2008 (9) TMI 366 - AT - Customs

Valuation - The appellant is a 100% EOU. They are manufacturing probes which are component parts of ultra sound scanners. They are permitted to clear their goods to DTA area. - They cleared some quantity of probes into DTA to their own service centre. The subject matter of the dispute is the valuation adopted. - In this case, the value adopted is equal to the FOB value of the goods exported by the party to their associate units and there is a SVB Circular indicating that such price has not been influenced by the relationship between the buyers and the seller. - in terms of Customs Valuation Rules, the domestic selling price cannot be the basis for valuation of goods under the Customs Act and Customs Valuation Rules. Further suppression of facts is not proved as goods were cleared after obtaining permission of department so extended period not invocable

Summary

Issues:
Valuation of goods for clearance to the Domestic Tariff Area (DTA) based on the price at which the service center sells the items. Time limitation for raising demands and imposing penalties.

Valuation Issue Analysis:
The appellant, a 100% Export Oriented Unit (EOU), cleared probes to their own service center in the DTA. The revenue disputed the valuation adopted, based on the FOB price at which the goods were exported to related parties, as the service center sold the goods at a higher price. The Commissioner (A) upheld the revenue's valuation approach, citing Board's circular and case laws. However, the Tribunal found the valuation legal, as per the Board circular, and relevant case laws like Axion Impex International Ltd. and Tata Coffee Ltd. The Tribunal emphasized that domestic selling price cannot be the basis for valuation under Customs Valuation Rules, supported by the decision in CCE, Raigad v. I.G. Petrochemicals.

Time Limitation Issue Analysis:
Regarding time limitation for demands and penalties, the Commissioner (A) found the demands beyond six months to be time-barred, as the appellant had not suppressed facts and had informed the department of all details. The Tribunal concurred, highlighting that the department was aware of the transactions since 2001, and the demand raised in 2006 was beyond the permissible timeframe. The Tribunal rejected the revenue's claim of suppressed facts, noting the appellant's compliance with procedures and disclosures to the department.

Conclusion:
The Tribunal allowed the appellant's appeal, rejecting the revenue's valuation approach and upholding the time limitation defense. The judgment emphasized adherence to Board circulars, relevant case laws, and the inapplicability of domestic selling price in customs valuation. The decision underscores the importance of timely demands and penalties, based on the disclosure of all relevant information to tax authorities.