AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2026 (4) TMI 1848
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.... the appellant from its parent company, the matter was referred to the Special Valuation Branch [SVB] of the Customs House to determine the value. It must be pointed out that as a unit located in STPI, the appellant was not liable to pay any duty at all unless the imported goods were taken out of the STPI. The determination of the value by the SVB was, therefore, more of an academic interest. On 06.01.2014, the Assistant Commissioner passed the order rejecting the transaction value of the appellant as the assessable value. 4. Aggrieved, the appellant filed an appeal before the Commissioner (Appeals). By order dated 28.04.2015, the Commissioner (Appeals) remanded the matter to the Assistant Commissioner. On 09.05.2017 the Assistant Commissioner passed an order in the de novo proceedings which the appellant assailed before the Commissioner (Appeals). The Commissioner (Appeals) upheld the order of the Assistant Commissioner and, therefore, the appellant filed an appeal before this Tribunal. By order dated 23.03.2021, this Tribunal remanded the matter to the Commissioner (Appeals) for de novo adjudication. The Commissioner (Appeals), thereafter, passed the impugned order upholding t....
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....me commercial invoice on which third parties had sold the goods to Cadence, USA. The appellant has submitted three certificates 29.06.2006, 23.05.2013 and 08.05.2017 from Cadence, USA regarding the valuation. In the certificate dated 26.09.2006 Cadence, USA stated that palladium computer system was supplied to the appellant on cost + representative profit. The certificate dated 23.05.2013 certified that the goods supplied in March 2006 was submitted at an arm's length price to the appellant. The certificate dated 08.05.2017 specifies that Cadence USA had procured computer parts, spares and accessories, IT equipment and office stationery from associated subsidiary companies and supplied to Cadence India(appellant) for internal use and consumption and no profit margin was added. (ix) Without going into the merits of the certificates produced, the SVB proceedings were initiated solely on the basis that Cadence USA and the appellant were related parties. (x) The appellant is an STPI Unit and was anywhere exempted from the customs duty and, therefore, the SVB proceedings are liable to be dropped. (xi) The department has imposed arbitrary values. Submissions....
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....d to decide it. The main palladium system was imported in March, 2006 before the amendment of the section 14 and the Customs Valuation Rules, 2007 were notified. Other goods were imported after 2007. 14. The first contention of the appellant is that the parent company Cadence, USA and the appellant have no interest in the business of each other. It is undisputed that the appellant is a fully owned subsidiary of its parent company. Therefore, it is difficult to say that the parent company had no interest on the appellant business. It is also difficult to say that the appellant had no interest in the business of its parent company because it as to show profits to its parent company. 15. The question of mutuality of interest in the definition of related persons has been decided in a central excise case by the Supreme Court in the case of Commissioner of Central Excise, Hyderabad vs. Detergent India Limited [2015 (318) ELT 559 (SC)] The relevant portion of this judgment is below: "12. When we come to the definition of "related person" the legislature has used a well known technique. It first employs the expression "means" and states that persons who are associated with t....
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....ntral Excise, Calcutta [1998 (99) ELT 202 (SC).] the Supreme Court held as follows: "15. In the present case, we do find that the authorities of and the Appellate Tribunal did address themselves to the basic question as to the shareholdings of both, the assessee and the buyer, inasmuch as they found that the Managing Director of both the companies was the same and one more director was common. It was also found that the shares of both the companies were held by the members of the 'Sharma family' but that is quite a vague expression and, therefore, in our view, the Appellate Tribunal was partly right in giving the direction to ascertain the break-up of the shares of each member of the family in the two companies. To lift the veil the actual shareholding of both the companies and the persons in control of the management of both the companies needed to be ascertained to consider the identity of interest of both the companies in the business of each other. No presumption of such mutuality of interest in the business of each other could have been drawn without the factual data. 18. It is trite to say that the subsidiary company has an interest in running the business....
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....e importer demonstrates that the declared value of the goods being valued, closely approximate to one of the following values ascertained on or about the same time. (i) Transaction value of identical goods or similar goods in sales to unrelated buyers in India. (ii) Deductive value of identical goods or similar goods (iii) Computed value of identical goods or similar goods. 22. As far as the Palladium computer is concerned, it is undisputed that similar systems were not sold by Cadence USA to anyone else in India. Having found that the appellant and Cadence, USA were related persons, we now proceed to decide the question of re-determination of the value of the goods by the Assistant Commissioner and upheld in the impugned order. There are, in all two types of goods: a) Palladium system imported in 2006 b) Other goods imported after 2007 23. The documents available before us to determine the value are the Cost Certificates issued by Cadence, USA. As per the cost certificate dated 26.9.2006, the system 29HT9P9 with 18 29HTIOKIT & 2 29HTSIMACCEL were sold to the appellant after charging a fee to ensure recovery of the total costs of t....
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....nce Inc.' 31. Clearly, the commercial invoices were issued only for the purpose of Customs and in respect of these goods, the value was declared without taking into account any profit margin. The profitability of Cadence USA was considered by the Assistant Commissioner for the entire period of dispute 2006 to 2016 as per the profitability statement supplied by Cadence, USA. Reckoning the average profitability, he ruled that 14.2% should be added to the prices indicated in the invoices to arrive at arm's length price. This decision was upheld by the Commissioner (Appeals) through the impugned order. 32. We find no infirmity in this decision. According to Cadence USA itself, the commercial invoices were not meant for sale but were issued only for the purpose of customs and that those invoices covered the costs but had not included any profit margin. 33. Needles to say that had the goods been sold to an unrelated person, a profit margin would have definitely been added. The profit margin added was calculated based on the average profit during the period provided by Cadence USA, itself. The fact that Cadence, USA got the goods shipped directly from its suppliers to the appella....