2014 (4) TMI 582 - AT - Customs

Valuation - inclusion in the value of import of goods - Nexus of importation of goods with expenses incurred in foreign exchange Whether the expenditure incurred in foreign exchange has anything to do with the goods imported by the appellant Held That - Prima facie it is found that the foreign exchange expenditure incurred by the appellant is in respect of imports made from non-related suppliers abroad and also for the services rendered for their foreign affiliates These expenses, thus, are not relatable to the goods imported by the appellant. Whether the sales commission also relate to the imports - Held That - It is contention of appellants that these commissions have been received in respect of goods which are not imported by the appellant and, thus, there is no direct nexus between the commission received and the imports undertaken - The entire matter needs to be examined afresh by the AO in respect of the various expenses incurred by the appellant in foreign currency Since there is no prima facie evidence of any nexus, it is directed that the imports shall not be loaded in respect of values The appeal is allowed by way of remand - stay granted Matter remanded back for fresh adjudication - Decided in favour of appellants.

Summary

Issues:
- Assessment of relationship influence on imported goods pricing
- Examination of foreign currency expenditure and sales commission impact on imported goods value

Analysis:

Issue 1: Assessment of relationship influence on imported goods pricing
The appeal challenged an Order-in-Appeal that set aside the assessing officer's conclusion regarding the influence of the relationship between the appellant and foreign principals on imported goods' prices. The lower appellate authority found that the assessing officer did not adequately examine the expenditure in foreign currency and sales commission received by the appellant from affiliates. The matter was remanded back to the adjudicating authority for the respondent to provide documentary evidence supporting their claim that these expenses should not be included in the value of imported goods. The appellant argued that the expenses were related to imports from unrelated suppliers and services received, thus not impacting the goods' value. The Revenue contended that the expenses and commissions indicated a price influence. The Tribunal decided to dispose of the appeal without pre-deposit and examined whether the expenses and commissions were related to the imported goods, ultimately remanding the matter for fresh assessment by the adjudicating authority.

Issue 2: Examination of foreign currency expenditure and sales commission impact on imported goods value
The Tribunal focused on whether the appellant's foreign exchange expenditure and sales commissions were connected to the goods imported during the relevant period. The appellant claimed that the expenses were for imports from non-related suppliers and services for foreign affiliates, while the sales commissions were for goods not imported by them, thus not affecting the import values. The Tribunal agreed that the expenses did not seem related to the imported goods and directed the adjudicating authority to reevaluate the matter based on the documentary evidence to be provided by the appellant. Pending the fresh assessment, the Tribunal directed that the appellant's imports should not be loaded in terms of values, and no extra duty deposit of 1% should be collected. The appeal was allowed for remand, and the stay petition was disposed of, with the application for early hearing deemed unnecessary.

This comprehensive analysis of the judgment highlights the issues, arguments presented by both parties, and the Tribunal's decision to remand the case for a fresh assessment based on the evidence provided regarding the impact of foreign currency expenditure and sales commissions on the imported goods' value.