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TMI Blog2020 (6) TMI 67X X X X Extracts X X X X X X X X Extracts X X X X ..... t relied on the ruling of Hon'ble Supreme Court in North Eastern Railway Administration, Gorakhpur vs. Bhagwan Das -2012 (281) ELT 161 (SC) in support of their prayer for additional evidence, praying that such evidence is basically calculation based on the record, and in the interest of justice to be considered in this appeal. 2. The issue involved in this appeal is regarding 'order of loading' in the transaction value, the impugned order confirming the percentage of enhancement to the transaction value, as ordered by the Deputy Commissioner of Customs vide order-in-original dated 29.11.2018. 3. The brief facts of the case are that the appellant M/s Lutron GL Sales & Services Pvt. Limited imports lighting control systems (products) from their parent company, "related party", M/s Lutron Electronics Co., Inc. USA (Lutron US for short). These products include sensors and dimmers, processors, controllers, radio frequency (RF) transmitters, interfaces, shades, etc. which are used for convenience and energy saving solutions to customers. The appellant is registered with SVB. Revenue started investigation into the matter of influence of their relationship on the invoice value of importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not incur any expenses on behalf of, by understanding or agreement with, or under instructions from the supplier of the imported goods on advertising, propaganda expenses or any other expenses for the promotion of sale of the imported goods; w. That the foreign suppliers supplies identical, similar or connected items to its subsidiaries in several countries. From the submissions made by the appellant, it surfaced that the appellant is a subsidiary of M/s Lutron Electronics Co., Inc. Headquartered in Coopersburg, Pennsylvania, USA, which along with its subsidiaries and associated companies is engaged in the business of designing, manufacturing, marketing and selling variety of 'total lighting management solutions - lighting control and shades' through a variety of channels including electrical contractors, lighting showrooms, window treatment dealers, retailers, custom electronics dealers and few other channels. 3. Considering the documents produced and reply to the questionnaire the SVB framed the issue for determination as follows:- (i) Whether the importer and the foreign supplier are related person? (ii) Whether the transaction value between importer and the parent supp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... c call centre license' (OSP) in July 2013. The appellant enjoyed higher discounts on its imports, as compared to the ASDs, due to its higher volume of purchases. Assuming the Lutron US list price to be same, the comparative average import price of ASDs vs. The appellant, would have been as under (rounded): Year Appellant price ASD price Difference 2013-14 21 42 21 2014-15 27 44 17 2015-16 28 43 15 2016-17 34 41 7 2017-18 35 34* 1 Difference Average 15 (leaving 2017-18) *Starting FY 2017-18 through the present, the appellant believes that there were no imports by the ASDs. The end customers purchased the goods from the ASDs on high sea sale basis. 8. The quantities imported by the appellant were significantly higher than those by the ASDs, and consequently the appellant enjoyed higher discounts. The appellant's imports were about 20 to 280 times greater than those of the ASDs. A comparison of the quantity imported is as under: (emphasis supplied). Year Appellant Import Qty Avg. ASD Import Qty 2013-14 8,773 427 2014-15 13,072 389 2015-16 73,674 256 2016-17 53,196 1,314 2017-18 44,798 1,492* 9. In the context of the aforesaid facts ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nominal profit. Further, that with 77% loading, the appellant would incur losses on their imports. (vi) That there is no published price list of Lutron US, for made to order (custom) products and import value of such products cannot be enhanced. 11. The appellant attended hearings on four dates, before different adjudicating authorities, and provided all the information and evidence requested for by the officers. The appellants were surprised and shocked to note that none of the evidence furnished or the arguments made, were considered by the Adjudicating authority, while deciding the case. 12. By an order dated 29.11.2018, the Deputy Commissioner directed enhancement of value by 77%, to make it at par with the price offered to the ASD. It was further held that substantial incontrovertible documentary evidence could not be provided by the appellant, for acceptance of the transaction value. 13. Against the aforesaid order, the appellant filed an appeal before the Commissioner of Customs (Appeals), inter-alia pointing the total non-application of mind to the issues by the original authority. Attention was also invited to the voluminous evidence furnished in support of the trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f demonstrated difference in commercial levels, quantity levels, adjustments in accordance with the provisions of Rule 10 and cost incurred by the seller in sales in which he and the buyer are not related; (c) Substitute values shall not be established under the provisions of clause (b) of this sub-rule. (4) if the value cannot be determined under the provisions of sub-rule (1), the value shall be determined by proceeding sequentially through Rule 4 to 9". (emphasis supplied). 17. The Rules provide that the transaction value in a sale between related persons shall be accepted, whenever the importer demonstrates that the declared value of the goods closely approximates to any of the listed methods, including the deductive va ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mphasis added): "4. Transaction value of identical goods.- (1) (a) Subject to the provisions of rule 3, the value of imported goods shall be the transaction value of identical goods sold for export to India and imported at or about the same time as the goods being valued; Provided that such transaction value shall not be that value of the goods provisionally assessed under section 18 of the Customs Act, 1962. (b) In applying this rule, the transaction value of identical goods in a sale at the same commercial level and in substantially the same quantity as the goods being valued shall be used to determine the value of imported goods. (c) Where no sale referred to in clause (b) of sub-rule (1), is found, the transaction value of identical goods sold at a different commercial level or in different quantities or both, adjusted to take account of the difference attributable to commercial level or to the quantity or both, shall be used, provided that such adjustments shall be made on the basis of demonstrated evidence which clearly establishes the reasonableness and accuracy of the adjustments, whether such adjustment leads to an increase or decrease in the value". Rule 4 can ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... elates to similar goods. (emphasis supplied). 22. The appellant submits that the average import quantity by an ASD is in the range of 0.5% to 5% of the imports made by the appellant. The imports by ASD's being negligible, as compared to that of the appellant, the imports are neither at the same commercial level nor in substantially the same quantity. The appellant had furnished evidence of the expenses incurred by ASDs as compared to those incurred by the appellant, to demonstrate that they were different class of buyers. A difference in quantity of this magnitude would occasion a higher discount, based on commercial considerations, and hence there is no reason to doubt the transaction value. 23. Without prejudice to the above, the absurdity of the loading is evident from the fact, that no cognizance has been taken of the change in the import price of the appellant vis-a-vis that of the ASD, over the period. From 2016 onward the differential between pricing of the appellant and the ASD has declined significantly. In 2017-18 the prices for the appellant and the ASD are nearly at par. The loading, for most of the period results in a value, which is even higher than the import pric ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the considered opinion, that bearing in mind the object behind the provision for "adjustment" in terms of Rule 5(1)(c), the fine distinction between the words "adjustment" and 'discount' sought to be brought out by the appellant is of no relevance to the controversy at hand. The provision is clear and unambiguous meant to provide some adjustment in the price of identical goods, imported by two or more persons but in different quantities. It is plain that such "adjustment" may not necessarily lead to a decrease in the value. It may result in an increase as well. Reference to the word 'discount' in the interpretative note is by way of an illustration to indicate that a seller's price list is one of the relevant pieces' of evidence to establish the factum of quantity discount by the seller. It is manifest that "adjustment" in terms of Rule 5(1)(c) of 1988 Rules, for the purpose of determination of value of an import, can be granted only on production of evidence which establishes the reasonableness and accuracy of adjustment and higher volumes of imports per se, would not be sufficient to justify an adjustment, though it may be one of the relevant considerations." Accordingly, learn ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ue is required. We also noticed that part collection of deductive value submitted by the appellant, they are only making a nominal profit. The appellant has to occur significant reduce licences from the Telecom Department and DGFT for import of RF products which are not incurred by other resellers. Accordingly, the impugned order is modified to the extent as indicated hereinabove. 28. Having considered the rival contentions, we find that as the ASD do not import 'RF products' as well as the 'made to order products', but some products are imported both by the appellant and the ASD, but are not comparable. Such imports constitute a significant part of the total imports made by the appellant. Such imports are in the range of 16 to 51% during the period 2013-14 to 2017-18 or an average of 36% of the total imports made by the appellant. Further, we find that the quantity imported by the appellant is more than 200 times than the quantity imported by the ASD. Further, we find that the ASD placed order for import usually when they have sales order in hand and do not undertake stocking of the products. Whereas the appellant irrespective of the sales orders in hand, the appellant imports in ..... X X X X Extracts X X X X X X X X Extracts X X X X
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