2018 (6) TMI 390 - AT - Customs

Valuation of imported goods - rejection of declared value on the ground that M/s Degmak Engineering Corporation and M/s Flow Fast Engineers (India) are related - Held that - It is seen that there is no charges to the effect that the foreign supplier and the Indian importer are related. The only charge in the proceedings is that the Indian importer is related to the intermediary through whom the goods are supplied to DESU - the same cannot be a reason for rejecting the transaction value and consequently application of Customs Valuation Rules for revision of assessable value cannot be sustained - appeal allowed.

Summary

Issues:
Appeal against confirmation of demand and imposition of penalties based on rejection of declared value for import due to alleged relationship between two partnership firms.

Analysis:
The appeals were filed against the order confirming demand and penalties by M/s Degmak Engineering Corpn., Hareshlal Bhatia, M/s Flow Fast Engineers (India), Manoharlal Bhatia, and Ashok Bhatia. The contention was that M/s Flow Fast Engineers (I) and M/s Degmak Engineering Corporation, both partnership firms, were considered related due to family members being partners in both entities. The rejection of declared assessable value was based on this alleged relationship, leading to the application of Customs Valuation Rules. However, it was argued that the foreign supplier was not related to the importer, Flow Fast Engineers (India), and thus, the rejection of transaction value and application of Customs Valuation Rules were unwarranted.

It was highlighted that one of the appellants, Shri Ashok T. Bhatia, had passed away, and his appeals were sought to be abated. The tribunal, in accordance with Rule 22 of the CESTAT (Procedure) Rules, 1982, abated the appeal of Late Shri Ashok T. Bhatia. Upon reviewing the submissions, the tribunal noted that the rejection of declared value was solely based on the relationship between M/s Degmak Engineering Corporation and M/s Flow Fast Engineers (India), without any indication of a relationship between the foreign supplier and the Indian importer. As a result, the tribunal concluded that the rejection of transaction value and the subsequent application of Customs Valuation Rules were not justified, leading to the allowance of the appeals.

In the operative portion of the order pronounced in Court, the tribunal allowed the appeals, emphasizing the insufficiency of the alleged relationship between the two partnership firms as a basis for rejecting the transaction value and applying Customs Valuation Rules.