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2023 (3) TMI 807 - AT - CustomsDemand of differential duty - related party or not - influenced import price or not - existence of any relationship between OMIFCO and KRIBHCO, the appellant and Government of India - HELD THAT - On the identical issue number of Show Cause Notice were issued to IFFCO and KRIBHCO out of that some appeals of IFFCO and KRIBCO have been decided by this Tribunal in INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED, KRISHAK BHARTI COOPERATIVE LIMITED VERSUS C.C. -KANDLA AND C.C (PRV.) , JAMNAGAR VERSUS INDIAN FARMERS FERTILIZERS CO OPERATIVE LIMITED 2023 (1) TMI 155 - CESTAT AHMEDABAD . Since the identical issue and fact are involved in all the cases, in this case there is nothing more to add - It was held in the case that it is clear that even if it is assumed that the buyer and seller are related in terms of Rule 2 (2) of valuation Rules, 2007 read with explanation II of said Rule, the price at which the goods were purchased from OMIFCO is the true transaction value and not influenced by their relationship. In the present matter Department has also not produced any evidence to show that the relationship between the parties has influenced the price. Therefore, the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside. Appeal allowed - decided in favour of appellant.
Issues Involved:
1. Relationship between OMIFCO and KRIBHCO, the appellant, and the Government of India. 2. Influence of the alleged relationship on the import price. 3. Liability of the appellant to pay the differential duty. Summary: 1. Relationship Between OMIFCO, KRIBHCO, and the Government of India: The case examines whether a relationship exists between OMIFCO, KRIBHCO, and the Government of India, which could influence the import price. The Tribunal referred to a prior decision (Order No. A/11354-11358/2022 dated 11.11.2022) involving similar facts and parties. The Memorandum of Understanding (MOU) and agreements between the Government of India (GOI) and the Sultanate of Oman led to the formation of a joint venture, OMIFCO, with equity participation from KRIBHCO, IFFCO, and Oman Oil Company. The Tribunal found that the GOI and the Sultanate of Oman protected their interests through these agreements, making the appellants agents of the GOI. 2. Influence of the Alleged Relationship on the Import Price: The Tribunal analyzed whether the relationship influenced the import price. It examined the Urea Off-Take Agreement (UOTA) and other agreements, which indicated long-term pricing arrangements and commitments to purchase urea. The adjudicating authority argued that IFFCO/KRIBHCO and the GOI were related persons under Rule 2(2) of the Customs Valuation Rules, 2007. However, the Tribunal found that the department failed to prove the conditions prescribed in Rule 2(2), such as control by a third person or being legally recognized partners. The Tribunal concluded that the relationship did not influence the price of the imported goods. 3. Liability of the Appellant to Pay the Differential Duty: The Tribunal emphasized that the burden of proof lies with the authority making the allegations. In this case, the department did not provide sufficient evidence to prove that the relationship influenced the declared price. The Tribunal noted that the declared prices could not be reviewed without evidence of price influence or money flow back from the importer to the supplier. It also highlighted that even if the buyer and seller were related, the transaction value should be accepted if the relationship did not influence the price (Rule 3(3)(a) of the CVR, 2007). The Tribunal found no evidence of price influence and set aside the impugned orders, allowing the appeal. Conclusion: The Tribunal set aside the impugned orders, allowed the appeal, and dismissed the revenue's appeal seeking to impose redemption fine, as it was consequential to the confirmation of differential duty. The Tribunal concluded that the charges of misdeclaration and undervaluation were not sustainable in law, and the differential duty demand, along with interest and penalties, was set aside.
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