2011 (3) TMI 222 - AT - Customs

Provisional assessments - Undervaluation - importer and the foreign supplier were related persons in terms of Rule 2 (2) of the Customs Valuation Rules 1988, the former being a 100% subsidiary of the latter - in the present application, there is no explanation as to why these documents could not be produced when requisitioned by the Dy., Commissioner (GVC) - it is for the original authority to examine the adequacy of evidence for ruling out the loading of value as also to reconsider the relationship between the assessee and the supplier in terms of Rule 2(2) of the Customs Valuation Rules - It is open to that authority to examine whether such relationship influenced the price of the goods - Decided in the favour of the assessee

Issues Involved:
1. Loading of value proposed by the Deputy Commissioner of Customs (GATT Valuation Cell) for imported goods.
2. Relationship between the importer and the foreign supplier under Rule 2(2) of the Customs Valuation Rules, 1988.
3. Adequacy and consideration of documentary evidence for valuation.
4. Compliance with principles of natural justice.

Issue-wise Detailed Analysis:

1. Loading of Value Proposed by the Deputy Commissioner of Customs (GATT Valuation Cell):

The appeal was filed against the appellate Commissioner's order affirming the loading of value proposed by the Deputy Commissioner of Customs (GATT Valuation Cell) for goods imported by the appellant from their holding company in Germany. The Deputy Commissioner finalized the matter based on available records and relevant provisions of the Customs Valuation Rules. The Deputy Commissioner concluded that the importer and the foreign supplier were related persons under Rule 2(2) of the Customs Valuation Rules, 1988, and ordered a 50% loading on the declared invoice price due to insufficient documentary evidence to demonstrate the true transaction value.

2. Relationship Between the Importer and the Foreign Supplier Under Rule 2(2) of the Customs Valuation Rules, 1988:

The Deputy Commissioner held that the importer and the foreign supplier were related persons as the importer was a 100% subsidiary of the supplier. The appellant contended that the relationship did not influence the price of the goods and provided additional grounds and documents to support this claim. The appellant argued that the price charged by the supplier was based on a printed price list and consistent with prices charged to other subsidiaries in different countries. The Tribunal's decision in Modi Senator (I) Pvt. Ltd. Vs. C.C. (Imports & General), New Delhi, was cited to support the argument that being a 100% subsidiary alone does not establish that the relationship influenced the price.

3. Adequacy and Consideration of Documentary Evidence for Valuation:

The appellant provided various documents, including the Memorandum and Articles of Association, price lists, balance sheets, and statements regarding imports. However, the Deputy Commissioner found the price list submitted by the importer inadequate as it was in the form of photocopies of loose sheets without currency details or clarity on whether it was the supplier's or importer's price list. The appellant later furnished additional documents and certificates to support their claim that the relationship did not influence the price. The Tribunal noted that these materials, though in existence at the material time, were not produced before the assessing authority.

4. Compliance with Principles of Natural Justice:

The appellant claimed that they were not offered sufficient opportunity to explain their case, alleging a denial of natural justice. The Tribunal found this grievance ill-founded, noting that the detailed order by the Deputy Commissioner disclosed the indifferent approach of the assessee despite repeated opportunities for document production and personal hearings. However, the Tribunal acknowledged the necessity of having all requisite documentary materials available to the officer in GVC dealing with valuation disputes and allowed the amendment application to include additional grounds and documents.

Conclusion:

The Tribunal set aside the orders of the lower authorities and remanded the case to the original authority for a fresh order on the valuation issue in accordance with law. The original authority was directed to reconsider the relationship between the assessee and the supplier, examine whether the relationship influenced the price of the goods, and consider the additional materials and relevant case law provided by the appellant. The Tribunal emphasized the burden on the Revenue to establish any influence of the relationship on the price and instructed that the assessee be given a reasonable opportunity for a personal hearing.

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