2019 (10) TMI 549 - AT - Customs

Valuation - substantial markup in the supply of these goods, as such, to their customers is a pre-arrangement with the supplier to enable undervaluation with intent to evade duties - HELD THAT - It is an admitted fact that the shipper and the appellant are connected through a common holding company. That, however, does not suffice to accord approval to the rejection of the declared value. There are no evidence of the relationship having impacted the conditions of sale or that the relationship itself had been suppressed to mislead the assessing authority. There is no evidence of any comparable sales effected by the same supplier to other importers in India - no evidence of the relationship having impacted the conditions of sale or that the relationship itself had been suppressed to mislead the assessing authority. There is no evidence of any comparable sales effected by the same supplier to other importers in India. Appeal allowed - decided in favor of appellant.

Summary

Issues:
1. Re-determination of assessable value for customs duty on imports.
2. Confiscation of goods and imposition of penalty under Customs Act, 1962.
3. Allegations of undervaluation with intent to evade duties.
4. Application of Customs Valuation Rules.
5. Relationship between supplier and importer affecting assessable value.
6. Impact of business operations on pricing and profit margins.

Analysis:

1. The appeal involved a challenge by M/s Voith Turbo Pvt Ltd against the demand of customs duties on imports and the confiscation of goods valued at a certain amount under the Customs Act, 1962. The issue primarily revolved around the re-determination of the assessable value based on allegations of undervaluation with the intent to evade duties.

2. The appellant argued that there was no evidence of their interest in the supplier's business or any compromise in the declared value. The Customs Valuation Rules were cited, emphasizing the need to follow specific rules for determining the assessable value of goods supplied by related parties. The appellant contended that the allegations against them were unfounded and lacked basis.

3. The respondent, on the other hand, highlighted the relationship between the supplier and importer as a basis for re-determination of the assessable value. However, the appellate tribunal noted that mere relatedness between parties does not automatically imply undervaluation and that each case must be examined based on its unique circumstances.

4. The tribunal found no evidence that the relationship impacted the sale conditions or was suppressed to mislead the authorities. Additionally, discrepancies were noted in the impugned order regarding the pricing comparison with other importers and the application of Customs Valuation Rules.

5. Considering the nature of the appellant's business involving maintenance and overhauling of specialized equipment for Indian Railways, the tribunal acknowledged the influence of overhead costs on pricing and profit margins. The tribunal concluded that the suspected enrichment alleged in the impugned order was without a factual basis.

6. Ultimately, after a detailed analysis of the arguments presented and the evidence provided, the tribunal found no valid reason to uphold the impugned order. Consequently, the order was set aside, and the appeal was allowed, with the decision pronounced in open court on a specified date.