2016 (10) TMI 468 - AT - Customs

CESTAT Mumbai: Appeal Allowed in Related Party Transaction Case

The Appellate Tribunal CESTAT MUMBAI allowed the appeal filed by M/s. Miranda Amsaw Pvt. Ltd. against the Commissioner (Appeals) order which set aside the ... Valuation - Technical Collaboration Agreement - related party transaction - transaction value - payment of royalty by the appellants to the related supplier - whether the rejection of the transaction value justified on the believe that the relationship does not affect the price and on the fact that no payment of royalty has taken place? - Held that: - there is no Technology Transfer Agreement entered into by the appellant with the related supplier. The fact has been confirmed by the Ld. Counsel in the letter in writing vide their letter dt. 28.09.2001 to the Commissioner (Appeals) title Memorandum of Cross-objection, no payment of royalty has taken place. Impugned order passed without application of mind, as the appellant did not attend the personal hearing despite given many opportunities - the same is set aside - transaction value accepted - appeal allowed - decided in favor of appellant. Issues:Challenge to transaction value determination based on related party relationship and technical collaboration agreement.Analysis:The appeal before the Appellate Tribunal CESTAT MUMBAI was filed by M/s. Miranda Amsaw Pvt. Ltd. against the order of the Commissioner (Appeals) which set aside the order of the Dy. Commissioner of Customs. The Dy. Commissioner accepted the transaction value of imports from a related party with which a Technical Collaboration Agreement was in place. The Revenue challenged this decision on the grounds that the adjudicating authority failed to call for separate agreements as required by the Joint Venture Agreement to show details of payments made to the foreign collaborator. The Tribunal noted that the Dy. Commissioner accepted the declared prices after comparing the list price of the foreign supplier with the actual price of imports and found them to be identical, concluding that the relationship did not affect the transaction value.The appellant's counsel argued that no agreement for technology transfer existed, and thus, no royalty payment was made or payable to the related supplier. They provided a confirmation stating the absence of any Technology Transfer Agreement or payments other than those against invoices. The Tribunal observed that there was no Technology Transfer Agreement between the appellant and the related supplier, as confirmed by the appellant's counsel in writing. The grounds of appeal challenging the transaction value were found to have no merit as no technology transfer agreement or royalty payment existed.The impugned order was based on the appellant's failure to respond to departmental communications and attend personal hearings before the lower authority. Despite opportunities given, the appellant did not respond adequately. The Dy. Commissioner's order noted the appellant's request to accept their transactional/invoice value during the personal hearing. The Tribunal found that the impugned order was passed without the application of mind and set it aside, allowing the appeal. The decision was pronounced in court on 1/9/2016.