TaxTMI 
TaxTMI 
2004 (10) TMI 218
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....ents necessary for the manufacture of the said Trucks from VTC which in turn is a subsidiary of AB Volvo, Sweden. The appellants have also been importing parts for the spare market from M/s. Volvo Parts Corporation (VPC), Belgium, which is also a subsidiary of the AB Volvo. Since the exporter viz. VTC and VPC and the importer who is the appellant, are related within the meaning of the Customs Valuation Rules, 1988, the assessments were made on a provisional basis by the Special Valuation Branch of the Chennai Customs House. A Show Cause Notice was issued to the appellants alleging that they are importing identical goods from both VTC and VPC; that the prices charged by VTC is low as compared to the prices charged by VPC. Hence, there was a ....
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....e scope of the original Show Cause Notice wherein it was proposed that the goods imported from VTC and VPC are identical. The Commissioner (Appeals) has given a finding that Rule 5 will not be applicable, as the goods are not identical. The Commissioner (Appeals) ought to have set aside the OIO and allowed the appeal. However, she remanded the matter to the original authority to determine the assessable value under Rule 8 of the Customs Valuation Rules, 1988. The learned Advocate cited a large number of case laws wherein it is held that the appellate authority cannot bring in a point, which is not proposed in the Show Cause Notice. The CESTAT, in the case of Tata Johnson Controls Automotive v. CC, Mumbai [2004 (167) E.L.T. 93 (Tri.-Mumbai)]....
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....f the 'transaction value' concept on the Customs side, dual prices in respect of components imported as OE parts and as spare parts had to be accepted unless there was evidence to the contrary. To reject the transaction value', the onus is on the department to establish that price is not sole consideration for the sale/transaction. This would be consistent with the practice on the Central Excise side". It was urged that the relationship has affected the prices. The learned Advocate relied upon the Tribunal's decision in the case of CC, Chennai v. Hewlett Packard Ltd. [1999 (108) E.L.T. 221 (Tribunal)] wherein it was held that the mere fact that the seller and buyer are related, is not sufficient to reject the transa....
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....es encountered by them in the International Taxation matters have deliberately adopted a Transfer Pricing Policy which aims at having prices at arm's length. In other words, it is stated that they ensured that the price between their Groups is kept as far as possible equal to the prices between unrelated entities. It was seen that a Radiator, when it is sold as spares in India, will be priced approximately twice the price of the same item when it is sold as OE. Thus, there is a price variation between the OE and the spare parts. The variation depends upon very many factors and it is not the same for all the items. Moreover, the price variation between OE and the spare parts is different for different countries. For example, in China, th....
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....much more than the cost of the OE, one cannot enhance the value of the OE for assessment purposes. The appellants have stated that the commercial level at which the OE is imported is much higher than that of those of the spare parts. Moreover, the spare parts have to be kept for fairly a longer time. All these factors influenced the price of the spare parts. lt is also seen that simply for the reason that the appellant and the exporters are related persons, we cannot enhance the price of OE to the level of the Spare parts unless it has been shown that the relationship has influenced the price. It is for the department to do thorough investigation and come out with evidence to show that the relationship has influenced the price. The departme....