2002 (3) TMI 132 - AT - Customs

Summary

Issues: Valuation of refrigeration equipment imported by the appellant; Application of Rule 2(2)(v) and Rule 9(1)(a) of the Customs Valuation Rules.

In this case, the appellant challenged the Order-in-Appeal related to the valuation of refrigeration equipment imported from a foreign company. The authorities had loaded the declared assessable value by 15% based on the appellant's relationship with the foreign company. The reason given was that the appellant, as an indenting agent, had indirect operational control over the Indian party, making them related under Rule 2(2)(v) of the Customs Valuation Rules. The appellant received a 15% commission on sales, leading to the loading of 15% on imports as per Rule 9(1)(a) of the Customs Valuation Rules.

The appellant contended that as an indenting agent, they could not be considered a related person, citing a previous Tribunal decision. They also argued that Rule 9(1)(a) did not apply in this case. The Tribunal found merit in the appellant's contentions, noting that the appellant operated on a principal to principal basis with the foreign company and received commission only on imports made by other parties, not on their own imports. The Tribunal held that the terms of the agreement did not establish a mutuality of interest between the parties, thus rejecting the finding that the supplier and the appellant were related.

Regarding Rule 9(1)(a) of the Customs Valuation Rules, the Tribunal observed that the provision was misapplied in this case. The rule required adding costs and services incurred by the buyer but not included in the price paid for the imported goods. Since the appellant did not incur any additional costs and received a commission from the supplier for other parties' imports, the application of Rule 9(1)(a) was deemed inappropriate.

Ultimately, the Tribunal set aside the impugned order, allowing the appeal as they found no reason to sustain the loading of 15% on the imports. The judgment emphasized the appellant's role as an indenting agent, the lack of mutuality of interest between the parties, and the incorrect application of Rule 9(1)(a) in determining the assessable value of the imported goods.