2018 (10) TMI 112 - AT - Customs

Valuation of imported goods - related party transaction - rejection of declared value - enhancement of value based on NIDB data - Royalty on sales. Held that - The Commissioner (Appeal) has not given any categorical finding as to how the relationship had influenced the transaction value especially when it is on record by way of affidavit that the LTA agreement of 2005 and 2013 have not changed. The pattern of sale transaction the terms and conditions in the two LTAs are same. Even in the impugned order which has been passed against O-I-O No. SVB/CUS/Review/HO/RK/2014-15 dated 4.03.2015 by the adjudicating authority has examined the agreement in detail and came to the conclusion that the relationship has not influenced the transaction value under the Customs Valuation Rules. On this finding of the Commissioner(Appeal) has not given as to how the NIDB data will be relevant in this case when it is apparent from the facts on records that there is no import/sale of the products in India. The Commissioner (Appeal) has simply accepted the grounds of appeal filed by the Revenue in without giving any independent findings on the point received in the appeal. On the other hand we find that the lower Adjudicating Authority has dealt with the valuation of the imported by the Appellant as per Customs Valuation Rules after going through the LTA, and examining the affidavit filed by the Appellant. There is no application of NIDB data in the case where the issue is examination of adoption of valuation under Rules, 2(2) Customs Valuation Rules, 2007 Ipso-facto. It is trite that the assessable value can t be rejected merely on the grounds of NIDB data - In the case of Commissioners (Appeal) in the impugned order has not taken any pain to find out the NIDB data available for the product in question especially when there is a categorical acceptance by the Adjudicating Authority that there is no import/sale price available before him. The order passed by the primary Adjudicating Authority is restored.

Summary

Issues: Appeal against setting aside of Order-in-Original regarding valuation of imported goods.

Analysis:
1. Valuation Mechanism and Previous Orders: The appellant, engaged in manufacturing, imports goods from related entities without a purchase agreement, determining prices based on various factors. A License and Technical Assistance agreement mandates royalty payment. Previous orders accepted the pricing mechanism without challenge. Appellant argues for finality of valuation mechanism. The Commissioner (Appeal) set aside the order, citing failure to examine balance sheets and Customs Valuation Rules.

2. Reasoning of Commissioner (Appeal): The Commissioner found the Adjudicating Authority lacking in examining financial data and payment details beyond goods' price. The appellant's appeal emphasizes consistency in pricing mechanism acceptance by the department, supported by the Tribunal's judgment. The Commissioner's decision was based on the failure to analyze NIDB data and balance sheets, crucial under Customs Valuation Rules.

3. Judicial Review and Legal Precedents: The Tribunal reviewed the case, emphasizing the importation history and past valuation orders. It noted the Commissioner's failure to provide a clear rationale for overturning the initial order. The Tribunal emphasized the importance of examining the relationship's influence on transaction value and the lack of NIDB data relevance in the absence of domestic sales. Referring to legal precedent, the Tribunal highlighted the limited role of NIDB data in determining assessable value.

4. Decision and Rationale: The Tribunal set aside the Commissioner's decision and reinstated the primary Adjudicating Authority's order. It emphasized the lack of substantial reasoning in the Commissioner's decision and the adherence to Customs Valuation Rules in evaluating the imported goods. The judgment aimed to restore consistency in valuation practices and uphold the finality of prior accepted mechanisms.

This detailed analysis covers the issues raised in the appeal, the reasoning behind the Commissioner's decision, the judicial review conducted by the Tribunal, and the final decision and rationale provided by the Tribunal in reinstating the original order.