1999 (9) TMI 190 - AT - Central Excise

Summary

Issues:
1. Determination of related parties between M/s. Modi GBC Ltd. and General Binding Corporation (GBC).
2. Inclusion of the value of drawings of components supplied by GBC in the assessable value of imported goods.

Analysis:
1. The first issue in this appeal concerns the determination of whether M/s. Modi GBC Ltd. and General Binding Corporation (GBC) are related parties. The dispute revolves around the application of Rule 2(2)(iv) of the Customs (Valuation) Rules, 1988, which deems persons to be related if certain shareholding criteria are met. The Assistant Collector initially held that the 40% ownership of respondent shares by GBC established a related party relationship. However, the Collector (Appeals) disagreed, emphasizing that for the rule to apply, a third person must hold shares in both entities. The absence of such common ownership negated the application of Rule 2(2)(iv). The departmental representative attempted to invoke Rule 2(2)(v) based on control, arguing that GBC's 40% shareholding constituted control over the respondent. Nevertheless, the Tribunal found this argument unsubstantiated, as mere shareholding does not necessarily confer control, and the new ground raised by the representative was deemed impermissible as it was not part of the original notice or previous considerations.

2. The second issue pertains to the inclusion of the value of drawings of components supplied by GBC in the assessable value of imported goods. The dispute centers around the application of Rule 9(1)(b), which mandates the inclusion of costs of goods or services supplied by the buyer of imported goods for use in production. The Collector (Appeals) ruled against the application of this rule, noting the absence of evidence that drawings provided by GBC were used by the respondent. Furthermore, the attempt to rely on Rule 9(1)(c) was dismissed due to its absence in the original notice and lack of merit. Consequently, the Tribunal upheld the Collector (Appeals) decision, ultimately dismissing the appeal.

In conclusion, the Tribunal upheld the Collector (Appeals) decisions on both issues, determining that the entities were not related parties as per the Customs (Valuation) Rules and rejecting the inclusion of the value of drawings in the assessable value of imported goods. The appeal was consequently dismissed.