2016 (12) TMI 1365 - AT - Customs

Valuation - related party transaction - invoice value influenced by the relationship between parties or not? - Held that - The original authority have carefully gone into the agreement between the importer and related supplier and after going through in detail other connected documents, has come to the conclusion that the invoice value of the goods imported are not influenced by that relationship. Invoice value accepted - appeal rejected - decided against Revenue.

Summary

Issues:
Revenue's challenge against the order of Commissioner (Appeals) regarding the acceptance of invoice value of imports without invoking Rule 3(3)(b)(i) of the Customs Valuation Rules.

Analysis:
The appeal filed by the Revenue was directed against the order passed by the Commissioner (Appeals), New Delhi, regarding the import of goods from a foreign supplier in Korea. The Special Valuation Branch of Customs House examined the transaction to determine if the relationship between the importer and the foreign supplier influenced the invoice value of the goods. The Deputy Commissioner of Customs concluded that the relationship did not impact the price, leading to the acceptance of the invoice value for imports. The Revenue challenged this decision, but the Commissioner (Appeals) upheld the original order. The only ground raised by the Revenue was the failure to invoke Rule 3(3)(b)(i) of the Customs Valuation Rules in the case.

The Commissioner (Appeals) had carefully reviewed the agreement between the importer and the related supplier, along with other relevant documents, and found that the invoice value of the imported goods was not influenced by the relationship. The impugned order was challenged under Rule 3(3)(b)(i) which deals with the acceptance of transaction value in sales between related persons if it closely approximates the value of identical or similar goods sold to unrelated buyers in India.

In the impugned order, the Commissioner (Appeals) referenced a previous order-in-original which had addressed the issue of identical/similar goods supplied to unrelated importers in India by the foreign supplier. The Commissioner accepted the declared invoice value based on the reasoning provided by the importer regarding differences in prices for related and unrelated importers and the role of the importer as a distributor and agent of the main supplier. The Commissioner emphasized that the transaction value should be rejected first with reasons before determining a new value under the Customs Valuation Rules.

The Tribunal, comprising Ms. Archana Wadhwa and Mr. V Padmanabhan, found that the Commissioner (Appeals) had adequately addressed the issue and provided safeguards in the order for review in case of changes in the method of sale. Consequently, the Tribunal upheld the impugned order and dismissed the appeal filed by the Revenue. The judgment was pronounced in open court on 22.12.16.