2008 (9) TMI 147 - AT - Customs

Valuation - allegation that importer and supplier are related person - revenue s contention that importer should submit contemporary prices of identical goods is not correct as once it has been held that two persons are not related, it is the department who has to produce evidence of contemporary import to load the price - Loading can be done only on the basis of contemporary price evidence available with Revenue and no across the board uniform loading can be done on all products

Summary

Issues:
1. Valuation of imported goods under Customs Valuation Rules, 1988.
2. Determination of related persons under Rule 2(2) of Customs Valuation Rules, 1988.
3. Proportionate loading of invoice value based on comparison of prices.
4. Legality of loading percentages and brand fees.
5. Compliance with principles of natural justice in adjudication process.

Issue 1: Valuation of imported goods under Customs Valuation Rules, 1988
The case involved the valuation of imported goods by M/s. F.S.P. (India) Pvt. Ltd. from related parties, FSP Holding A.G, Switzerland, and FSP S.A. Luxembourg. The dispute arose when the GATT Valuation Cell loaded the invoice prices of the imported products by 34.8% based on comparisons with other importers. The Commissioner (Appeals) set aside this loading, emphasizing the need for a legal and speaking order based on contemporary evidence. The Appellate Tribunal upheld the remand order, directing the adjudicating authority to determine the assessable value by considering contemporary imports.

Issue 2: Determination of related persons under Rule 2(2) of Customs Valuation Rules, 1988
The adjudicating authority considered the supplier of the imported goods as related persons due to their 100% equity holding in the importer. The Commissioner (Appeals) disagreed with this assessment, citing the decision in the case of Maruti Udyog Ltd. and emphasizing that the buyer and supplier cannot be considered related under Rule 2(2) of the Valuation Rules, 1988. The Appellate Tribunal upheld this finding and clarified that the importer and supplier being related was not established.

Issue 3: Proportionate loading of invoice value based on comparison of prices
The loading of invoice value by the adjudicating authority was challenged as being inconsistent and not based on a proper comparison of prices. The Appellate Tribunal agreed that loading should be done based on contemporary price evidence available with Revenue and not through uniform loading across all products. The Tribunal remanded the matter to determine fresh loading of prices for specific parts with contemporary evidence after providing an opportunity of hearing to the respondents.

Issue 4: Legality of loading percentages and brand fees
The Commissioner (Appeals) found the loading percentages and brand fees added by the lower authority to be illogical and contrary to Customs Valuation Rules, 1988. The Appellate Tribunal concurred with this observation, emphasizing the need for a legal and proper order in compliance with the rules. The Tribunal allowed the appeal by way of remand to rectify the loading percentages and brand fees based on contemporary evidence.

Issue 5: Compliance with principles of natural justice in adjudication process
The Appellate Tribunal noted that the principles of natural justice were not fully observed in the adjudication process, leading to errors in the loading of invoice values and application of percentages. The Tribunal directed a remand to ensure a fair and just determination of the assessable value in accordance with the law and principles of equity.

In conclusion, the judgment focused on the correct valuation of imported goods, determination of related persons, proportionate loading of invoice values, legality of loading percentages and brand fees, and the importance of complying with principles of natural justice in the adjudication process. The Appellate Tribunal emphasized the need for a legal and speaking order based on contemporary evidence and provided specific directions for a fair reassessment of the assessable value.