2001 (2) TMI 250 - AT - Customs

Summary

Issues Involved:
1. Valuation of imported sunglasses for the purpose of assessment of Customs duty.
2. Relationship between the importing company and the supplier.
3. Acceptance of the declared invoice value.
4. Alleged under-valuation and misdeclaration by the importer.
5. Voluntariness and implications of the statement given by the importer's representative.

Issue-wise Detailed Analysis:

1. Valuation of Imported Sunglasses:
The central issue in the appeals was the valuation of sunglasses imported by Telebrands (India) Manufacturing & Assembling Industries Private Limited (Telebrands). The Commissioner had enhanced the value of the sunglasses, demanded duty, and imposed penalties based on the investigation findings that the CIF price declared was too low. The appellant argued that the declared value should be accepted as the transaction value.

2. Relationship Between the Importing Company and the Supplier:
The appellant conceded that Telebrands India is a subsidiary of Telebrands Corporation USA, making them related within the meaning of Rule 4 of the Customs Valuation Rules. However, they contended that this relationship did not influence the price of the goods, as the Chinese manufacturer, who supplied the goods to Azad International (Hong Kong), was not related to either the American or Indian companies. The department's case relied heavily on the relationship and past transactions involving Azad International as a conduit, but the Tribunal found no evidence of a relationship between Azad International and the Telebrand companies that would affect the transaction value.

3. Acceptance of the Declared Invoice Value:
The appellant provided invoices from the Chinese manufacturer to support their declared value. The Commissioner dismissed these invoices as manipulated due to differences in typefaces, but the Tribunal found no substantial evidence to support this claim. The Tribunal emphasized that the mere difference in typefaces was insufficient to prove fabrication and accepted the invoices as valid.

4. Alleged Under-valuation and Misdeclaration by the Importer:
The Commissioner argued that the price declared by Telebrands was manipulated to reflect a lower value. However, the Tribunal noted that there was no evidence of any additional payment beyond the invoice price to the Chinese manufacturer. The Tribunal also referred to the Supreme Court judgment in Eicher Tractors Ltd. v. CC, which mandates accepting the transaction value unless a relationship influencing the price is established. The Tribunal concluded that the relationship between the American and Indian companies did not impact the transaction value, and there was no proof of under-valuation.

5. Voluntariness and Implications of the Statement Given by the Importer's Representative:
The Commissioner relied significantly on the statement of Hitesh I Israni, the representative of Telebrands, which was considered voluntary and binding. Israni had indicated that the CIF price was kept low to establish the brand in India but did not confess to any under-valuation or manipulation. The Tribunal found that Israni's statement did not suggest any payment over and above the invoice value or any manipulation between the American and Indian companies. The Tribunal concluded that the low prices were a strategic decision to capture the market, not an indication of under-invoicing.

Conclusion:
The Tribunal allowed the appeals, setting aside the Commissioner's order. They found no basis to reject the declared value of the imported sunglasses, as the relationship between the companies did not influence the price, and there was no evidence of under-valuation or misdeclaration. The declared invoice value was accepted, and the penalties and enhanced duty demands were annulled.