2017 (7) TMI 220 - AT - Customs

Valuation of imports - loading of 20% - related party transaction - joint venture - technical know-how - royalty - Held that - payments made to M/s. Lear Corporation, USA and to M/s. Hanil E. HWA Co. Ltd., Korea by the appellant, had not been disclosed and consequently not analysed, during the initial SVB investigation in 2001. There can then be no doubt that such a vital information of this nature has been suppressed from the investigating SVB. Such suppression cannot be attributed to inadvertence or negligence and has certainly been done for the purpose of avoiding proper enhancement of assessable value and thereby evading discharge of the correct Customs duty to the exchequer. The lower appellate authority is right in coming to the conclusion that It would therefore be absurd and incongruous to state that these payments do not relate to the supply of components under import. It would be only natural to assume that the technical know how that has been accrued by way of such payments would go in to each and every product that is imported in to India and thereby all the services that have been paid for above are liable to be added to the value of the products. Appeal dismissed - decided against appellant.

Issues Involved:
1. Jurisdiction of Review Order-in-Original and Order-in-Appeal.
2. Finality of the Order-in-Appeal dated 31.08.2001.
3. Legitimacy of demands for differential duty for the period 2001 to 2004.
4. Issuance of notice under Section 28 of the Customs Act, 1962.
5. Addition of ?84,80,744/- paid to M/s. Lear Corporation, USA.
6. Addition of ?4,59,67,972/- paid to M/s. Hanil E. HWA & Co. Ltd., Korea.
7. Provisional payment of 1% EDD for the review period from April 2004.

Detailed Analysis:

1. Jurisdiction of Review Order-in-Original and Order-in-Appeal:
The appellant contended that the Review Order-in-Original and Order-in-Appeal lacked jurisdiction as they sought to determine the value for the period 2001 to 2004, which had already been finalized by the Order-in-Original dated 26.02.2001 and set aside by the Order-in-Appeal dated 31.08.2001. The tribunal found that the Commissioner (Appeals) had only set aside the 20% loading on the invoice price but did not nullify other parts of the original order. Thus, the Special Valuation Branch (SVB) had the authority to review the matter after three years, leading to the Review Order-in-Original dated 30-03-2006.

2. Finality of the Order-in-Appeal dated 31.08.2001:
The appellant argued that since no appeal was filed against the Order-in-Appeal dated 31.08.2001, the issue was closed. However, the tribunal observed that the Commissioner (Appeals) did not annul the entire Order-in-Original but only the 20% loading on the invoice price. Consequently, other directives and conditions in the original order remained effective.

3. Legitimacy of Demands for Differential Duty for the Period 2001 to 2004:
The appellant claimed that the Review Order-in-Original dated 30-03-2006 could not address valuation for the period up to March 2004. The tribunal held that the review was legitimate as the original order's conditionalities and directions remained valid, and the review was necessary due to the discovery of suppressed information.

4. Issuance of Notice under Section 28 of the Customs Act, 1962:
The appellant noted that no notice under Section 28 of the Customs Act, 1962, had been issued until May 2017. The tribunal did not specifically address this issue in the judgment, focusing instead on the legitimacy of the review process and the findings of suppression of facts.

5. Addition of ?84,80,744/- Paid to M/s. Lear Corporation, USA:
The appellant argued that this amount should not be added as there were no imports from M/s. Lear Corporation, USA. The tribunal found that the payment was made to satisfy an obligation of the seller under the joint venture agreement and was related to the imported goods. Therefore, it was rightfully included in the assessable value.

6. Addition of ?4,59,67,972/- Paid to M/s. Hanil E. HWA & Co. Ltd., Korea:
The appellant contended that this amount should not be added as the imports were not manufactured by Hanil E. HWA & Co. Ltd., Korea. The tribunal concluded that the payment for technical assistance and engineering fees was related to the imported goods and should be added to the assessable value. The tribunal noted that these payments were not disclosed during the initial SVB investigation, constituting suppression of facts.

7. Provisional Payment of 1% EDD for the Review Period from April 2004:
The appellant highlighted that the review Order-in-Original dated 30-03-2006 did not finalize the value for the review period from April 2004 but directed provisional payment of 1% EDD. The tribunal upheld the review order, emphasizing the need for provisional assessment due to the ongoing investigation and the discovery of suppressed information.

Conclusion:
The tribunal dismissed the appeal, affirming the findings and conclusions of the lower appellate authority. It held that the additions to the assessable value and the invocation of the extended period were justified due to the willful suppression of facts by the appellant. The tribunal emphasized the importance of full disclosure in customs valuation and upheld the legitimacy of the review process.

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