TaxTMI 
TaxTMI 
2026 (3) TMI 1651
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....ant vide its purchase order wherein discounts for each of the items ranging from 75% - 91% was given except for two items for which discount percentage was shown as 52% from the list/basic price of Cisco. The Cisco's standard rate card shows a discount of 42% extended to any third-party purchase unless larger volume is purchased by a single customer and special prices has been extended to the same. Consequently, the assessment was made provisional. After detailed scrutiny of various documents/letters, show-cause notice dated 12.03.2008 was issued to the appellant alleging that in the discount summary sheet submitted by the appellant, 42% discount is available in case of purchase by Bharti Comptel/third party from the list price, whereas a special price can be agreed in case of bigger purchase order received from single customer and the same to be agreed mutually by appellant and Cisco; since appellants have not furnished any such documents/agreement entered into by the appellant and Cisco, the transaction value declared was proposed to be rejected under Rule 10A of the Customs Valuation Rules, 1988 and also it is proposed to finalise the pending provisional assessments by disallowi....
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.... to M/s. JQ Networks against the five purchase orders is around USD 29,04,350, whereas M/s. JQ Networks charged appellants total price of USD 36,11,624. Consequently, appellants imported these five consignments of telecom equipment from M/s. JQ Networks and corresponding five Bills of Entry filed at Air Cargo Complex for clearance. Initially, the said Bills of Entry were assessed on provisional basis on execution of bond and bank guarantee. Later, finally assessed by extending discount of only 42% from the listed price of Cisco. 3. Assailing the impugned order, the learned advocate has submitted that the authorities below erred in adopting assessment under Rule 8 of Customs Valuation Rules, 1988 and confirmed the demand, when there is no allegation whatsoever regarding assessment under Rule 8 of the Customs Valuation Rules, 1988 in the show-cause notice dated 12.03.2008 and hence, the impugned order had travelled beyond the allegations raised in the show-cause notice, consequently contrary to the principle of law laid down by the Hon'ble Supreme Court in the case of Commissioner of Customs, Mumbai vs. Toyo Engineering India Ltd.: 2006 (201) ELT 513 (SC). 4. The learned advoca....
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....the supplier has extended abnormal discount raising doubt and objection by the department on the transaction, is irrelevant and cannot be sustained. The five invoices raised by M/s. JQ Networks viz-a-viz Cisco invoice clearly shows that there is no abnormal discount allowed by the seller M/s. JQ Network to the buyer, the appellant. The value declared in the five Bills of Entry as per the invoices raised by M/s. JQ Networks are as per their published price list basis and the appellants have paid the duty on the value shown in the Bills of Entry, therefore, it shows that the commercial nature of the transaction and satisfied the condition laid down under Section 14 of Customs Act, 1962, and further, there is no allegation that the appellant had paid any additional amount to M/s. JQ Networks over and above the invoice. He has submitted that the transaction value cannot be rejected in such circumstances unless the imports attract any of the exceptions mentioned in Rule 3(2) of Customs Valuation Rules, 2007. In support, he has referred to the following judgments: • Virat Enterprises vs. Commissioner of Central Excise, Chennai: 2001 (132) ELT 691 (Tri.-Chennai) â€....
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....nvoked to re-assessee the imported goods at a higher value which mandates that importer is to be intimated in writing the grounds for doubting the truth and accuracy of the value declared. Even though department was requested repeatedly, no grounds have been furnished to the appellant in writing. The show-cause notice dated 12.03.2008 did not set-out the grounds other than non-production of manufacturer's invoice/ pricelist. In support, he referred to the judgment in the case of Bayer India Ltd. Vs. CC, Mumbai: 2006 (198) ELT 240 (Tri.-Mum.). 9. Further, he has submitted that higher rate of discount is admissible in normal course of international trade. In support, he referred to the judgment in the case of Mirha Exports Pvt. Ltd. (supra), Commissioner of Customs, Bombay vs. Nippon Bearings (P) Ltd.: 1996 (82) ELT 3 (SC). He has further submitted that the entire transaction between the appellant and M/s. JQ Network and Cisco has been treated as bundled or packaged deal which were consolidated and single price has been agreed upon for the goods covered by the impugned Bills of Entry even though the same was covered by five separate invoices. Referring to the commentary on the GAT....
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....effect from 7.9.2001 so as to include exceptional circumstances i.e., cases involving abnormal discounts. Similarly South India Television Ltd. (supra) and JD Orgochem Ltd. (supra) also not applicable since the same goods were sold to Bharti Comtel at a higher price, where the discount extended was only 42% over list price. 12. He has submitted that the value declared for insurance purpose cannot be the basis for determination of assessable value since neither Section 14 of the Customs Act, 1962 nor Customs Valuation Rules, 1988 mandates the same. In the present case, subject goods were covered by the manufacturer's pricelist but what was contested by the Revenue is that the discount extended from the said price list to the appellant which were in the nature of abnormal discounts. The allegation of the appellant that prices of contemporaneous import of similar items were not taken into consideration is incorrect inasmuch as identical goods imported by Bharti Comtel from Cisco allowed discount at the rate of 42% from the price list of Cisco which has been submitted by the appellant in its letter dated 22.5.2007. Thus, in comparison with the discounts to the aforesaid imports of B....
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....68 19.05.2007 20,038 4 443979 21.05.2007 11,39,680 5 443980 21.05.2007 12,48,995 Total 36,11,624 16. Undisputed facts of the case are that as part of the Policy and directive from Telecom Regulatory of Government of India to all brand operators, including the appellant, are required to update the bandwidth from 512k to 2 Mbps to provide to all customers, for which it required various network equipment. These equipments are Cisco make and could be procured only through its authorised channel partner like M/s. JQ Networks Pte Singapore. The appellant had ordered it for their requirements in Karnataka State. On being asked by the department at the time of import for assessment purpose they filed corresponding purchase order placed on JQ Network dated 28.03.2007 No.BAL/KK/06-07/141 dated 28.3.2007 involving a total amount of USD 36,11,624 as shown in the Annexure to the said PO. These Annexures reflected discount from the Cisco unit price which are in the range of 52% - 91%. The correspondence entered between the Revenue and the appellant between 21.05.2007 to 19.06.2007 enclosed with paper-book reveal that the value declared by the appellant was ....
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....(2) Notwithstanding anything contained in sub-section (1) for sub-section (1A)], if the "[Board] is satisfied that it is necessary or expedient so to do it may, by notification in the Official Gazette, fix tariff values for any class of imported goods or export goods, having regard to the trend of value of such or like goods, and where any such tariff values are fixed, the duty shall be chargeable with reference to such tariff value. (3) For the purposes of this section- (a) "rate of exchange" means the rate of exchange - (i) determined by the 10[Board], or (ii) ascertained in such manner as the [Board] may direct, for the conversion of Indian currency into foreign currency or foreign currency into Indian currency, [(b) "foreign currency" and "Indian currency" have the meanings respectively assigned to them in clause (m) and clause (q) of section 2 of the Foreign Exchange Management Act, 1999 (42 of 1999);] Rule 4 of Customs Valuation Rules, 1988 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 i....
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....hat 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 9 of these rules and cost incurred by the seller in sales in which he and the buyer arc not related; (c) substitute values shall not be established under the provisions of clause (b) of this sub-rule. Rule 8 of Customs Valuation Rules, 1988 8. Residual method.- (1) Subject to the provisions of Rule 3 of these rules, where the value of imported goods cannot be determined under the provisions of any of the preceding rules, the value shall be determined using reasonable means consistent with the principles and general provisions of these rules and sub-section (1) of Section 14 of the Customs Act, 1962 (52 of 1962) and on the basis of data available in India. (2) No value shall be determined under the provisions of 8[this rule] on the basis of : (i) the selling price in India of the goods produced in India; (ii) a system which provides for the acceptance for customs purposes of the highest of the two alternative values; (ii....
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....nt, the learned Commissioner (A) observed as follows: "7.4 The appellant in their grounds of appeal has pleaded that the basis for doubting the transaction value has been duly rebutted and satisfied to the lower authority. This is factually incorrect as the assessee has not furnished documentary evidence such as purchase order between JQ Net Works and CISCO since they have stated that any pricing negotiated by JQ Net Works with CISCO will be their internal documents and not available to them. Further no specific reason for the abnormal discount as explained above has been explained by the appellant and the logic of discount for the particular quantity was also not explained. Further no documentary evidence has been produced by the appellant as to the involvement of CISCO in the entire transaction. The Bill of Entry furnished for clearances from Chennai are not for similar or identical goods and hence cannot be compared for the current imports. In view of all these facts, the various contentions raised by the appellant have not been substantiated and backed by documentary evidence. In the absence of specific documentary evidence. I have no option but to uphold the valuation....
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.... through their channel partner M/s. JQ Network; the discount from the Cisco list price has been initially extended to M/s. JQ Network, who in turn raised invoices on the appellant with the discounted price after adding their margin. The appellant during the course of hearing placed the following price chart: Bill of Entry No. & Date JQN's invoice No. and date raised on the appellant Basic Price of CISCO as per PO annexure (USD) Price charged by Cisco to JQN (INR) % of Basic price Discounted price of JQN to the appellant (INR) % of Basic price Price charged by JQN to the appellant (INR) 442566/ 19.05.2007 7590010430/ 14.05.2007 46,62,570 6,16,887 13.23 9,17,716 19.68 9,54,425 443979/ 21.05.2007 7590010488/ 16.05.2007 76,47,720 7,91,466 10.35 10,95,846 14.33 11,39,680 443980/ 21.05.2007 7590010459/ 16.05.2007 1,12,69,845 12,40,209 11 12,00,957 10.66 12,48,995 442568/ 19.05.2007 7590010431/ 14.05.2007 96,630 16,868 17.46 19,268 19.94 20,036 442567/ 19.05.2007 7590010436/ 15.05.2007 13,83,840 2,38,923 ....