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2016 (9) TMI 171 - AT - Customs


Issues:
- Addition of commission as per Customs Valuation Rules, 1988
- Relationship between appellant and foreign supplier
- Inclusion of commission in invoice value

Analysis:
1. Addition of Commission: The appellant, a distributor of foreign supplier goods, appealed against the addition of commission as specified in the price list under Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988. The appellant received commissions on imported products, which were not included in the price list. The supplier offered a special price to the appellant, who was a 100% subsidiary of the supplier. However, the commission received by the appellant was not disclosed in the price list. The Tribunal upheld the decision to add the commission to the declared price, as per the Customs Valuation Rules.

2. Relationship between Appellant and Supplier: The appellant acted as both a commission agent for booking orders and an importer/dealer of the supplier's products. The appellant received a fixed commission that included the cost of free services provided to third parties importing the products in India. The supplier had the right to change the discount or commission rates in the agreement. The appellant argued that the commission was earned when booking orders, while the discount was applied when importing goods. The Tribunal noted the special treatment given to the appellant as a subsidiary of the supplier, leading to the inclusion of the commission in the invoice value.

3. Inclusion of Commission in Invoice Value: The Tribunal emphasized that the commission, termed as discount, was to be added to the invoice value as per Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988. The commission received by the appellant from the supplier for orders placed by other buyers in India was deemed includible in the invoice value. The Tribunal dismissed the appeal, citing the failure of the appellant to provide details of the commission received from the supplier. The decision highlighted the related nature of the appellant and the supplier, leading to the inclusion of the commission in the valuation process.

In conclusion, the judgment affirmed the addition of commission to the invoice value based on the relationship between the appellant and the foreign supplier, as per the Customs Valuation Rules, 1988. The decision underscored the importance of disclosing all relevant commissions in the valuation of imported goods, especially in cases involving related parties and special pricing arrangements.

 

 

 

 

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