1996 (9) TMI 325 - AT - Customs

Summary

Issues:
Challenge to valuation of imported components under Customs Act, 1962 and Customs Valuation Rules, 1963 based on collaboration agreements with foreign concerns.

Detailed Analysis:

1. Valuation under Customs Act, 1962:
The appeal challenged the valuation of imported components by the Assistant Collector and the Collector (Appeals) under the Customs Act, 1962. The Assistant Collector determined that the transactions between the appellants and Bendix USA were not at arms length due to equity participation and collaboration agreements, leading to valuation under Section 14(1)(b) of the Act instead of Section 14(1)(a). The Assistant Collector also ordered loading of invoice values for components imported from Nippon Air Brake Co. Ltd., Japan, and Bendix France. However, the Tribunal found that the relationship did not influence the price of components, and the valuation under Section 14(1)(a) was sustainable.

2. Collaboration Agreements and Valuation:
The collaboration agreements with Bendix USA, Nippon Air Brake Co. Ltd., Japan, and Bendix France were crucial in determining the valuation of imported components. The agreements involved payment of royalties for technical information, assistance, and use of patents. The Tribunal analyzed the terms of these agreements and found that the foreign concerns did not have a mutual interest in the appellants' business, and the royalty payments were linked to indigenous manufacture and use of patents, not import of components. The Tribunal cited precedents to support its finding that the agreements did not influence the price of goods, and the valuation under Section 14(1)(a) was appropriate.

3. Valuation of Spares and Components:
The Assistant Collector's order included loading of prices for spares and components imported by the appellants. The Tribunal found that while valuing spares based on price lists was reasonable, the decision to load prices of other spares by 1.5% or 4.5% was not sustainable. The Tribunal set aside the loading of prices and confirmed the valuation based on manufacturers' price lists for spares, allowing the appeal in part.

4. Conclusion:
In conclusion, the Tribunal upheld the valuation of imported components under Section 14(1)(a) of the Customs Act, 1962, based on collaboration agreements with foreign concerns. It rejected the loading of prices for components and spares, except for spares valued based on manufacturers' price lists. The appeal was allowed in part, setting aside the loading of prices and confirming the valuation based on price lists for spares.