TaxTMI 
TaxTMI 
2019 (9) TMI 1165
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....s, a discount of 45% from the Global Price List of the related supplier were accepted and any discounts above 45% were not being allowed. There have been changes, in the organizational relationship with the related supplier, prices of the import goods and currency, after the SVB order in 2008 which were duly intimated to the department; the original related supplier i.e, M/s Millipore Corporation USA and its group companies were taken over by M/s Merck Kg AA, Germany; discount pattern was rationalized for different goods; new discounts given ranged from as low as 2% to more than 45%, unlike the fixed discounts to maximum of 45% as given earlier; different discount rates were given to different goods, from the Global Price List; the net discounted prices were given as ICIN Pricelist; discounts given were fixed in case of the appellant whereas there is no limit of any discount given for the unrelated direct buyers. 2. As per Distributor Agreement, the appellant is a Non-Exclusive Distributor of the foreign related supplier i.e, Millipore SAS, France; appellant and the supplier are independent contractors; as can be seen under clause 6 tiled as 'Distributor Not Agent or Legal Represe....
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....e of the import goods is the focal point of the present appeal. * The appellants have also demonstrated that the ICIN prices are purely determined by the foreign supplier on purely commercial considerations and thus fixed the discount rates as far as the appellants are considered as ICIN prices cannot be negotiated any further, while the Global price List can be negotiated to any level of discounts by the third party buyers, so that their prices could be lower than that of the appellants herein. (page No.11 and 12 of the OIO) * (upon analyzing the Tables 4 and 5) Discount allowed to unrelated importer is 46% while discount given to related importer is only 2%.Quantity and time of import etc., may also be observed. It leaves no doubt that related importer was not the benefits extended to the unrelated importer.It is mostly so in respect of data available in annexure M. It is the display of annexure M that unrelated importers are extended discounts ranging from 46% to 77% while related importer is extended ranging from 2% to 55% showing that unrelated importers are favored vis-à-vis related importer in the matter of price charged. Discounts in excess of 45% seen in Table 3....
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....ing that higher discount allowed in stray cases to independent buyers cannot be the basis for allowing the higher discount to the appellant. The finding is without any basis and also contrary to its own finding and hence, same is not legal and not proper. 6. The foreign supplier is open to consider the commercial considerations and thus open to grant higher discount to unrelated buyers than that granted to the related buyers. Thus, the appellant is only put to disadvantage under the ICIN pricelist. In addition, the appellant has to shoulder the burden associated with distributorship like minimum stock, warranty servicing, sales promotion, etc., and without this burden, the unrelated buyers can also get higher discounts. Pricelist is merely an index of the prices of the goods of the seller and in any case, in the case herein the Global Price List is intended to serve only as an index and a basis for providing discounts and thus not fixed in any manner. Apex court held in Eicher Tractors Ltd Vs CC, Mumbai (2000(122) ELT 321 (SC) that A price list is really no more than a general quotation and that .... 'A discount is a commercially acceptable measure, which can be resorted to by a v....
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....mittedly a finding in the Order-in-Original as seen earlier. Hence, the ICIN prices cannot be rejected or subjected to any restrictions as the considerations thereof are commercial in nature and the relationship has not played any role. In the case, it is an investigation of import prices of related persons and this investigation is periodically reviewed and the instant review was done exhaustively due to the reason that there has been a change in the pricing basis as the discount policy was rationalized as per the commercial considerations of each item of import goods. This was not the case in the matter of Eclipse Combustion Pvt Ltd Vs CC, Mumbai - 2005 (189) ELT 282 (Tri -Mum) relied on by the department wherein only specific imports were dealt with and in any case, both the related importer and the unrelated importers resell the imported goods and thus the difference in discount were found to be unacceptable. In their case, no such finding as to the independent buyer and the appellant are doing the same commercial activity was made and, in any case, even such third parties were given much higher discount than the appellant which was not the case in the above cited case. In our....
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....the import price was disallowed; Organisational changes and new agreements entered into force from 2008 to 2011; The Indian entity changed from a Joint Venture to a fully owned subsidiary; Subsequent to the changes, there was a change in prices across all the products (price hike), and a Global Price List was also made; however, a Separate special Price List (ICIN) was prepared only for the Related Party (Millipore (India) Pvt Ltd.). It is described as a Net Discounted Price; the method of arriving at the prices in the ICIN is not demonstrated by the importer. The rationale of having a separate price list for the related party amounts to Special treatment arising out of the relationship. And in the absence of scientific demonstration, it is to be treated as not acceptable under the Customs Valuation Rules. 11. The Learned Authorised Representative submits that it is noted from the order that there are thousands of products imported from the related buyer; in the demonstration given in the Appeal memorandum, only a few products are illustrated in the appellant's favour, whereas, the 0-i0 has taken a detailed study based on the price lists submitted and arrived at the conclusion....
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....ions of the Hon'ble Tribunal in the order. 14. Heard both sides and perused the records of the case. On going through the arrival submissions and the records of the case we find that a brief issue that requires to be deciding in this case is as to whether the ICIN list followed by the Foreign supplier in respect of import by the appellant can be allowed for the purpose of assessment of value of imported goods and as to whether the relation between the Foreign supplier and importer/appellant has influenced the pricing mechanism. At the outset we find that, the appellants have submitted that the original authority has given categorical findings to the effect that it I s evident from the worksheet given by NIPL, as annexure G to their letter dated 15/10/2012, the prices indicated in ICIN when compared to the previously accepted transaction value (which was 55% of the list price), in more than 90% cases is higher. Effectively the difference between the list price and ICIN price works out to a average discount of 32%, which is lesser than the previously accepted discount of 45%; commercial consideration appear to have laid role in determination of sale price of the supplier with no....