2016 (6) TMI 395 - AT - Customs

Valuation - 100% EOU - Includability - lump-sum fees for technical assistance and licence agreement - supplier and importer are related to each other - Held that - the respondent is 100% EOU and their import is not chargeable to custom duty therefore even if there is any variations in the valuation, there will be no effect of custom duty payment. We therefore without going into merit of the issue that whether lump-sum technical assistance fees is includible in the assessable value or otherwise, we find that since no custom duty involved, in the present case due to respondent being 100% EOU, the Revenue s appeal does not survive. We therefore without giving any observation on the issue of valuation, dismiss the appeal of the Revenue only on the point that no custom duty demand is involved. - Decided against the Revenue

Summary

Issues:
- Appeal against Order-in-Appeal upholding Order-in-Original on inclusion of technical assistance fees in assessable value for customs valuation.

Analysis:
The case involved an appeal by the Revenue against an Order-in-Appeal upholding the Order-in-Original, which rejected the Revenue's appeal regarding the inclusion of technical assistance fees in the assessable value for customs valuation. The appellant, a 100% EOU associated with a Japanese company, imported goods subject to valuation under the Customs Act and Valuation Rules. The adjudicating authority accepted the invoice value under Rule 4 of CVR, 1988, as the importer had no duty liability due to being a 100% EOU. The Commissioner(Appeals) upheld the Order-in-Original but provided detailed findings that the technical assistance fees were not includible in the assessable value. The Revenue contended that the fees should be included as the supplier and importer were related, citing relevant judgments. The respondent argued that as a 100% EOU, no customs duty was payable on imports, thus inclusion of fees would not impact revenue. The Tribunal noted that as no customs duty was involved for a 100% EOU, the appeal was dismissed without delving into the merit of the valuation issue.

The key contention revolved around whether the lump-sum technical assistance fees paid by the importer should be included in the assessable value for customs valuation. The Revenue argued for inclusion based on the relationship between the supplier and importer, supported by legal precedents. In contrast, the respondent emphasized that as a 100% EOU, no customs duty was payable on imports, rendering the inclusion of fees irrelevant for revenue gain. The Tribunal acknowledged the parties' submissions but focused on the lack of customs duty implications for a 100% EOU, leading to the dismissal of the Revenue's appeal solely on this ground.

The Tribunal's decision hinged on the fact that the respondent being a 100% EOU meant no customs duty was applicable to their imports. Consequently, any variations in valuation, including the inclusion of technical assistance fees, would not impact customs duty payment. As a result, the Tribunal dismissed the Revenue's appeal without addressing the valuation issue, as the absence of customs duty liability for a 100% EOU rendered the appeal moot in terms of revenue implications. The decision highlighted the specific circumstances of the case, where the nature of the importer as a 100% EOU significantly influenced the outcome of the appeal, emphasizing the impact of customs duty exemptions on valuation considerations.