TaxTMI 
TaxTMI 
2011 (3) TMI 315
X X X X Extracts X X X X
X X X X Extracts X X X X
....sp; 04¬03¬2009. By the said order¬in-original dated 04¬03¬2009,duty amounting to Rs.97,15,00,054/ has been confirmed and equal amount of penalty has been levied under Section 114¬A of the Customs Act, 1962. 3. Relevant facts are that : the petitioner - company incorporated under the Companies Act, 1956 is a wholly owned subsidiary of Skoda Auto AS, a company incorporated under the laws of Czech Republic ('Skoda' for the sake of convenience). 4. In the year 1999, Skoda made an application before the Foreign Investment Promotion Board ('FIPB' for short) seeking permission to establish a unit for manufacture and sale of cars in India. The proposal was to manufacture 45000 cars over a period of 5 years. On receiving the requisite approval from the FIPB, the petitioner company was incorporated under the provisions of the Companies Act,1956 as a 100% subsidiary of Skoda to establish a car manufacturing unit in India. The FIPB approval recor....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s required for manufacture of cars were imported from Skoda, a related person within the meaning of Rule 2(2) of the Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 ('1988 Rules' for short), a detailed application was filed with the Special Valuation Branch ('SVB' for short) for determination of the assessable value of goods imported by the petitioner from Skoda, a related person. 7. The Deputy Commissioner of Customs in the SVB after considering all material facts, including the clauses in the TTA dated 01¬10¬2001, by his order¬in¬original dated 10¬06¬2003 held that US$ 45 million paid as per TTA was in no way relatable to the value of the car kits to be supplied by Skoda to the petitioner and that the transaction value declared in the....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... 45 million paid by the petitioner to Skoda should not be considered as part of the value of the raw materials imported from Skoda. The petitioner filed detailed reply denying all the allegations made in the show¬cause notice. 10. By an order¬in¬original dated 04¬03¬2009, the Commissioner of Customs confirmed the duty amounting to Rs.97,15,00,054/¬ and further imposed penalty in the equivalent amount under Section 114¬A of the Customs Act, 1962. By the said order, penalty was also levied against the ex-Managing Directors as well as the Chartered Accountants of the petitioner. 11. Challenging the aforesaid order, appeals were filed before the CESTAT with an application seeking waiver of pre¬deposit. By the impugned order dated 12¬05¬2010, the CESTAT has directed the petitioner to make pre-deposit of Rs....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s as service tax as the respondents have considered that the payment of US$ 45.00 million to Skoda was towards availing technical services.Thus, the Revenue has already recovered more than the amount due and payable and, therefore, the Tribunal was not justified in directing pre¬deposit of Rs.30 crores. 14.Counsel for the petitioner further submitted that out of the demand of Rs.97.16 crores confirmed by the Commissioner, Rs.23.5 crores relates to the goods cleared under provisional assessment and unless the provisional assessments are finalized the question of recovering the duty on those goods does not arise at all. In this connection, reliance is placed on the decision of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... customs duty on car kits imported by the petitioner. The prima facie reasons recorded by the Tribunal are : a) FIPB approval was sought by Skoda to set up a unit in India to manufacture 45,000 cars over a period of 5 years by importing car kits. The approval was granted subject to the condition that no royalty shall be payable to Skoda as long as they hold 100% equity shares of the petitioner. b) Payment of US$ 45.00 million under Technology Transfer Agreement has been worked out on the basis of per car kit to be imported by the petitioner for manufacturing 45,000 cars over a period of 5 years. The TTA was to end when assembly contracts were to end, which means that the payment of US$ 45 million is relatable to the car kits to be imported. c) Cost sheet relating to imports found during the course of search ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....s not affected by the relationship and it was supplied on cost plus basis was obviously not correct. m)amount paid as per the TTA has been capitalized by petitioner. Once that amount is capitalized while allocating depreciation for the purpose of costs of the car assembled, automatically the amount paid towards TTA gets allocated to a car. Thus, the petitioner took an additional cost of US$ 1000 into account for the purpose of costing in addition to the amount paid under the TTA. 20.From the aforesaid reasons, it cannot be said that the decision of the Commissioner is devoid of any merit. Incriminating material gathered subsequent to the decision of the SVB prima facie show that all material facts were either not placed before the SVB or altered subsequently. 21. As regards the financial hardship, the Tribunal took note that the petitioner had cash and bank balance of more than Rs.127 crores as on 31¬12¬2009 and sundry debtors had ....