2013 (7) TMI 682 - HC - Customs

Court sets aside invoice value increase due to related suppliers. Customs duty on technical know-how deemed baseless.

M/s. Fairfield Atlas Limited Versus The Union of India and others

The Court set aside the order enhancing the declared invoice value by 25% due to related suppliers, as it did not address the influence of the ... Value of imported goods - related persons – validity of order - the assessee was engaged in the manufacture of transmission gears and was importing cutting for use as capital goods in its manufacturing operations in India from related persons – the suppliers of the assessee were related - whether the relationship between the two had affected the price of goods imported - Court confirmed the decision of the tribunal - from a plain reading of the order dated 23 February 2007 of the Tribunal that the impugned demand which is sought to be raised on the basis of the orders dated 24 December 2003 and 24 April 2006 is unsustainable - the addition was not warranted since it was beyond the scope of the order of remand which had earlier been passed by the Tribunal- the revenue had not challenged the order of the adjudicating authority on the ground that no finding had been recorded as to whether the relationship between the parties has influenced the price – appeal allowed – decided in favour of assessee. Issues:1. Whether the relationship between the petitioner and the foreign company influenced the price of importsRs.2. Validity of the order enhancing the declared invoice value by 25% due to related suppliers.3. Legality of adding a lumpsum amount to the invoice value under Customs Valuation Rules.4. Correctness of the demand for customs duty on the amount paid for technical know-how.5. Interpretation of the Tribunal's orders and finality of previous decisions.Analysis:1. The petitioner, engaged in manufacturing transmission gears, imported cutting tools from related persons for use as capital goods. The issue arose regarding the influence of the relationship on the imported goods' price. Despite a request for documents, the Deputy Commissioner of Customs enhanced the invoice value by 25%. The Commissioner of Customs (Appeals) dismissed the appeal as time-barred. The Tribunal remanded the case for fresh adjudication due to an exparte order without granting time for document production.2. Post remand, the Deputy Commissioner directed adding a lumpsum amount to the invoice value under Customs Valuation Rules. The Commissioner of Customs (Appeals) set aside the order, leading to an appeal before the CESTAT. The CESTAT found that the Deputy Commissioner had not addressed the issue of relationship influence on pricing, instead adding a technical know-how fee. The CESTAT set aside the order and allowed the appeal.3. Subsequently, the Deputy Commissioner demanded customs duty on the amount paid for technical know-how. The petitioner contended that the issue had already been finalized by the Tribunal's order. The Tribunal dismissed the petitioner's application for clarification, stating the Deputy Commissioner's order had attained finality.4. The Tribunal's order clarified that the Deputy Commissioner had not addressed the relationship's influence on pricing, and the addition of the technical know-how fee was beyond the scope of the remand order. The Tribunal set aside the order of the adjudicating authority and allowed the appeal. The demand for customs duty on the technical know-how amount was deemed baseless.5. The Court found the impugned demand based on previous orders to be unsustainable. The Tribunal's order had already settled the matter, and the demand for customs duty was quashed. The Tribunal declined to entertain a subsequent application by the petitioner. The Rule was made absolute by setting aside the impugned letters demanding duty, with no order as to costs.