2000 (7) TMI 156 - AT - Customs

Summary

Issues involved: Customs valuation of imported goods based on related party status and applicability of Customs Valuation Rules.

Customs Valuation - Related Party Status:
The appellants, a joint venture company between TISCO and Timken of USA, imported goods from Timken of USA. The Assistant Commissioner of Customs deemed the two companies as related due to shareholding and royalty agreement, disallowing the purchase price for customs duty valuation. The Commissioner (Appeals) invoked Rule 9(1)(c) of Customs Valuation Rules, remanding the case for fresh determination. The appellants argued that shareholding alone does not establish related party status, citing precedent from Daewoo Motors India Ltd. case.

Customs Valuation - Rule 9(1)(c) Applicability:
The appellants contested the Commissioner's finding that Rule 9(1)(c) applied, asserting that the rule pertains to royalties for imported goods, whereas the royalty in question was for technical assistance in manufacturing bearings in India. The technological agreement between the companies supported this claim. The Departmental Representative argued for related party status based on shareholding and technology sharing.

Judgment:
The Tribunal held that shareholding does not automatically establish related party status, as per Daewoo Motors India Ltd. precedent. The royalty payment was deemed unrelated to the imported goods but for technical assistance in local production. Consequently, Rule 9(1)(c) of Customs Valuation Rules was found inapplicable. The impugned orders were set aside, and the appeal was allowed in favor of the appellants, with consequential relief granted.