2016 (7) TMI 1197 - AT - Customs

Valuation - loading of value at the rate of 2% on the CIF value to arrive at the assessable value of imported goods purchase by the appellant on High Seas Sale basis from their group company - Held that - t though there is a guideline in the Public Notice No. 145/2002 dt. 3.12.2002 for adding the High Sea Sales service charges at the rate of 2% but in the present case there is a legal contract between the appellant and the High Sea Seller for addition of ₹ 500/- towards High Seas Sales Commission. We find that neither the adjudicating authority nor the Ld. Commissioner (Appeals) have given any concrete evidence that why the actual High Seas Sales Commission of ₹ 500/- is not correct. We are of the view that the 2% service charges can only be added if there is no basis of actual high seas sales commission/service charges. In the present case, there are sufficient materials to support the high seas sales commission of ₹ 500/- added by the appellant in the invoice value. Commissioner (Appeals) has loaded 2% only on the basis of his opinion and not on any evidence - Demand set aside - Decided in favor of assessee.

Summary

Issues:
- Loading of value at the rate of 2% on the CIF value for imported goods purchased on High Seas Sale basis.
- Justification of loading 2% of the CIF value as High Seas Sales Commission.
- Interpretation of Public Notice No. 145/2002 regarding High Seas Sales charges.
- Comparison with previous Tribunal decisions on High Seas Sales charges.

Analysis:
1. The appeal challenged the loading of value at the rate of 2% on the CIF value for imported goods purchased on High Seas Sale basis. The appellant argued that the actual High Seas Sales Commission of ?500 added by them was justified based on a legal contract with the High Sea Seller. The Commissioner (Appeals) had ordered to load only 2% in accordance with Public Notice No. 145/2002, but the Tribunal found that there was no concrete evidence to reject the actual High Seas Sales Commission added by the appellant. The Tribunal emphasized that 2% service charges could only be added if there was no basis for actual commission, and since there were sufficient materials supporting the ?500 commission, the loading of 2% was deemed unjustified. The Tribunal also referred to a previous judgment rejecting the addition of 3% or 2% as High Seas Sales charges, further supporting their decision to set aside the impugned order.

2. The interpretation of Public Notice No. 145/2002 regarding High Seas Sales charges was a crucial aspect of the case. While the Public Notice suggested adding 2% for High Seas Sales service charges, the Tribunal emphasized the importance of actual contractual agreements between parties. In this case, the legal contract between the appellant and the High Sea Seller for a specific commission amount prevailed over the general guideline of 2% mentioned in the Public Notice. The Tribunal highlighted that the Public Notice was procedural and not mandatory, and the actual contractual terms should be given precedence.

3. The comparison with previous Tribunal decisions on High Seas Sales charges provided additional support for the appellant's argument. The Tribunal cited a previous case where it was held that only the actual amount charged for transferring goods on a high sea sale basis should be added, rejecting the notion of adding 3% or 2% as High Seas Sales charges. By applying the ratio of this previous judgment to the current case, the Tribunal found that the loading of 2% by the Commissioner (Appeals) was not sustainable and, therefore, set aside the impugned order, allowing the appeal.

This detailed analysis of the judgment highlights the key issues, arguments presented by both parties, the Tribunal's reasoning, and the legal interpretations that led to the final decision in favor of the appellant.