2013 (7) TMI 406 - AT - Customs

Valuation of imported goods - Transaction Price - inclusion of Trade Discount - Held that - purpose of appointing a distributor is to sell the goods within the specified territory - If the goods are supplied to others, then the purpose of appointing a distributor itself will be defeated - Unrelated importers were getting a discount of 35% earlier - It logically follows that after the appointment of distributor, he would also eligible for the same discount earlier given to unrelated distributors - Assessing officer came to the conclusion that 35% discount from the price list given to the appellant is a normal trade discount and it is not a discriminatory discount available only to the appellant - Grant of territorial commission/discount cannot be arbitrary/or discriminatory - It does not affect the normal trade discount given to buyers in any way - Decided in favour of assessee.

Summary

Issues:
1. Valuation of imported goods based on discounts offered to related importer.
2. Determination of discriminatory discount and its impact on assessable value.
3. Comparison of discounts offered to related and unrelated buyers.
4. Interpretation of trade practices and standard discounts in distributorship agreements.

Issue 1: Valuation of imported goods based on discounts offered to related importer
The case involved a dispute regarding the valuation of imported office automation equipment by M/s Autonics Automation India Pvt. Ltd. from M/s Autonics Corporation, Korea. The assessing officer initially accepted a 35% discount from the list price offered by the foreign supplier to the appellant, considering it in line with trade practices. However, the Revenue challenged this valuation, leading to an appeal.

Issue 2: Determination of discriminatory discount and its impact on assessable value
The lower appellate authority found that the 35% discount provided to the appellant was discriminatory as unrelated buyers were no longer receiving the same discount after the appellant's appointment as a distributor. This led to a conclusion that the discount should be added to the transaction price to determine the assessable value, resulting in the appellant appealing against this decision.

Issue 3: Comparison of discounts offered to related and unrelated buyers
The appellant argued that the discount received was not extra or discriminatory, as they were granted the same benefit as unrelated buyers prior to their distributorship appointment. The provision for territory commission in the agreement indicated that standard discounts were available to all buyers, including unrelated ones. The appellant contended that denying the standard discount was illogical and baseless.

Issue 4: Interpretation of trade practices and standard discounts in distributorship agreements
Upon careful consideration of both parties' arguments, the tribunal emphasized that appointing a distributor implied selling goods within the specified territory, thus precluding sales to unrelated buyers. The tribunal reasoned that the distributor should logically be eligible for the same discount previously offered to unrelated buyers. The assessing officer's view that the 35% discount was a normal trade discount and not discriminatory was upheld. The tribunal found no merit in the lower appellate authority's conclusions and set aside the impugned order, restoring the decision of the adjudicating authority. The appeal was allowed, and the stay application was disposed of accordingly.