appellant’s Contention:- The appellant submitted that in fact the enhancement had been made only on the ground that the transaction value was rejected as the appellant was related to the supplier, therefore the proviso to Rule 3(3)(d) of the Rules was invoked. In fact, there was no Rule 3(3)(d) in Customs Valuation Rules, 2007. It was further found that as declared value had been rejected and transaction value determined following Rule 5(2) of Customs Valuation Rules, 2007 and in the absence of identical or similar imports, therefore, Rule 6 or Rule 7 of the Customs Valuation Rules, 2007 be resorted. As the appellants did not produce the data, therefore, the Commissioner has no option but to rely on the audited balance sheet of the appellants and thereafter found that 23.80% are the administrative expenses therefore he enhanced the value of 10% of the declared value under Rule 8 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 and the said order was confirmed by the first appellate authority which was not correct. As the adjudication order itself was contrary to the finding in para 30 of the impugned order, wherein it had been observed by the adjudicating authority that no payments were required to be made by the importer to supplier on account of Royalty, Technical know-how and lump sum payment etc. therefore, it appeared to be no case of loading the transaction value on account of factors such as Royalty, Technical Know-how and Lump sum payment to the related supplier but he loaded the value under Rule 10(1)(c) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 which dealt with Royalty. Therefore, impugned order was to be set aside and appeal be allowed.

Respondent’s Contention:-The Revenue strongly opposed the contention of the appellant and submitted that the questionnaire given to the appellants was replied in affirmative and no similar imports or transaction value had been submitted by the appellants. Moreover, in the balance sheet, they have shown the administrative expenses to the tune of 23.80% which is on higher side. Therefore, it is presumed that loading of 10% on the declared transaction value is proper and correct. Therefore, the impugned order was to be upheld.

Reasoning of Judgment:-The Tribunal heard both sides and perused the records. On perusal of the records, the Tribunal found that in para 30 of the Order-in-Original a clear cut finding was given that there was no case of loading the transaction value on account of factors such as Royalty, Technical Know-how and Lump sum payment to the related supplier. No evidence had been brought on record by the adjudicating authority that there was some flow of funds other than the transaction value. The transaction value had been enhanced under Rule 10(1)(c) of the Customs Valuation Rules, 2007 which clearly dealt with lump sum payment of royalty. There was no justification for addition of 10% of the value of the declared value. Therefore, the bench set aside the impugned order and allow the appeal with consequential relief, if any.

Decision:-Revenue’s order set aside and allow the appeal with consequential relief.

Comment:-The Tribunal rightly decided the case that there is no case of loading the transaction value on account of factors such as Royalty, Technical Know-how and Lump sum payment to the related person. Rule 10 (1) (c) of the Customs Valuation Rules, 2007 will only apply when there is payment of lump sum Royalty. In this case Revenue has no evidence that there is some flow of funds other than transaction Value.

Prepared by: Bharat Rathore

Checked by :- Prayushi Jain

Comments

PJ/CASE LAW/2015-16/2621

Post a Comment

Query