TaxTMI 
TaxTMI 
2023 (1) TMI 155
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.... and disposal. Appeals No. Order-in-Original No. & date (Impugned Order) Period of Dispute Demand (Rs.) C/11133/2015 (M/s IFFCO) KDL/COMMR/26/2014-15 dated 30.03.2015 Urea - 30.08.2012 to 03.07.2013 Ammonia - 06.09.2012 to 02.04.2013 Rs. 45,78,35,036/- on Urea Rs. 12,96,74,539/- on Ammonia Total duty of Rs. 58,75,09,575/- Rs. 5,00,00,000/- Penalty Under Section 112(a) C/11971/2015 (M/s IFFCO) KDL/COMMR/11/2015- 16 dated 31.08.22015 Urea - 29.01.2014 to 08.09.2014 Rs. 12,14,22,750/- duty on Urea Rs. 2,50,00,000/- as Penalty Under Section 112(a) C/11463/2016 (M/s IFFCO) 05/COMMR/2016 dated 19.04.2016 Urea- 21.05.2010 to 18.02.2014 Rs. 53,76,02,720/- duty on Urea Rs. 53,76,02,720/- Penalty under Section 114A C/11529/2016 C/EH/10256/2021 C/CO/10665/2016 (Commissioner of Customs (PRV.), Jamnagar) 05/COMMISSIONER/2016 Dated- 19.04.2016 Urea- 21.05.2010 to 18.02.2014 Seeking imposition of Redemption fine C/10922/2017 (M/s KRIBHCO) MUN-CUSTM-000-COM- 24-16-17dtd. 25.01.2017 September 2013 to February 2015 Rs. 9,17,56,145/- duty on Urea Rs. 2,00,00,000/- Penalty under Section 112(a....
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.... AOTA and international price of said goods. Therefore, the price at which urea and ammonia imported into India was not representing the true and correct value of said goods; (ii) Government of India (GOI) is obligated to buy the entire production of Urea and M/s IFFCO is obliged to buy entire production of ammonia at a predetermined price from the supplier, OMIFCO; (iii) The Appellants/ Government of India are related to OMIFCO in terms of Rule 2(2)(i), (ii) and (vi) of the Customs Valuation Rules, 2007 read with Explanation II thereof. (iv) The prices at which urea and ammonia are imported from OMIFCO appears clearly influenced by the relationship between GOI, OMIFCO and the Appellants and hence the transaction value is liable to be rejected in terms of Rule 12 of the Customs Valuation Rules, 2007 read with Section 14 of Customs Act, 1962. 5. The appellants are before us challenging the above impugned orders in respect of confirmation of demand and penalty. The Revenue is in appeal before us, seeking imposition of redemption fine in respect of Order-In- Original No. 05/COMMR/2016 dated 19.04.2016 6. Shri. Manish Jain, learned Counsel appearing for the Appellant M/s IFFCO ....
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....ted only if he falls within one of the eight categories mentioned in Rule 2(2). Therefore, in the present matter Ld. Commissioner has totally failed in establishing the relationship between IFFCO /KRIBHCO and Government of India in terms of Rule 2(2) (i),(ii) and (iv) of CVR, 2007. Further even if for the sake of argument the GOI and IFFCO are treated as related persons for import of Urea because of the shareholding of GOI in IFFCO, the said relationship is of no relevance as IFFCO is not paying duty on the price at which it purchases Urea from GOI but pays duty on the price at which GOI imported from OMIFCO. 6.2 Without prejudice, he also submits that relation has not influenced the price. Rule 3(2) (d) provides for acceptance of transaction value even though the buyers and sellers are related, if the provisions of Rules 3 (3) are satisfied by the assessee. He placed reliance on the following decisions. * Modi Senator (I) Pvt. Ltd. Vs. CC (Import & General), New Delhi - 2009 (247) ELT 313 (Tri. Del.). Affirmed by the Supreme Count in 2010(256)ELT A19(S.C.) * Nestle India Ltd. Vs. Commissioner of Customs- 2010(252)ELT 208 (Tri. Chennai). * Sew- Curodrive (I) Pvt.Ltd. Vs. Com....
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....8.01.2021 * Hyderabad Industries Ltd. Vs. Union of India 2000 (115) ELT 593 (SC) * Eternist Everest Ltd. Vs. CC., Bombay 2000(119)ELT 716 (Tri. LB) * CC, Tuticorin Vs. Krishak Bharti Co-Operative Ltd. Final Order No. 41756/2020 dtd. 09.12.2019 7. Shri. B K. Singh, learned Counsel appearing for the Appellant M/s KRIBHCO submits that the only issue to be decided in these cases is whether the price at which the Urea was imported could be rejected under provisions of Customs valuation Rules, 2007 and the value can be redetermined considering the contemporaneous value of the identical goods imported at the same time. In the present matter department has not proved as how the GOI and OMIFCO are related under any of the sub-rules of Rule 2 (2) of the Customs Valuation Rules 2007. In the present matter buyer is GOI and seller is OMIFCO. It is also not disputed that GOI was indeed instrumental in getting the production unit in OMAN established. But they did not invest in this company. The investment pattern was 50% by the Oman Oil Company, 25% by IFFCO and 25% by KRIBHCO. Relationship between two entities could be established if they satisfy any of the following conditions. (i) The....
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....ploy GOI and neither does GOI employ OMIFCO. Thus, they cannot be termed as employer nor employee as required under clause (iii) of Rule2. Further, clause (iv) to be applicable, it must be shown that a third party (beside OMIFCO and GOI) controls or holds five per cent or more of the outstanding voting stock or share of both OMIFCO and GOI, whether directly or indirectly. This clause cannot be applicable for the simple reason that the GOI is not a company limited by shares to enable any such holding of stock. OMIFCO is a Joint venture between Oman Oil Company (50%), KRIBHCO (25%), IFFCO (25%). So neither KRIBHCO nor IFFCO have any controlling interest in OMIFCO. Assuming the GOI has some shares in KRIBHCO or IFFCO, it still cannot control OMIFCO because of the holding pattern described above. On the other hand, it does not need any explanation that OMIFCO cannot directly or indirectly control the GOI. Thus, it cannot be said that one of them directly or indirectly controls the other for clause (v) to apply. 7.3 He submits that similar to clause (iv) for clause (vi) to be applicable, it must be shown that a third person (beside OMIFCO and GOI), directly or indirectly, controls both....
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....ng term take or pay contract, on the term and conditions to be agreed upon, 100% of Urea Production of the Fertilizer plant at the price equal to the defined calculated floor price or the market price of urea at FOB Oman, whichever is greater; that the calculated floor price (CFP) of urea was defined to mean a price necessary to yield a 10% internal rate of return (IRR) on the equity investment in the fertilizer project. Thus, it is found that the selling price has been fixed in LTP/UOTA in such a manner that reasonable margin of profit is earned by the company. However, inspite these glaring facts and ignoring the long term price agreement, the Ld. Commissioner has enhanced the value only on the basis of contemporaneous import. Further Rule 12 of CVR makes it clear that the transaction value of imported goods could be rejected, only when the proper officer has reason to doubt " the truth or accuracy of the value declared in relation to any imported goods." 7.6 He also submits that on the identical issue Hon'ble Chennai CESTAT vide Final Order No. 41756/2019 dated 09.12.2019 dismissed the appeal of department on merit as well as being time barred. 8. Shri. Ajay Jain & Shri. S. K.....
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....-pay contract, on terms and conditions to be agreed upon, 100% of urea production of the fertilizer plant at price equal to defined calculated floor price or the market price of urea at FOB Oman, whichever is greater. The calculated floor price (CFP) of urea was defined to mean a price necessary to yield a 10% internal rate of return (IRR) on the equity investment in the fertilizer project. Appellants would be entitled to a urea sales fee at the rate of $3.50 per MT. in consideration of the sale and takeor- pay expense incurred by them. Thus in pursuance of the said MOU dtd. 30.07.1994 and the Joint Venture agreement dated 02.04.1997 was signed between Appellants and Oman Oil Co. Ltd. a new JV Company in the name and tile of Oman India Fertilizer Company LLC ( OMIFCO) was formed with equity participation as envisaged in the MOU, i.e KRIBHCO -25%, IFFCO - 25% and Oman Oil Ltd. - 50%. In addition, in the Board of Directors of the new company there is equal number of Directors nominated by either side. It is evident that the GOI and Sultanate of Oman have protected their interest conceived behind MOU signed between them by way of assigning the rights and responsibilities to the entiti....
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....CO shall offer to sell to IFFCO, FOB, the loading terminal, all of the Ammonia produced from and after the date of Commencement of production. The price at which the Amonia was to be sold to IFFCO was stated in clause 5 of the said agreement. 11. The above facts not disputed in the present matter. We find in the present matter adjudicating authority held that IFFCO/KRIBHCO as the importer and the Government of India -through the department of fertilizer, fall within the ambit of related person in terms of the Rule 2(2) (i) (ii) and (vi) of the CVR, 2007. The said provision reads as under : Rule 2 "(2) For the purpose of these rules, persons shall be deemed to be "related" only if - (i) they are officers or directors of one another's businesses; (ii) they are legally recognized partners in business; (iii) They are employer and employee; (iv) any person directly or indirectly owns, controls or holds 5 per cent or more of the outstanding voting stock or shares of both of them; (v) one of them directly or indirectly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (vii) together they directly or indirectly control....
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....d person. In the present matter revenue failed to show that who is the third person who controls Appellants. From the facts of the case it is also clear that none of the party involved in the present transactions controlled each other. Accordingly, based on the undisputed facts of this case the appellants and the GOI and OMIFCO are not related persons in terms of Rule 2 (2)(i), (iii) and (vi) of Customs Valuation Rules 2007. 14. It is a settled principle of law that the authority making the allegations has to prove with sufficient evidence. In the instant case, leaving alone the evidence, even reasons to entertain such a belief have not been properly brought forth or established. Therefore, we find that the impugned orders do not stand the scrutiny of law. We find that declared prices cannot be reviewed without any evidence to the effect that the relation between the appellants and sellers has influenced the declared price or to the effect that there was a flow back of money from the importer to the related supplier. Therefore, we don't find any substance to sustain the impugned orders. 15. Without prejudice, We also find that though the importer Appellants and GOI and Suppler of....
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.... the present matter impugned orders and department had not established that the price of the goods imported by the Appellants was influenced by the relationship between OMIFCO. 15.2 We also observe that in the matter of Commissioner of Customs, New Delhi vs. Prodelin India (P) Ltd. 2006 (202) E.L.T. 13 (S.C.) the Hon'ble Supreme Court held that: 28. Even assuming for argument's sake that the respondent and M/s. PC USA are related persons even in that case their transaction value is to be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. Further we find that following decisions also support the case of the appellants. (i) Sew-Curodrive (I) Pvt. Ltd. Vs. CC. 2012 (284) ELT 294 (Tri) (ii) Gemplus India Pvt. Ltd. Vs. CCE- 2005 (185) ELT 269 (Tri.) (iii) CC Vs. Hewlett Packard Ltd. - 1999 (108) ELT 221 (Tri.) (iv) Volvo India Pvt. Ltd. Vs. CC -2005 (180) ELT 489 (v) Modi Senator (I) Pvt. Ltd. Vs. CC (Import & General), New Delhi - 2009 (247) ELT 313 (Tri. Del.). Affirmed by the Supreme Court in 2010(256)ELT A19(S.C.) (vi) Nestle India Ltd. Vs. Commissioner of Customs-....