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Issues: Valuation of imported vibration monitoring machines
Analysis: The issue in this appeal before the Appellate Tribunal CESTAT, NEW DELHI revolves around the valuation of vibration monitoring machines imported by the appellant from its Holding Company in the United States, which is also the manufacturer. The dispute arises from the loading of 15% on the transaction value for assessment purposes due to the appellant receiving a 20% discount from the Holding Company, while direct buyers like BHEL received a 17.5% discount. The appellant argues that no loading of the transaction value is warranted, emphasizing that being a bulk buyer, they should receive similar discounts as direct buyers. Additionally, the appellant contends that the higher discount received is justified based on the 'level' of trade, as they are traders who buy and resell, unlike consumers like BHEL. The appellant relies on Rule 5 of the Valuation Rules, which allows for adjustments based on the level of trade. Upon reviewing the records and hearing submissions, the Tribunal finds merit in the appellant's contentions. The Valuation Rules indeed provide for adjustments in value based on the level of trade and quantum of sales. As the appellant, a subsidiary, imports, stocks, and sells the machines, a higher discount is deemed justified. The Tribunal concludes that the addition of commission ordered under the impugned orders is unwarranted, as the commission received by the appellant on sales to India is irrelevant for the valuation of the imported machines. Therefore, the Tribunal rules in favor of the appellant, allowing the appeal and providing consequential relief, if any, to the appellant.
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