2003 (8) TMI 332 - AT - Customs

Summary

Issues:
Challenge against the order enhancing the declared value of Nylon 66 yarn.

Analysis:
The appeal questions the justification of enhancing the declared value of Nylon 66 yarn to US $ 5.8 per Kg under Rule 6 of Customs Valuation Rules, 1988. The case involves the import of Nylon 66 yarn by the appellant for manufacturing tyre cord fabric. The appellant argues that even if the buyer and seller were related before 1-1-2001, the transaction value should be accepted if the relationship did not influence the price. Post-1-1-2000, with no relationship between the parties, the appellant contends that the transaction value should have been accepted. The appellant challenges the application of Rule 6 by the authorities and asserts that the parameters for comparing transaction values of similar goods were not met. The appellant argues that the goods imported by another entity were not similar to those imported for tyre cord fabric production. The appellant also questions the comparison of transaction values from different time periods and quantities.

The appellant further argues that the transactions were not at the same commercial level or quantity, citing previous Tribunal decisions to support their stance. They highlight the import of Nylon 66 yarn by a non-related entity during 1999-2001 at a lower price, emphasizing that price variations for bulk buyers are common commercial practices. The appellant contends that the rejection of the transaction value post-1-1-2000, without a relationship between the parties, was unjustified, citing relevant Supreme Court decisions.

In response, the Department contends that the relationship between the parties justified the rejection of the transaction value and the subsequent enhancement. However, the Tribunal finds merit in the appellant's arguments. It emphasizes that even in related party transactions, the transaction value should be accepted if the relationship did not influence the price, as per Rule 4(3)(a) of Customs Valuation Rules. The Tribunal agrees with the appellant's assertion that the import by another entity was not comparable due to different denier specifications. The Tribunal notes the lack of justification for rejecting the transaction value based on the end-use of the products. Consequently, the Tribunal sets aside the order enhancing the transaction value, allowing the appeal.

In conclusion, the Tribunal ruled in favor of the appellant, finding that the Revenue failed to justify the rejection of the declared transaction value and subsequent enhancement. The Tribunal highlighted the importance of considering the relationship between parties and the comparability of imported goods when determining transaction values under Customs Valuation Rules.