2008 (10) TMI 77 - AAR - Customs

Joint venture of applicant & Hong Kong company applicant claim its status as of non-resident - from a combined reading of Section 28 E (h) of the Customs Act and Sections 2(30), 2(31) and 6(3) of Income Tax Act, it is clear that a company registered outside India would be considered to be a resident of India, if during the previous year, control and management of its affair is situated wholly in India - proposed joint venture is not an eligible applicant u/s 28 E(c)(i)(b) of the Customs Act

Summary

Issues Involved:
1. Maintainability of the application under Section 28-H of the Customs Act, 1962.
2. Whether the proposed import of components for manufacturing Torch Light would attract Anti-Dumping Duty under Notification No. 125/2003-Cus.
3. Definition and existence of a "joint venture" as per Section 28-E(c) of the Customs Act.
4. Non-resident status of Dynamic Exports (P) Ltd.

Detailed Analysis:

1. Maintainability of the Application:
The Department contended that the application was not maintainable under the proviso to Section 28(I)(2) since the issue of anti-dumping duty on past imports by the applicant was pending adjudication. However, the Authority found no merit in this contention, stating that the question raised in the application was different from the one pending adjudication. The pending issue involved allegations of mis-declaration to evade duty, whereas the application sought a legal determination on the applicability of anti-dumping duty on proposed imports.

2. Anti-Dumping Duty under Notification No. 125/2003-Cus:
The applicant sought clarification on whether the import of four specific parts of a flashlight would attract anti-dumping duty under the said notification. The Department argued that past imports made by the applicant were not a proposed activity but an ongoing one. The Authority did not delve into this argument due to the conclusion that the joint venture claim was unsubstantiated.

3. Definition and Existence of a "Joint Venture":
The crux of the matter was whether the applicant's arrangement with Dynamic Exports (P) Ltd. constituted a "joint venture" under Section 28-E(c). The Authority examined the Memorandum of Understanding (MOU) and found it too vague and ambiguous to constitute a contractual arrangement for a joint venture. The MOU lacked clear terms on joint control and substantial interest by the non-resident partner. Clauses regarding investment and profit-sharing were indefinite, indicating that further negotiations were required. Thus, the MOU did not meet the statutory definition of a joint venture.

4. Non-Resident Status of Dynamic Exports (P) Ltd.:
One member, Chitra Saha, raised an additional point regarding the non-resident status of Dynamic Exports (P) Ltd. She noted that the sole director, Rajesh Aggarwal, controlled and managed the company, and his residency status was crucial. The applicant failed to produce complete passport details to establish Aggarwal's non-resident status. Consequently, it was concluded that Dynamic Exports (P) Ltd. could not be considered a non-resident, further disqualifying the joint venture claim.

Conclusion:
The application was rejected under Section 28 I (2) of the Customs Act, 1962, as the applicant failed to substantiate the existence of a joint venture with a non-resident entity. Additionally, the non-resident status of Dynamic Exports (P) Ltd. was not satisfactorily established, providing another ground for rejection.