2023 (6) TMI 375 - AT - Customs

Valuation - Additions of 2% Notional Commission on High Seas Sale - Purchased goods / Propane on High Seas Sale basis from various Public Sector undertaking like IOCL, BPCL, and HPCL. - Genuineness of the transactions price - failure of the appellant to produce the documents or not - HELD THAT - The issue regarding addition of Notional Commission at the rate of2% of high Seas Sale price has been examined by Tribunal in the case of Indian Farmers Fertilizer Co-Operative Limited 2020 (2) TMI 1134 - CESTAT AHMEDABAD where it was held that while there was scope for addition of notional charges in the assessable value under the unamended Section 14 of the Customs Act, but after the actual sale price concept was introduced in the year 2007 on the basis of GATT guidelines and Section 14 of the Customs Act was amended in 2007, any inclusion of notional charges seems to have lost its relevance and only actual cost incurred by the buyer is required to be considered. Thus, it is apparent that addition of 2% High Seas Sale on Notional Basis Cannot be sustained. Genuineness of the transactions price - failure of the appellant to produce the documents - HELD THAT - The same has no merit. The documents that the Commissioner (appeals) has sought the invoice which is always produced at the time of filing of bill of entry. The agreement between the public sector undertaking and the appellant is also produced before the Commissioner (Appeals), therefore the objection raised by the learned AR cannot be sustained. Appeal allowed.

Summary

Issues Involved:
1. Inclusion of High Seas Sale Commission in the assessable value.
2. Genuineness of the transaction price and failure to produce necessary documents.

Summary:

1. Inclusion of High Seas Sale Commission in the assessable value:

The appellant, Reliance Industries Limited, contested the demand for customs duty, which included a 2% High Seas Sale Commission in their declared assessable value. The appellant argued that they imported "Propane" from Abu Dhabi on a High Seas Sale basis from various Public Sector Undertakings (PSUs) like IOCL, BPCL, and HPCL, and the agreement stipulated no premium or commission beyond the contracted price from Abu Dhabi National Oil Company (ADNOC). The Tribunal referenced the case of Indian Farmers Fertilizer Co-Operative Limited (2020) and Circular No. 11/2010-Cus, which clarified that the addition of a 2% notional High Seas Sale Commission is improper. The Tribunal reiterated that the assessable value should be based on the actual transaction value and not include notional charges, especially after the 2007 amendment to Section 14 of the Customs Act, which emphasizes the actual price paid or payable for the goods.

2. Genuineness of the transaction price and failure to produce necessary documents:

The revenue's objection centered on the appellant's failure to produce necessary documents to establish the correctness of the High Seas Sale price. The Tribunal found this objection to be without merit, noting that the required documents, such as the invoice and the agreement between the PSUs and the appellant, were produced at the time of filing the bill of entry and before the Commissioner (Appeals). Therefore, the Tribunal dismissed the revenue's objections.

Conclusion:

The Tribunal allowed the appeals, set aside the impugned orders, and ruled that the addition of 2% High Seas Sale Commission on a notional basis cannot be sustained. The objections regarding the genuineness of the transaction price were also dismissed due to the availability and submission of the required documents.