1999 (11) TMI 484 - AT - Customs

Summary

Issues Involved:
1. Valuation of imported goods (SOMATOM ARC) for Customs duty.
2. Impact of the relationship between the importer and supplier on the valuation.
3. Acceptance of invoice price as the transaction value.
4. Comparison with prices of identical goods sold to unrelated parties.
5. Legitimacy of the adjudicating authority's decision to reject the invoice price and adopt the List Price.

Detailed Analysis:

1. Valuation of Imported Goods:
The primary issue in the appeal was the valuation of SOMATOM ARC imported by the appellant from its parent company, Siemens-AG Germany. The declared value in the bill of entry was DM 306805.25 (Rs. 55,99,196/- C.I.F., Delhi). However, the Customs authorities initiated inquiries based on information suggesting that the real value was higher than the declared value. The adjudication order fixed the assessable value at DM 788000 (Rs. 1,43,81,000), confirmed a differential duty demand, confiscated the goods, and imposed penalties.

2. Impact of the Relationship Between Importer and Supplier:
The appellant, a subsidiary of Siemens-AG Germany, argued that the relationship did not influence the transaction value. They cited Rule 4(3)(a) of the Customs (Valuation) Rules, 1988, which allows acceptance of the transaction value if the relationship did not affect the price. The Customs authorities at Bombay had previously accepted assessments based on invoice values, indicating that the relationship did not influence the sale price.

3. Acceptance of Invoice Price as the Transaction Value:
The appellant contended that the invoice price represented the transaction value and should be accepted as the assessable value. They argued that the sale price was negotiated and acceptable under Customs law. They also provided evidence of identical goods sold to unrelated parties in India at comparable prices, supporting their claim that their purchase price closely approximated the transaction value of identical goods.

4. Comparison with Prices of Identical Goods Sold to Unrelated Parties:
The appellant provided examples of sales to Goa Medical College, Apollo Hospital, and others, where the sale price was DM 300000. They explained the gap between the List Price and the invoice price as due to the List Price being a "Basis Price" used to calculate actual selling prices based on various parameters. The adjudicating authority, however, rejected these explanations, arguing that the goods imported by unrelated parties were not identical and that the prices varied due to factors like commission, warranty, and installation costs.

5. Legitimacy of the Adjudicating Authority's Decision:
The adjudicating authority concluded that the invoice value could not be the basis for valuation and fixed the assessable value at the List Price by resorting to Rule 8 of the Customs (Valuation) Rules. The Tribunal found this decision arbitrary and illegal, noting that no evidence supported the conclusion that the prices were manipulated. The Special Investigation Branch of Customs had concluded that the relationship did not affect the sale price. The Tribunal held that the rejection of the invoice price was contrary to the facts and provisions of the Customs Act and Customs (Valuation) Rules.

Conclusion:
The Tribunal set aside the impugned order in its entirety, providing consequential relief to the appellant. The Tribunal emphasized that the invoice price should be accepted as the transaction value, given the evidence that the relationship did not influence the price and that identical goods were sold to unrelated parties at comparable prices. The adjudicating authority's reliance on the List Price was found to be unreasonable and inconsistent with the principles of valuation under the Customs (Valuation) Rules.