2002 (2) TMI 246 - AT - Customs

Appellate Tribunal rules in favor of importers in dispute over Transaction Value

The Appellate Tribunal CEGAT, Bangalore allowed the appeal of importers of modems and software from BOCA RESEARCH INC., USA, stating that the Transaction ... Transaction value - related persons - proviso (c) of Rule 4(2) of the Customs Valuation Rules - Rule 7 deductive value - Rule 9(1)(d) additions - acceptance of CIF declared valueTransaction value - related persons - acceptance of CIF declared value - Transaction Value declared in the Bill of Entry must be accepted and cannot be rejected on the basis of assumed accruals to the foreign supplier merely because of equity holding. - HELD THAT: - The Tribunal found that the concept of a related person could not be invoked to discard the declared transaction value. Reliance was placed on the Apex Court's approach in the cited authorities, including Fisher Rosemount , which upheld acceptance of the declared CIF value in a case involving substantial equity holding and stringent conditions in favour of the foreign supplier. Following that precedent and Eicher Tractors , the Tribunal held that mere equity participation by the foreign seller did not, without more, justify departing from the Transaction Value declared by the importer.Declared Transaction Value/CIF accepted; rejection on account of assumed accruals to foreign supplier set aside.Proviso (c) of Rule 4(2) of the Customs Valuation Rules - Rule 7 deductive value - Rule 9(1)(d) additions - Invocation of proviso (c) of Rule 4(2) and application of Rule 7 deductive value was not justified; additions under Rule 9(1)(d) cannot be used to move out of Transaction Value without permissible adjustments being shown. - HELD THAT: - The Tribunal held that resort to proviso (c) of Rule 4(2) was improper where the Transaction Value stands and where the prescribed adjustments under Rule 9(1)(d) have not been shown to permit departure from that value. The accruals contemplated by proviso (c) are subject to the specific additions listed in Rule 9, and any adjustment must be demonstrated to fall within those permissible additions. Consequently, adopting the Rule 7 deductive value in lieu of the Transaction Value was unwarranted in the absence of such shown adjustments.Invocation of proviso (c) and adoption of Rule 7 deductive value set aside; no additions under Rule 9(1)(d) shown to justify departing from Transaction Value.Final Conclusion: The appeal is allowed: the Tribunal accepts the declared Transaction Value/CIF and sets aside the valuation determined by invoking proviso (c) of Rule 4(2) and Rule 7, finding no justification under Rule 9(1)(d) to depart from the Transaction Value. The Appellate Tribunal CEGAT, Bangalore allowed the appeal of importers of modems and software from BOCA RESEARCH INC., USA, stating that the Transaction Value should not be rejected based on assumed profit accruing to the foreign supplier. The Tribunal found no merit in upholding the determination of value by the Commissioner (Appeals) and allowed the appeal.