2023 (8) TMI 561 - AT - Customs

Valuation of imported goods - Related party transaction - import of foreign base supplier namely Oman India Fertiliser Company, Oman (OMIFCO) - HELD THAT - The matter has been examined earlier by 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 , wherein it has been held that IFFCO and OMIFCO are not related parties. It is apparent that the appellant importer and the foreign base exporter cannot be the treated as related parties. The impugned order which treats two as related party cannot be sustained and the same is set aside and appeal is allowed.

Summary

Issues Involved:
1. Whether the appellant importer and foreign base supplier are related parties.
2. Whether the declared transaction value can be accepted.
3. Legitimacy of the differential duty demand, interest, and penalties imposed.
4. Validity of the revenue's appeal for imposing redemption fine on the goods.

Summary:

1. Related Parties:
The primary issue was whether the appellant importer, M/s. Indian Farmers Fertilizers Co Operative Ltd., and the foreign base supplier, Oman India Fertiliser Company (OMIFCO), are related parties. The Tribunal previously ruled that IFFCO and OMIFCO are not related. The Memorandum of Understanding (MOU) and agreements between the Government of India (GOI) and the Sultanate of Oman established a joint venture with equity participation from KRIBHCO, IFFCO, and Oman Oil Company. The adjudicating authority's assertion that IFFCO/KRIBHCO and the GOI are related under Rule 2(2) of the Customs Valuation Rules (CVR), 2007, was not substantiated. The Tribunal found no evidence that the appellants and the Department of Fertilizer, GOI, were officers or directors of one another's businesses, legally recognized partners, or controlled by a third person.

2. Declared Transaction Value:
Even if the appellants and OMIFCO were considered related, the declared value of the imported goods should be accepted as the transaction value u/s Rule 3(3)(a) of the CVR, 2007. The Tribunal noted that the long-term agreements and fixed pricing mechanisms between the GOI and OMIFCO ensured that the relationship did not influence the price. The declared prices could not be reviewed without evidence of price influence or money flow back from the importer to the supplier.

3. Differential Duty Demand, Interest, and Penalties:
The Tribunal concluded that the impugned orders did not withstand legal scrutiny as the allegations lacked sufficient evidence. The declared transaction value was not influenced by the relationship between the parties, and thus, the differential duty demand, interest, and penalties imposed were set aside.

4. Revenue's Appeal for Redemption Fine:
The Tribunal dismissed the revenue's appeal seeking to impose a redemption fine on the goods, as the confiscation and fine were consequential to the confirmation of differential duty, which was set aside.

Conclusion:
The Tribunal set aside the impugned orders, allowing the appeals filed by the assessees with consequential relief in accordance with law. The revenue's appeal was dismissed as devoid of merit. The appellant importer and the foreign base exporter were not treated as related parties.