9911796707
TMI Blog1993 (11) TMI 133X X X X Extracts X X X X X X X X Extracts X X X X ..... ionally various consignments of the aforesaid goods imported by the appellants from Konica. Since a large number of such assessments were kept pending the appellants moved the Hon ble Bombay High Court by filing writ petition No. 213 of 1991 requiring to finalise the provisional assessments. By the order dated 28-1-1991 the Divisional Bench of the Bombay High Court ordered that the department shall finalise the provisional assessment in respect of goods imported by the appellants on or before 31st March, 1991. 3.In pursuance of the order of the High Court the Assistant Collector of Customs issued a show cause notice dated 18-3-1991 alleging that the value of goods imported by the appellants from Konica could not be determined under Rule 4 of the Customs Valuation Rules, 1988 since the appellants and Konica are to be deemed related parties in terms of Rule 2(2) of the Customs Valuation Rules, 1988 and therefore, acceptance of the transaction value was ruled out in terms of Rule 4(2)(d). It was further alleged that according to the franchise agreement the buyer of N.P.S. Lab was compulsorily required to buy chemical papers and chemicals from Konica and on account of this conditio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ey had absolute freedom regarding the choice of the customers and also regarding the price and no part of the sale price was payable or was in fact paid in any form to Konica either by the appellants or by the franchise customers. They stated that the appellants were purchasing the goods from Konica on principal to principal basis. The appellants also submitted that they and Konica could not be deemed as `related for the purpose of valuation of the imported goods. They contended that they were purchasing the goods on their own and were dealing with the imported goods at their own risk. They also submitted that no amount was payable by the appellants to Konica over and above the invoice price. They pointed out that they had acquired pre-eminent position in the Indian Photographic Industry and being the leading manufacturer and supplier of photographic products they were in a position to purchase the products from Konica who treated them as a distinct buyer. On these grounds they contended that the negotiated price paid for the goods imported from Konica represented the assessable value of the goods. 5. In the impugned order dated 10th December, 1991 the Additional Collector arriv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ssion or brokerage is to be added to the price actually paid or payable for the imported goods where some service is rendered by the buyers in relation to the import and where the cost of service is incurred by the appellants is not included in the price actually paid or payable by the buyers. He contended that none of these conditions are fulfilled in respect of so-called indenting commission referred to by the Additional Collector. He stated that the Additional Collector had accepted that the transaction between the appellants and the Konica were on principal to principal basis. He added that the appellants were not acting as indenting agent and were also not rendering any indenting service in respect of goods imported by them. He argued that under these circumstances the order passed by the Additional Collector was contrary to the plain terms of Rule 9(1)(a)(i). He submitted that the impugned order was patently inconsistent and illogical since the Additional Collector after considering the relevant fact had held that the relationship between the appellants and the Konica was on principal to principal basis. He stated that once this position was accepted by the department there c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s Valuation Rules, 1988. He stated that these three items were being imported by the appellants directly from M/s. Konica whereas all other importers were required to go through M/s. Choksi of M/s. Nippon, who were acting as indenting agents and who were being receiving their indenting commission from M/s. Konica. He stated that the price at which the goods were being supplied to the appellants was lower than the price at which other independent parties going through the indenting agents could import the same goods. He contended that the Additional Collector had, therefore, correctly held that the invoice of the goods in question when imported by the appellant would have to be enhanced to the extent of the commission earned by the indenting agents. He added that Section 14(1) provides for assessment of imported goods at the price at which they are offered for sale to unconnected buyers in India. He reiterated his stand that even though the appellants do not pay any indenting or agency commission in terms of Rule 9(1)(a)(i) the assessable value of the goods imported by them would include the element of indenting commission included in the price at which the goods imported by other i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other parties. 9. We have examined the records of the case and considered the submissions made on behalf of both sides. It is seen that the following are the main findings of the Additional Collector in the impugned order :- (a) The Show cause notice had not brought forth any evidence to show that explicit monetary consideration (over and above the invoice price) flowed from the Appellants to Konica in respect of the goods imported by the Appellants; (b) The Appellants sold substantial quantities of the imported goods to non-franchise customers in addition to the sales made to the customers holding franchise; (c) In the absence of any evidence to suggest that some monetary consideration was flowing back to Konica, it was not possible to accept the Department s contention that the Appellants right to enter into the franchise Agreements with NPS Laboratories ought to be measured in monetary terms for the purpose of loading the declared transaction values; (d) The appellants were one of Konica s major clients in India and that the relationship was based on normal commercial considerations. Further, under the franchise Scheme Agreement the Japanese Company had taken only s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... contrary to the provisions of Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988 since from the plain language of Rule 9(1)(a)(i) only that commission or brokerage can be added to the price actually paid or payable for the imported goods where some service is rendered by the buyer in relation to the import and the cost of the service is not included in the price actually paid or payable by the buyer. In their case the transactions were on principal to principal basis and the appellants are neither acting as indenting agents nor is there any finding that they are rendering any other service, hence, there can be no question of any addition to the cost of goods on account of such services and accordingly the impugned order is contrary to the plain terms of Rule 9(1)(a)(i). (ii) The impugned order requiring adjustment to transaction value under Rule 9(1)(a)(i) is patently inconsistent and illogical. The Additional Collector after considering the relevant facts has held that the relationship between the appellants and Konica is on principal to principal basis. Once this position is accepted by the Department, there can be no question of payment of any `commission or `indenting com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rage except the buying commissions are required to be added to the price paid or payable for the imported goods only in cases where - (i)some service is rendered by buyer in relation to the imported goods, (ii)the cost of the service is incurred by the buyer; and (iii)the value of the service is not included in the price actually paid or payable by the buyer; We find that the Additional Collector arrived at the finding in Para 17 of the impugned order that the relationship between the appellants and M/s. Konica is not of the type so as to warrant rejection of the transaction value since no undeclared monetary consideration flows back either way. However, on the grounds that the appellants who have been declared as distributors are performing the role of both distributor and importer and are enjoying a price advantage which amounts to availment of distributor s commission, the Additional Collector held that it is permissible under Rule 9(1)(a)(i) of the Customs Valuation Rules, 1988 to load their declared value to the extent of the normal indentor s commission paid by M/s. Konica to other distributors. It is seen that before arriving at his finding the Additional Collect ..... X X X X Extracts X X X X X X X X Extracts X X X X
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