2009 (3) TMI 756 - AT - Customs

Summary

Issues:

1. Determination of related party status between the appellant and the supplier for the purpose of loading the value of imported goods.
2. Addition of technical know-how fee to the value of capital goods and machinery imported by the appellant.

Analysis:

Issue 1: Determination of Related Party Status:
The appellants, engaged in manufacturing 'Automatic Roller Doors,' had an agreement with M/s. Gliderol India Ltd. for technical assistance and imported goods from M/s. Gliderol International Pvt. Ltd., Australia. The Deputy Commissioner considered the appellant and the supplier as related parties and proposed a 20% loading on the value of imports for customs duty assessment. However, the Commissioner (A) overturned this decision, stating that the supplier and the appellant were not related parties. The Tribunal observed that the sole issue for consideration was the related party status between the appellant and the supplier. Notably, there was no prior proposal to add the technical know-how fee to the imported goods value, and the importers were not informed of such an addition. Consequently, the Tribunal set aside the Commissioner's decision, ruling in favor of the appellant.

Issue 2: Addition of Technical Know-How Fee:
The Commissioner (A) had ordered the inclusion of the technical know-how fee in the value of capital goods and machinery imported by the appellant, despite no prior notice or proposal regarding this addition. The Tribunal found this decision unsustainable as the importers were not given an opportunity to address or contest the inclusion of the technical know-how fee. Therefore, the Tribunal overturned the Commissioner's ruling, allowing the appeal in favor of the appellant.

In conclusion, the Appellate Tribunal CESTAT, Chennai, in the absence of representation from the appellants, considered the related party status between the appellant and the supplier as the primary issue. The Tribunal found that the addition of the technical know-how fee was not justified due to lack of prior notice to the importers. Consequently, the Tribunal set aside the Commissioner's decision and ruled in favor of the appellant, emphasizing the importance of procedural fairness and adherence to due process in customs duty assessments.