2017 (11) TMI 49 - AT - Customs

High seas sale - import of Stressometer Flatness Measurement and MC 40 R Millmate Roll Force Measurement for Hitachi Mill - Original Authority rejected the High Sea Sale only on the ground that the agreement was dated and signed on 23/12/2011 on a stamp paper which was purchased on 29/12/2011 - Held that - We are in agreement with the Original Authority that submission of such document before the Customs Authorities vitiates the claim of the importer. The plea that they have other supporting documents to establish High Sea Sale transaction becomes seriously jeopardized in the face of such untenable document filed before the authorities. Accordingly, we hold that the Original Authority has correctly rejecting such agreement. Discount of 20% - Held that - the sale value between these two companies of the same group cannot be accepted as transaction value for Customs duty unless the relationship is examined and non-influenced nature of such transaction is brought out by evidence. In the present case, admittedly the transaction is between these two related units of ABB and the Original Authority recorded that such special discount was not recognized in the SVB order and the importer also did not submit any explanation to justify such discount. We find no reason to interfere with such finding - discount correctly denied. Penalties - Held that - The bill of entry claimed High Sea Sale. The support for High Sea Sale is a document which was found to be mis-declared - confiscation and penalty upheld. Appeal dismissed - decided against appellant.

Summary

Issues:
1. Validity of High Sea Sale transaction between two companies.
2. Admissibility of discounts claimed for valuation.
3. Imposition of penalties under Sections 112 and 114AA of the Customs Act, 1962.

Analysis:
1. The case involved two appeals against an order passed by the Commissioner of Customs, Airport, New Delhi, regarding the validity of a High Sea Sale transaction. The goods in question were imported by M/s ABB Limited and sold on a High Sea Sale basis to M/s Bhushan Steel Ltd. The impugned order held that the High Sea Sale was not valid, leading to confiscation of the goods with an option to redeem on payment of a fine. Penalties were imposed on various parties, including M/s ABB Ltd. and its Business Controller. The appellants contended that the High Sea Sale was supported by documents like purchase orders, but the Original Authority rejected the transaction due to discrepancies in the agreement dates. The Tribunal agreed with the Original Authority's decision, stating that the agreement's authenticity was questionable, thereby upholding the rejection of the High Sea Sale transaction.

2. The appellants also challenged the rejection of a 20% discount claimed for valuation. The Original Authority disallowed the discount, citing lack of justification and the special relationship between M/s ABB Ltd. India and M/s ABB Ltd. Sweden. As both companies were part of the same group, the transaction required scrutiny to ensure proper valuation. The Tribunal concurred with the Original Authority's findings, noting the absence of justification for the discount and the failure to recognize it in the Special Valuation Branch (SVB) order. Consequently, the Tribunal upheld the rejection of the discount, emphasizing the need for evidence to establish the non-influenced nature of transactions between related entities.

3. The penalties imposed under Sections 112 and 114AA of the Customs Act, 1962 were contested by the appellants, who argued that there was no intentional violation to evade duty. They claimed that the bill of entry contained accurate details and no mis-declaration. However, the Tribunal disagreed, stating that the submission of a mis-declared document to support the High Sea Sale undermined the appellants' claims. Additionally, the second appellant's involvement in signing the unacceptable and pre-dated agreement further justified the penalties imposed. Ultimately, the Tribunal found no grounds to interfere with the impugned orders and rejected the appeals, affirming the decisions of the Original Authority regarding the High Sea Sale transaction, discount rejection, and penalty imposition.