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2021 (4) TMI 719 - AT - CustomsValuation - import of some spares and accessories related to the system filing appropriate bills of entry - import from a parent company by its subsidiary in India - importer and their foreign supplier are related persons in terms of Rule 2 (2) (v) of Customs Valuation Rules (CVR), 2007 or not - HELD THAT - The Customs Valuation Rules, 1988 and the Section 14 as applicable prior to 2007 were not considered or applied to the main system by the Commissioner (Appeals) as was required. Both sides agreed that the issue needs to be remanded to the Commissioner (Appeals) to determine the valuation in terms of Section 14 and the Customs Valuation Rules, as applicable to each of the consignments - Appeal is allowed by way of remand.
Issues:
1. Application of Customs Valuation Rules, 2007 to imports made before the enactment of the rules. 2. Sequential application of Rules 3 to Rule 9 of Customs Valuation Rules, 2007. 3. Consideration of profit margin in valuation. 4. Calculation of average profit margin. 5. Application of values of similar or identical products. 6. Need for remand to re-determine the value of imported goods. Analysis: Issue 1: Application of Customs Valuation Rules, 2007 to pre-2007 imports The appellant argued that since the main system was imported in 2006 before the Customs Valuation Rules, 2007 came into force, the un-amended Section 14 of the Customs Act, 1962, and the Customs Valuation Rules, 1988 should have been applied. The impugned order was challenged on the grounds of incorrect application of legal provisions. Issue 2: Sequential application of Customs Valuation Rules, 2007 The appellant contended that for imports post-2007, if the declared value is rejected, the value must be determined sequentially as per Rules 3 to Rule 9 of Customs Valuation Rules, 2007. It was argued that Rule 9 was directly applied without considering the applicability of Rules 3 to 8, making the impugned order unsustainable. Issue 3: Consideration of profit margin in valuation The appellant raised concerns about the addition of a profit margin to the invoice value, arguing that if a profit margin is to be added, it should only be based on the profit margin of the specific product line and not the company as a whole. Issue 4: Calculation of average profit margin The appellant challenged the calculation of the average profit margin, stating that it was inaccurately determined by considering profits from some years while ignoring losses from others. This led to a higher average profit margin, making the impugned order unsustainable. Issue 5: Application of values of similar or identical products The Departmental Representative argued that since the imported goods were custom-made, there were no similar or identical products to consider for valuation purposes. Issue 6: Remand for re-determination of imported goods' value Both parties agreed that the issue required remand to the Commissioner (Appeals) to determine the valuation in accordance with Section 14 and the relevant Customs Valuation Rules for each consignment. In conclusion, the Tribunal set aside the impugned order and remanded the matter to the Commissioner (Appeals) for re-determination of the imported goods' value in compliance with the applicable legal provisions, granting the appellant an opportunity to present their case and data for consideration within a specified timeline.
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