TaxTMI 
TaxTMI 
2023 (6) TMI 18
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....hich response was submitted by the appellant/importer, including all such documents as required. From the documents so submitted, it appears to have become clear that the appellant is the subsidiary of M/s. Nubiola Pigmentos SL, Spain which was holding 98% of share in the appellant/importer company and that there was a common director. It thus appeared to be clear from the above that both the foreign entity as well as the importer/appellant were related in terms of Rule 2(2)(i), (iv) and (v) of the Customs Valuation Rules, 1988. 2.3 In the backdrop of the above, it appeared as regards the transaction value declared by the appellant, that the comparison of price of import vis-à-vis third party imports were noticeably different; that unit price between the third party imports and the import of the appellant with reference to the imported products appeared to be varying between 0.44% and 44.59%, which prompted the Revenue to believe that the admitted transaction value between the appellant and its foreign supplier was not at arm's length as envisaged under Rule 4 ibid. 2.4 It appears that from the above, the obvious conclusion was drawn by the Revenue that the relationshi....
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.... features of the arguments advanced by the appellant, as captured by the Adjudicating Authority, are as under: - • Inter company prices (ICP) were already submitted along with the certificate of a Chartered accountant, which showed that ICP among subsidiaries were uniform. • Documents submitted in support also revealed that there was uniformity in unit prices in respect of subsidiaries; no third party invoices from overseas suppliers filed. • Pricing of group companies was governed by inter-company prefixed prices and the transfer pricing would consider manufacturing/industrial cost plus a mark-up of 8%. • The above was the standard practice among group companies, but the prices to third parties was fixed after considering expenses relating to sales, administration logistics, post-sale services and future technical support. • Quantity of purchase by a group company was relatively higher than that from other company. 5.2 De-novo Order-in-Original No. 12899/2010 dated 14.09.2010 was thereafter passed by the Adjudicating Authority wherein the transaction value was proposed to be loaded by 24.40%, for the following rea....
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....supplies made to other group companies, covering all 11 items. Thus, the declared value was liable for rejection. n) In the absence of third party supplies of all the items to be compared with imports made by the Indian subsidiary, it was not possible to determine the price by directly adopting the price of the third party supplies. 5.3 For the above reasons and discussion, the Adjudicating Authority vide de-novo Order-in-Original rejected the declared invoice price of goods imported by the appellant and inter alia directed for loading the same by 24.40% under Rule 5 ibid. It is also clear from the above that though the appellant participated in the proceedings, apparently for want of evidence / documents in support, the Adjudicating Authority had to propose loading of transaction value by 24.40%. 6. The appellant appears to have preferred first appeal before the First Appellate Authority, but however, even the First Appellate Authority having rejected their appeal vide Order-in-Appeal C.Cus. No. 1539/2012 dated 21.12.2012, the present appeal has been filed before this forum. 7. Heard Shri. S. Murugappan, Learned Advocate appearing for the appellant and Smt. Sride....
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.... method of adoption of the prices at which the principal had supplied goods to the third parties in other countries could not form the basis for valuation of the goods supplied to the Indian subsidiary which, is against the principles underlying Section 14 ibid.; it is for the above reason that there was wide variation in the prices which resulted in percentage variation as well, as tabulated in the Order-in-Original. This, according to the Learned Advocate, would clearly establish that the supplies were not comparable at commercial levels due to the quantum of the order and the period of supply. 8.8 He would also contend that the appellant had relied on and referred to imports made by them from China to point out that the prices of the imported goods were comparable, which fact was not at all accepted by the Adjudicating Authority without giving any reason. 8.9 Without prejudice to the above, it is his case that the appellant had arrived at net profit margin after taking out the sales details of these very goods which were imported during the relevant period and the overhead expenses incurred, in support of which a certificate issued by a Chartered was also filed. 8.10 He....
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....s out not at their declared value being correct but at the method adopted for redetermining the transaction value. 10. We have heard both sides and perused the documents placed on record as well as the orders of lower authorities. 11. We find that the only issue to be decided by us is: whether the declared transaction price was acceptable, or did it require loading, as proposed, for the reasons discussed in the orders of lower authorities? 12.1 We find after hearing both sides and after going through the appeal papers that the appellant nowhere denied, and rightly so, that its imports were sourced from its relative entity and accordingly hit by Rule 2(2)(i), (iv) and (v) ibid. wherein "related" is defined. In view of the above, it is most relevant here to ascertain if the value so declared is at arm's length. Burden is therefore on the appellant to establish that the transaction value declared by it was not influenced by the relationship with its supplier. Though the Learned Advocate contended that the declared value was at arm's length, we find from the orders of the lower authorities that they have disputed the same. Even before us, other than arguing that their value de....
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.... consideration for the sale or in any other case; (iii) the manner of acceptance or rejection of value declared by the importer or exporter, as the case may be, where the proper officer has reason to doubt the truth or accuracy of such value, and determination of value for the purposes of this section : (iv) the additional obligations of the importer in respect of any class of imported goods and the checks to be exercised, including the circumstances and manner of exercising thereof, as the Board may specify, where, the Board has reason to believe that the value of such goods may not be declared truthfully or accurately, having regard to the trend of declared value of such goods or any other relevant criteria :] Provided also that such price shall be calculated with reference to the rate of exchange as in force on the date on which a bill of entry is presented under section 46, or a shipping bill of export, as the case may be, is presented under section 50. (2) Notwithstanding anything contained in sub-section (1), if the Board is satisfied that it is necessary or expedient so to do, it may, by notification in the Official Gazette, fix tariff val....
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....at one is the sole agent or sole distributor or sole concessionaire, howsoever described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule." 17.2 Further, Rule 2(1)(f) defines "transaction value" to mean the value determined in accordance with Rule 4 the Rules. 17.3 Rule 4(1) of the Rules is reproduced below: - "4. Transaction value - 1. The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules." 17.4 Further, Rule 4(2)(d) reads as under: - "2. The transaction value of imported goods under sub-rule (1) above shall be accepted: ... (d) the buyer and seller are not related, or where the buyer and seller are related, that transaction value is acceptable for customs purposes under the provisions of sub-rule (3) below." 17.5 Rule 4(3)(a) and 4(3)(b) are also extracted below:- "3. (a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstance....