TaxTMI 
TaxTMI 
2020 (6) TMI 67
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....red was at arm's length. Further, appellant relied on the ruling of Hon'ble Supreme Court in North Eastern Railway Administration, Gorakhpur vs. Bhagwan Das -2012 (281) ELT 161 (SC) in support of their prayer for additional evidence, praying that such evidence is basically calculation based on the record, and in the interest of justice to be considered in this appeal. 2. The issue involved in this appeal is regarding 'order of loading' in the transaction value, the impugned order confirming the percentage of enhancement to the transaction value, as ordered by the Deputy Commissioner of Customs vide order-in-original dated 29.11.2018. 3. The brief facts of the case are that the appellant M/s Lutron GL Sales & Services Pvt. Limited imports lighting control systems (products) from their parent company, "related party", M/s Lutron Electronics Co., Inc. USA (Lutron US for short). These products include sensors and dimmers, processors, controllers, radio frequency (RF) transmitters, interfaces, shades, etc. which are used for convenience and energy saving solutions to customers. The appellant is registered with SVB. Revenue started investigation into the matter of influence of thei....
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....e foreign suppliers; u. That their company does not receive any amount in the form of agency commission, over riding commission or any other remuneration; v. That their company does not incur any expenses on behalf of, by understanding or agreement with, or under instructions from the supplier of the imported goods on advertising, propaganda expenses or any other expenses for the promotion of sale of the imported goods; w. That the foreign suppliers supplies identical, similar or connected items to its subsidiaries in several countries. From the submissions made by the appellant, it surfaced that the appellant is a subsidiary of M/s Lutron Electronics Co., Inc. Headquartered in Coopersburg, Pennsylvania, USA, which along with its subsidiaries and associated companies is engaged in the business of designing, manufacturing, marketing and selling variety of 'total lighting management solutions - lighting control and shades' through a variety of channels including electrical contractors, lighting showrooms, window treatment dealers, retailers, custom electronics dealers and few other channels. 3. Considering the documents produced and reply to the qu....
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....periodic review of the prices and ASD discount, necessary to ensure such prices and discounts, and Distributor's resale margins, are at arm's length under applicable legal standards. 7. The appellant obtained its first Radio Frequency product Import Licence in October, 2012, and received a 'domestic call centre license' (OSP) in July 2013. The appellant enjoyed higher discounts on its imports, as compared to the ASDs, due to its higher volume of purchases. Assuming the Lutron US list price to be same, the comparative average import price of ASDs vs. The appellant, would have been as under (rounded): Year Appellant price ASD price Difference 2013-14 21 42 21 2014-15 27 44 17 2015-16 28 43 15 2016-17 34 41 7 2017-18 35 34* 1 Difference Average 15 (leaving 2017-18) *Starting FY 2017-18 through the present, the appellant believes that there were no imports by the ASDs. The end customers purchased the goods from the ASDs on high sea sale basis. 8. The quantities imported by the appellant were significantly higher than those by the ASDs, and consequently the appellant enjoyed higher discounts. T....
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....ellant, on account of the huge difference in volumes. Further adjustment of 5% on account of the differences in quantity, is wholly unreasonable. (iv) That the appellant incurs significant expenses in obtaining Radio Frequency Licences (WPC & DGFT), for import of RF products, whereas the ASDs do not import RF products,, and do not incur such expenses. (v) The arm's length transaction was justified by the deductive methodology, indicating a nominal profit. Further, that with 77% loading, the appellant would incur losses on their imports. (vi) That there is no published price list of Lutron US, for made to order (custom) products and import value of such products cannot be enhanced. 11. The appellant attended hearings on four dates, before different adjudicating authorities, and provided all the information and evidence requested for by the officers. The appellants were surprised and shocked to note that none of the evidence furnished or the arguments made, were considered by the Adjudicating authority, while deciding the case. 12. By an order dated 29.11.2018, the Deputy Commissioner directed enhancement of value by 77%, to make it at par with the pr....
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....enever the importer demonstrates that the declared value of the goods being valued, closely approximates to one of the following values ascertained at or about the same time. (i) The transaction value of identical goods, or of similar goods, in sales to unrelated buyers in India; (ii) The deductive value for identical goods or similar goods; (iii) The computed value for identical goods or similar goods; Provided that in applying the values used for comparison, due account shall be taken of demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) Substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through Rule 4 to 9". &....
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....ation has not been rebutted by the Department and hence the transaction value is liable to be accepted in terms of Rule 3 (3) of the Rules. The appellants have also submitted as 'Additional evidence', computed value certificates, for the most recent period, 2016-2017, and 2017-2018 from the foreign suppliers. The evidence on record, reflects that the relationship has not affected the price. (emphasis supplied). 19. The application of Rule 4 is even otherwise unjustified, as the requirements of Rule 4 are not met. Rule 4 provides as under (Emphasis added): "4. Transaction value of identical goods.- (1) (a) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued; Provided that such transaction value shall not be that value of the goods provisionally assessed under section 18 of the Customs Act, 1962. (b) In applying this rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the....
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....ind to this evidence. The adoption of an ad hoc percentage for enhancement of value across the board, in respect of all imports, is specifically barred by Rule 9 (2), which does not permit adoption of arbitrary or fictitious values. 21. In so far as the products which are common to the ASDs and the appellant are concerned, it is submitted that the requirements of Rule 14 are not met, as the imports are not at the same commercial level or in substantially the same quantity. In the absence of any evidence for making an adjustment, the application of Rule 4 must be ruled out. The same holds good for Rule 5, which relates to similar goods. (emphasis supplied). 22. The appellant submits that the average import quantity by an ASD is in the range of 0.5% to 5% of the imports made by the appellant. The imports by ASD's being negligible, as compared to that of the appellant, the imports are neither at the same commercial level nor in substantially the same quantity. The appellant had furnished evidence of the expenses incurred by ASDs as compared to those incurred by the appellant, to demonstrate that they were different class of buyers. A difference in quantity of this magnitude w....
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....med by the learned Commissioner (Appeals). The contention of appellant that 5% adjustment factor was too low is not plausible in view of the fact that proposal was made and communicated through the show cause notice. The appellant did not offer any comment to the quantum of volume discount and hence this cannot be termed arrived at unilaterally, keeping the appellant in dark. It is further urged that there is no rule or straight jacket formulae to determine at a different factor for volume discount. Reliance is placed on the ruling of the Apex Court in Pernod Ricard India (P) Ltd., -2010 (256) ELT 161 (SC) where it is held as follows:- "33. We are of the considered opinion, that bearing in mind the object behind the provision for "adjustment" in terms of Rule 5(1)(c), the fine distinction between the words "adjustment" and 'discount' sought to be brought out by the appellant is of no relevance to the controversy at hand. The provision is clear and unambiguous meant to provide some adjustment in the price of identical goods, imported by two or more persons but in different quantities. It is plain that such "adjustment" may not necessarily lead to a decrease in the value. It....
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....ty imported by the appellant are 20 to 280 times greater than that imported by ASD as already noticed herein above. Thus, mere 5% adjustment allowed by the Court below in the transaction value is without any justification. In view of the transaction value of some of the identical goods imported by the appellant and other importers there appears to be requirement of some adjustment. Accordingly, we modify the direction of enhancement of transaction value by 77% to 20% for the period 2013-14 to 2016-17. For the year 2017-18, there is apparently no such difference in the import value by other importers and the appellant and as such no enhancement in the transaction value is required. We also noticed that part collection of deductive value submitted by the appellant, they are only making a nominal profit. The appellant has to occur significant reduce licences from the Telecom Department and DGFT for import of RF products which are not incurred by other resellers. Accordingly, the impugned order is modified to the extent as indicated hereinabove. 28. Having considered the rival contentions, we find that as the ASD do not import 'RF products' as well as the 'made to order products'....