2024 (4) TMI 971 - AT - Customs

Valuation of imported Goods - Allowance of discount of 25% to appellant by foreign supplier - related party transaction - remittances made higher than the invoice price or not - HELD THAT - In the agreement dated 16.06.2001 executed by the appellant and the foreign supplier, the amount of discount was mentioned as 17% only - The invoices raised by foreign supplier showed 25% discount and the remittance by the appellant was made accordingly. The department does not have a case that the remittances do not match with invoice value. In para 8 of the denovo order the adjudicating authority has noted that the appellant has furnished all the particulars of imports made from the year 2001 to 2008 as well as copies of corroborated bank statement. There is no evidence adduced by department to establish that the appellant has made remittances higher than the invoice price. So also the appellant has produced the CA certificate substantiating the payments made to the supplier for the relevant period. The AA has held that the e-mail communication is a mere afterthought. The appellant has been continuously litigating contending that they had been given 25% discount by the foreign supplier. So also, they have later produced the amended agreement in which it has been expressly stated that the 25% discount is applicable retrospectively from the date of earlier agreement. Taking note of all these documents we are of the considered opinion that the appellant has succeeded in establishing that they have been given 25% discount by the foreign supplier. The impugned order is set aside - Appeal allowed.

Summary

Issues Involved:
The issues involved in the judgment are related to the disallowance of a 25% discount claimed by the appellant in a Commercial Agency and Distribution Agreement with a foreign supplier, based on the Customs Valuation Rules 1988.

Issue 1:
The original authority disallowed the appellant's claim for a 25% discount, stating that they were related parties with the foreign supplier and eligible only for a 17% discount as per the agreement. The Commissioner (Appeals) upheld this decision. The Tribunal remanded the matter for fresh consideration, emphasizing the appellant's claim of receiving a 25% discount from the supplier. The subsequent order reiterated the disallowance, leading to this appeal.

Issue 2:
The appellant contended that despite an agreement stating 17% discount, there were communications indicating a 25% discount from the foreign supplier. The department failed to consider these communications and held the appellant eligible only for a 17% discount due to the related party status. The appellant presented evidence including an amended agreement retroactively applying the 25% discount from the earlier agreement.

Issue 3:
The department argued that the appellant did not respond to requests for documents, and the e-mail and amended agreement were considered afterthoughts. The adjudicating authority and Commissioner (Appeals) correctly rejected the appellant's claim for a 25% discount, as per the department's stance.

Judgment:
The Tribunal reviewed the facts and documents presented by both sides. It was observed that while the agreement mentioned a 17% discount, communications and invoices indicated a 25% discount, which the appellant adhered to in remittances. The Tribunal highlighted its earlier direction to consider the e-mail communication and found that the appellant had substantiated receiving a 25% discount. Despite the department's claim of afterthought, the Tribunal concluded that the appellant successfully proved the entitlement to a 25% discount. Consequently, the impugned order disallowing the discount was set aside, and the appeal was allowed with any necessary reliefs.