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2023 (11) TMI 1039 - AT - CustomsValuation of imported goods - undervaluation - Urea - Ammonia - Influence on import price due to the alleged relationship or not - relationship between OMIFCO (the exporter of the goods situated outside India) and KRIBHCO (importer in India/Appellant), exists or not - demand of differential duty with penalty - HELD THAT - The issue is no longer res integra and the same has been adjudicated by the Coordinate Bench in the Appellant s own case INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED, KRISHAK BHARTI COOPERATIVE LIMITED VERSUS C.C. -KANDLA AND C.C (PRV.) , JAMNAGAR VERSUS INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED 2023 (1) TMI 155 - CESTAT AHMEDABAD where it was held that The alleged relationship between the Appellants/ GOI and OMIFCO has not influenced the price of the imported goods. The impugned order set aside - appeal allowed.
Issues Involved:
1. Relationship between OMIFCO (exporter) and KRIBHCO (importer). 2. Influence of the alleged relationship on the import price. 3. Liability of the Appellant to pay differential duty and consequential penalties. Summary: Issue 1: Relationship between OMIFCO and KRIBHCO The primary issue is whether OMIFCO and KRIBHCO are related parties and if this relationship influenced the import price of urea. The Tribunal found that OMIFCO is a Joint Venture between Oman Oil Company (50%), IFFCO (25%), and KRIBHCO (25%). The imports were made under long-term agreements between the Government of India and OMIFCO. The Tribunal noted that the relationship between the parties does not fall under the definitions provided in Rule 2(2) of Customs Valuation Rules (CVR), 2007, which includes officers or directors of one another's businesses, legally recognized partners, and entities controlled by a third person. Issue 2: Influence on Import Price The Tribunal concluded that the relationship did not influence the import price. The agreements, such as the Urea Off-Take Agreement (UOTA) and Ammonia Off-Take Agreement (AOTA), were long-term contracts negotiated between sovereign nations. The prices were fixed for 15 years, taking into account international market trends. The Tribunal emphasized that the declared prices should not be reviewed without evidence showing that the relationship influenced the price or that there was a flow-back of money from the importer to the supplier. Issue 3: Liability for Differential Duty and Penalties The Tribunal held that the revenue failed to prove that the appellants and OMIFCO were related persons under Rule 2(2) of CVR, 2007. It also noted that the declared value of the imported goods should be accepted as the transaction value under Rule 3(3)(a) of CVR, 2007, as the relationship did not influence the price. Consequently, the Tribunal set aside the differential duty demand, interest, and penalties imposed on the appellant. The Tribunal also dismissed the revenue's appeal for imposing redemption fine, as it was consequential to the confirmation of differential duty. Conclusion: The Tribunal allowed the appeal, setting aside the impugned orders and granting consequential relief to the appellant. The Tribunal also noted that the Ahmedabad Bench's Final Order dated 11.11.2022, which addressed similar issues, had been accepted by the Department.
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