2000 (8) TMI 509 - AT - Customs

Summary

Issues:
1. Valuation of imported goods for assessment of duty.
2. Loading of invoice price by 8.3% for imports prior to the Customs Valuation Rules, 1988.
3. Determination of transaction value and relationship between the importer and the foreign supplier.

Issue 1: Valuation of imported goods for assessment of duty:
The case involved M/s. General Marketing & Manufacturing Company Limited (GMMCO) entering into agreements with Caterpillar Far East Ltd. for sales and service of equipment. The dispute arose when the Special Valuation Branch directed provisional assessment of imported goods by GMMCO. The adjudicating authority loaded the value of imported goods by 8.3% for duty assessment. The key contention was whether the invoice price should be accepted as the transaction value for assessment as per Customs Valuation Rules, 1988, or if additional considerations influenced the transaction value.

Issue 2: Loading of invoice price by 8.3% for imports prior to Customs Valuation Rules, 1988:
The Tribunal initially allowed the Department's appeal, upholding the loading of 8.3% on the CIF value of imported goods covered by both the 1963 and 1988 Customs Valuation Rules. However, the Supreme Court remanded the case back to the Tribunal for fresh consideration based on additional evidence. The Tribunal reviewed the case, considering the loading of invoice prices for imports prior to the 1988 Rules and the sustainability of such loading.

Issue 3: Determination of transaction value and relationship between the importer and the foreign supplier:
The Tribunal analyzed the relationship between GMMCO and Caterpillar, focusing on whether they were related persons influencing the transaction value. It was established that GMMCO was one of several dealers of Caterpillar parts in India and that the price offered to dealers was significantly lower than the consumer price. The Tribunal examined the terms of the agreement between GMMCO and Caterpillar to determine if there was control over pricing or mutual interest in each other's business. The conclusion was that without mutual interest, the transaction price should be accepted as shown in the invoices, and any commission received by GMMCO should not influence the value of imported goods.

In the final judgment, the Tribunal dismissed the Revenue's appeal and allowed GMMCO's appeal. It directed the authorities to finalize the assessment based on the transaction value shown in the invoices under Section 14 of the Customs Act, emphasizing the importance of mutual interest in determining the relationship between the parties for valuation purposes.