2017 (10) TMI 574 - AT - Customs

Valuation of imported goods - price variation clause - the department filed appeal before the Commissioner (Appeals), who vide the impugned order observed that the sale agreement indicated additional amounts and remanded the matter for reconsideration - Held that - Article 19 appears to be nothing but a standard clause so as to fix the liability for discharging taxes/government dues. We do not find anything in such clause so as to enter a finding that it is a condition of sale etc. The discussion or the observation made appears to be too flimsy. Further, such ground was not raised in show-cause notice or in the appeal filed by department and, therefore, cannot be a ground for remand of the matter - the impugned order directing remand is unsustainable - appeal allowed - decided in favor of appellant.

Summary

Issues:
Import of hydraulic components for wind industries, show-cause notice validity, transaction value acceptance, remand order by Commissioner (Appeals), comparison of prices, agreement clauses interpretation.

Analysis:
The case involved the import of hydraulic components by the appellants from a related foreign company for manufacturing hydraulic systems for wind industries. The Customs House in Chennai initiated a case based on a show-cause notice, leading to the original authority accepting the transaction value. However, the department appealed before the Commissioner (Appeals) who observed discrepancies in the sale agreement, indicating additional amounts. This discrepancy prompted a remand for reconsideration, which the appellant challenged before the Tribunal.

The appellant contended that the Commissioner (Appeals) made findings beyond the show-cause notice by alleging additional payments based on the sale agreement, which the appellant was not given a chance to defend. The appellant argued that the clause in the agreement merely fixed liability for tax dues and did not involve passing additional consideration. Furthermore, the department failed to raise this contention in their appeal before the Commissioner (Appeals). The appellant provided evidence that the price difference in imports was justified due to some components being supplied in assembled condition to an unrelated buyer, while the appellant imported in SKD/CKD condition, assembling them in India.

On the other hand, the department reiterated the findings of the impugned order, emphasizing that the adjudicating authority should have considered the agreement and that the original authority had erred in accepting the transaction value based on uniform pricing. The Commissioner (Appeals) remanded the matter for revisiting the order due to discrepancies in the comparative chart of prices.

Upon hearing both sides and examining the records, the Tribunal found that the grounds for appeal before the Commissioner (Appeals) focused on unexamined purchase orders, lack of detailed cost break-up discussions, and unclear pricing basis in the comparison chart. The Commissioner (Appeals) had remanded the matter based on an interpretation of a standard clause in the agreement, which the Tribunal deemed unsustainable. The Tribunal set aside the remand order and allowed the appeal with consequential reliefs, if any.

In conclusion, the Tribunal found the remand order unsustainable, highlighting discrepancies in the interpretation of agreement clauses and pricing comparisons. The Tribunal's decision favored the appellant by setting aside the remand order and allowing the appeal.