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TMI Blog2022 (3) TMI 1227X X X X Extracts X X X X X X X X Extracts X X X X ..... ored, the scheme of valuation under section 14 of Customs Act,1962 cannot be for it is the transaction value, and the transaction value alone, as declared in the bill of entry that is assured of acceptance for assessment except for varying from the qualifying circumstances therein as well as in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. There is no finding, either of additional payments having been made as consideration or of the value not being in conformity with the parameters therein, for rejection of rule 12 of the Rules to warrant resort to the sequential application of the several methods in the Rules. The impugned order has relied upon a pro forma invoice as rationale for the enhancement. That may have sufficed for re-determination of transaction value after rejecting declared value. However, the provisions for inclusion of cost of services are a special law within the Rules which require ascertainment per the circumstances in rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. There is no such determination in the impugned order and the enhancement of assessable value is, thereby, tainted. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tream to the supplier in China proposed in the show cause notice as assessable value are taken up together for disposal in this common order. 2. In his narration of the background, Mr G Shivadass, Learned Senior Counsel appearing for the importer and the partners, informed that. having been contracted along with M/s DNA Entertainment Network, by Board of Control for Cricket India (BCCI) to undertake screen display during the cricket tournament styled as Indian Premier League (IPL), the joint venture entered into a tri-partite agreement, designated as the Collaborative Framework Agreement (CFA) , with M/s Shenzen Lamp Technology Company Ltd, China for supply of LED panels, of particular specifications, along with specified accessories which, when assembled, would be deployed at the venue of matches and to be retained thereafter for five years to be used in specified events before being returned to overseas supplier. To further demonstrate the nature of the transaction as one of mere transfer of possession temporarily, he highlighted the pre-mature termination clauses and the fixed return payment stream of US$ 5,800,000 over a period which could, by no stretch, be construed as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h seizure of the panels that had been assembled for use during the event and stored thereafter for further use in future. 5. According to him, the adjudicating authority had, even while rejecting the proposal in the show cause notice for adopting the entirety of the fixed revenue payment stream in the Collaborative Framework Agreement (CFA) as the assessable value, erred in re-determining duty liability based on an earlier import of different specification by adjustment of that value downwards in proportion to the reduced physical dimensions of the impugned goods. He submits that, while rejection of the proposal in the show cause notice could not be faulted, the significant distinction of the product imported earlier from the impugned goods rendered the comparison logically, and legally, odious. He also argued that the Collaborative Framework Agreement (CFA) had ceased to be a valid contract with no bearing on the import of the impugned goods. Reliance was placed on the decision of the Hon ble Supreme Court in Eicher Tractors v. Commissioner of Customs, Mumbai [2000 (122) ELT 321 (SC)] and of the Tribunal in Commissioner of Central Excise, Bangalore v. CMC Ltd. [2016 (343) E ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e units as they are driven by a single power supply unit which is connected serially to one another, the size on one Panel is diagonally 43 inches and 19 inches horizontal and 39 inches vertical; one LED unit with power supply unit approximately weighs 45 kgs; the total visual display unit consists of 16 tiles measuring 10 inches by 10 inches and 14 inches diagonally; these individual tiles are only components and does not have the ability to function independently; Shri Lokesh has stated that this product is not covered under BIS 616 and that it squarely falls under as per IS 13525 (IT category) (requiring compulsory registration with the BIS) as the said product does not have a tuner card and the inspected product has only the feature of displaying the input signal. 26.2. M/s. Auro LED contested the proceedings of mahazar and the Report of M/s. TUV SUD and also requested for cross-examination of Shri Lokesh. During cross-examination of Shri Lokesh, they established that Shri Lokesh has not actually switched on the units to see whether the individual units can function separately or not. The main noticee offered to demonstrate that the individual display units can function i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mported against the 16 bills of entry is concerned, it is common ground that the impugned order is flawed. He highlighted the obvious infirmity in the finding of the adjudicating authority that 27.2. The Noticee vociferously contested the allegation during the investigation as well as in response to the Show Cause Notice. They submitted that though there were deliberations that eventually resulted in the signing of the agreement by all the parties, the agreement was not implemented; As they were under the impression that things would go as per Collaboration Framework Agreement, they had not arranged immediate funds for buying from alternate source; they were forced to agree for a price of USD 750 for P8.33 LAMP design; Unilumin assured that the CF Agreement would be amended accordingly, as per their letter dated 15.3.2017. Since, Unilumin assured that they would review the agreement and as product was required urgently, the noticee signed the agreement and dispatched the same to Unilumin; If the noticee had not agreed to the terms dictated by Unilumin, Unilumin would not have supplied the material; As Unilumin failed to supply the noticee with the product agreed upon, in order ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ase Order with a Price of US $ 750 per Sq. Mtr on the supplier before such date, i.e., before 15.3.2017. The Purchase Order is dated 13.3.2017. Indeed, as the Purchase Order was raised on the Supplier by the Noticee for US $ 750 per Sq. Mtr, there was no need for any communication reducing the price for US $ 750. Further, the agreement was for consideration called as 'Fixed Return payable over a period of time. The communication, if any, should be in relation to reduction of such 'Fixed Return' and not for unit price. Alternatively, as Shri Brijesh Patel contended, once the purchase order is raised(for US $750 per Unit), the agreement became void, there was no need to issue any communication by M/s. Unilumin to M/s. Auro LED. It is also seen that the letter dated 15.3.20 17 submitted by Shri Udit Patel does not speak about what was the price agreed upon and from what price the price is reduced to US $750. Hence, communication dated 15.3.2017 is not a credible communication in view of the above inconsistencies. 27.8. The investigation placed reliance on the Collaboration Agreement. The Noticee contested the same on many grounds. Firstly, they stated that the Collab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in inclusion of the value of the invoice for services in the assessable value of the goods. 8. It is not in doubt that the goods imported against 16 bills of entry were presented for clearance without any certification of compliance with standards mandated by Electronics and Information Technology (Requirements for Compulsory Registration) Order, 2012. However, it is also on record that the said certification had been obtained while the goods were under seizure to enable release of goods pending further proceedings. It is not in dispute that each piece in the imported consignments, as presented, was below the threshold for compliance with the standards and that it was only upon assembly of the pieces in accordance with requirements of Indian Premier League (IPL) that the display equipment traversed that threshold. It is on record that the issue had been raised prior to clearance of the unassembled pieces and the proper officer had granted out of charge under section 47 of Customs Act, 1962 only after satisfaction that certification was not mandated. Subsequent alteration of the size of the goods, such as it is, by assembly for installation takes it out of the pale of impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s) Rules, 2007 to which all alternative methods of valuation are subject. 10. The Tribunal, having in Futura Travels Ltd v. CC (Import), Mumbai [final order no. A/87363-87364/2021 dated 21st December 2021 disposing off customs appeal no. 239 of 2012 arising out of order-in-original no. CC/MAK/18/2011-12 ADJ ACC (I) dated 26th December 2011 of Commissioner of Customs (Import), Air Cargo Complex, Mumbai] occasion to examine the law on acceptability of lease value for assessment, had held that 9. On perusal of 14. Valuation of goods. - (1) For the purposes of the Customs Tariff Act, 1975 (51 of 1975), or any other law for the time being in force, the value of the imported goods and export goods shall be the transaction value of such goods, that is to say, the price actually paid or payable for the goods when sold for export to India for delivery at the time and place of importation, or as the case may be, for export from India for delivery at the time and place of exportation, where the buyer and seller of the goods are not related and price is the sole consideration for the sale subject to such other conditions as may be specified in the rules made in this behal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1962 and the Rules framed thereunder. The re-determination in the impugned order can be set aside and the appeal of Revenue dismissed for that reason alone. 11. In the circumstances, we need not dilate on the Solomonic wisdom of the adjudicating authority in mathematically apportioning value of goods, said to be similar though of different dimension and for want of goods of the same physical specification, imported on an earlier occasion to the extent of fitment with the smaller pieces in the impugned bills of entry and which, unlike the renowned adjudgement that venerable monarch, failed both to please either of the disputants and in impressing the Queen of Sheba, if we may permit ourselves the conceit of denominating ourselves thus. Doubtlessly, arithmetic and geometry are among the seven liberal arts but logic is no less so. The lack of conformity of the benchmark imports with the impugned goods excludes it from the qualifications in rule 3 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 to which all the prescribed methods of valuation are subject and, thereby, negates its comparability for arriving at the assessable value. 12. Turning to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices that are liable to be subjected to duties of customs in accordance with 4. Transaction value. - (1) The transaction value of imported goods shall be the price actually paid or payable for the goods when sold for export to India, adjusted in accordance with the provisions of Rule 9 of these rules.... of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 which is of concern to us. Again, from rule 4, it is apparent that rule 9 of the said Rules is intended only for addition to the price actually paid or payable. This is a natural corollary of the substitute values under rule 5 to 8 having to be on the same, or almost the same, terms as the imported goods to qualify as acceptable approximations and, therefore, inclusive of the cost of services, to the extent applicable, required to be added. The show cause notice has not disputed the insurance, freight and landing charges, mandated by rule 9(2) of the Rules, as not included in the assessable value declared in the bill of entry. The impugned order has narrowed down the proposed inclusions within the empowerment of rule 9(1)(c) and 9(1)(e) of Customs Valuation (Determination of Price of Importe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e without bounds before 1994 nor that tax levied on services provided from outside the country from 2006 blurs the bounds to such extent as to erase any restriction in the inclusion envisaged in rule 9 of Customs Valuation (Determination of Price of Imported Goods) Rules, 1988. Clearly, the services leviable to tax by the inclusion thereof are not services rendered by an overseas provider that are liable to tax within the meaning of section 66A of Finance Act, 1994 and, as the provisions under Customs Valuation (Determination of Price of Imported Goods) Rules, 1988 and the successor Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 did not vary owing to unveiling of tax on services, we can gauge the extent to which services offered by the overseas entity is liable to tax upon assessment of imported goods. This, then, is the pole star for clearing a swathe through the conceptual commotion in the proposition of customs authorities. 18. Furthermore, in rule 9 of the said Rules, the caveat of xxxx (3) Additions to the price actually paid or payable shall be made under this rule on the basis of objective and quantifiable data. (4) No addition ..... X X X X Extracts X X X X X X X X Extracts X X X X
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