2006 (7) TMI 61 - AT - Customs

Customs Difference in value of import of appellant and examiner Documentary prove not furnished by appellant Violation of principles of natural justice No evidence to show that appellant and foreign supplier are related Transaction appears on principal to principal basis and reasons for giving higher discount to MTNL clearly brought out

Issues Involved:
1. Rejection of Transaction Value.
2. Application of Customs Valuation Rules.
3. Principles of Natural Justice.
4. Discount and Relationship between Supplier and Importer.
5. Contemporaneous Imports.

Issue-wise Detailed Analysis:

1. Rejection of Transaction Value:
The appellants filed a Bill of Entry for clearance of Cisco 2620XM Routers, declaring a value of Rs. 199879.43. The lower authority rejected this Transaction Value, fixing it at Rs. 1,03,039/- per unit, based on higher values recorded for similar imports during the same period. The Commissioner (Appeals) upheld this decision, prompting the appellants to challenge the findings.

2. Application of Customs Valuation Rules:
The appellants argued that the Commissioner (Appeals) contradicted his own findings by accepting that third-party imports should not be considered but still upheld the enhanced value. They contended that under Rule 3 of the Customs Valuation Rules 1988, the value for assessment should be the Transaction Value unless specific conditions under Rule 4(2) are met, which were not satisfied in this case. The appellants emphasized that the Transaction Value should not be rejected arbitrarily under Rule 10A.

3. Principles of Natural Justice:
The appellants claimed that the Bill of Entry used to enhance the price was not provided to them, violating the Principles of Natural Justice. They highlighted that the Adjudicating Authority did not furnish details or documents about the contemporaneous imports relied upon, which was acknowledged by the Commissioner (Appeals).

4. Discount and Relationship between Supplier and Importer:
The appellants, as Gold Certified Partners of CISCO, received discounts based on their global contract. They produced evidence, including manufacturer's documents and a certificate from CISCO, to show that the declared price matched the invoice price. They argued that the discounts were normal and varied based on the ultimate buyer, such as MTNL receiving a 55% discount compared to HDFC's 42%. The appellants cited the Apex Court's decision in Basant Industries, emphasizing that different prices for old and new customers are common and acceptable.

5. Contemporaneous Imports:
The appellants contended that the differential demand was based on imports by third parties and not their own. They referenced the Tribunal's decision in Iron Master India Pvt. Ltd., which held that Transaction Value cannot be rejected solely based on other import prices. They argued that the lower authorities failed to scrutinize the documents and understand the reasons for the discounts. The Board's Circular No. 82/2002-Cus.V was also cited, which accepts lower prices for OE parts and places the onus on the Department to prove that price is not the sole consideration.

Conclusion:
The Tribunal found that the lower authorities did not adequately scrutinize the documents provided by the appellants and rejected the Transaction Value based on contemporaneous imports without proper justification. The Tribunal noted that the appellants had satisfactorily explained the discounts and produced relevant documents. The rejection of the Transaction Value was deemed arbitrary, and the failure to provide requested documents was a violation of the Principles of Natural Justice. Consequently, the Tribunal set aside the impugned orders and allowed the appeal with consequential relief.

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