2014 (6) TMI 265 - AT - Customs

Valuation of goods - whether the transaction price can be accepted for assessment of customs duty inasmuch as the supplier and buyer are related, and whether the cost plus method adopted for determination of price can be accepted or not - Held that - On the basis of evidence before him, the assessing officer has come to the conclusion that VIO price adopted by the appellant are based on cost plus method and the price is sole consideration for sale. Accordingly, he has ordered for assessment of the goods on the basis of the invoice price declared by the appellant. Thus, the order of the assessing officer in the instant case has been done in accordance with law and after appreciating the evidence available on record with regard to costing - The cost plus method takes into account raw materials cost, manufacturing cost, administrative and sales overhead, packing cost, dealer s cost, overhead and profit based on annual forecast. Thus the price declared by the appellant based on cost plus method is also supported by the documentary evidence by way of original invoices and other related documents. Therefore, we do not find any infirmity in the order passed by the assessing authority in the matter - there is no allegation of any flow-back or payment of any additional consideration by the appellant to the foreign supplier. In the absence of such positive evidence adduced by the Revenue, the argument that the transaction value cannot be accepted lacks merit and the same is rejected - Decided in favour of assessee.

Summary

Issues:
1. Assessment of customs duty based on transaction price between related parties.
2. Acceptance of cost plus method for determination of price.

Analysis:
1. The appeal questioned the acceptance of transaction price for customs duty assessment between related parties, M/s. Rehau Polymers Pvt. Ltd. and M/s. Rehau GmbH, Germany. The Tribunal had previously remanded the case for reconsideration due to the failure of authorities to consider submissions in accordance with Customs Valuation Rules. The adjudicating authority, upon reconsideration, found that the transaction value was not influenced by the relationship, supporting the use of the cost plus method. However, the lower appellate authority disagreed, noting a significant price difference with third-party imports and raised concerns about the transaction value. The Tribunal, after considering arguments, upheld the transaction value based on the cost plus method, citing lack of evidence of pricing influence due to the relationship.

2. The appellant argued that the cost-based method included all relevant costs without additional payments to the foreign supplier, negating the need for adjustments under Customs Valuation Rules. They relied on Tribunal decisions supporting acceptance of transaction values in similar cases. The Revenue, represented by the Addl. Commissioner, supported the lower authorities' findings. The Tribunal analyzed the details provided by both sides and found the assessing officer's consideration of the price difference and subsequent adoption of the cost plus method to be in accordance with the law. Documentary evidence supported the appellant's pricing method, including original invoices and related documents. Citing precedents, the Tribunal rejected the Revenue's argument against accepting the transaction value, emphasizing the lack of evidence of additional consideration or pricing influence, leading to the appeal's allowance with consequential relief.

In conclusion, the Tribunal set aside the impugned order and allowed the appeal, highlighting the adherence to the cost plus method for determining the transaction value in customs duty assessment between related parties, emphasizing the importance of documentary evidence and lack of proof of pricing influence.