Customs valuation includes disguised commission paid to a related importer under a special pricing arrangement.

A 100% subsidiary treated as a related person of the foreign supplier was held to have received, in substance, commission rather than a true discount. Because the special pricing was not available to independent buyers and reflected a related-party arrangement, the amount was includible in the declared import value under Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988. The Tribunal accepted that the agreement contemplated price-list sales to others but a discounted price plus commission for the appellant, and upheld addition of the commission to the invoice value.

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Issues: Whether the commission or so-called discount received by a 100% subsidiary and related person of the foreign supplier was includible in the declared import value under Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988.

Analysis: The appellant was found to be a related person of the foreign supplier under Rule 2(2) of the Customs Valuation Rules, 1988. The agreement showed that the supplier maintained a price list, while the appellant received a discounted price and also earned commission on orders booked for the supplier. The Tribunal found that the so-called discount was in substance commission, that it was not available to independent buyers, and that such commission was liable to be added to the invoice value under Rule 9(1)(a)(i). The Tribunal also accepted the finding that the special pricing arrangement reflected related-party treatment rather than an ordinary arm's length sale.

Conclusion: The commission was correctly added to the declared price and the appeal failed.

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