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TMI Blog2023 (8) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... tive) appeared for the Respondent ORDER This appeal has been filed by M/s. Indian Farmers Fertilizers Co Operative Ltd., against demand of Customs duty. 2. The issue involved in the instant case is, if the appellant importer and foreign base supplier namely Oman India Fertiliser Company, Oman (in short OMIFCO) are related or otherwise. The matter has been examined earlier by Tribunal order A/11354-11358/2022 dated 11.11.2022, wherein it has been held that IFFCO and OMIFCO are not related parties. In the said order following has been observed: 9. Heard both sides and gone through the facts, documents and case laws relied upon and oral submission made during the personal hearing. We find that in the present matters issue is related to the undervaluation of goods imported by the Appellants on the grounds that seller and buyer are related to each other and that their relationship had influenced the price of goods imported. 10. Perusal of the MOU/ agreements and other records reveal that in order to meet out the fertilizer requirement in India and to ensure uninterrupted supply of fertilizer to farmers of India at a subsidized price a Joint Venture company had be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hat as per the note of discussion of the meeting held on 20.12.1999 and 27.12.1999 of the Public Investment Board of the GOI vide paragraph 8 thereof that the imports made under the projects would be on GOI account and that under UOTA the Indian Sponsors ( Appellants) have been designated as agents of GOI. In OMIFCO,, though equity participation is by the Appellants and Directors are nominated by them it is evident that the real person behind the project is the GOI as far as the India side is concerned and that the entities are only agents. 10.1 We also find that as per the clause 2.1 of Urea Off-Take Agreement (UOTA) as regards supply and sales by the company, OMIFCO was bound to offer to supply and sell to the GOI in bulk at FOB the loading terminal one hundred percent (100%) of the actual production of urea from and after the date of commencement of production for the term and on the terms and conditions of agreement. Further, as per clause 5.1 price of urea produced after the date of commercial production the company and GOI agreed for the long term price of urea for rated capacity (initially specified manufacturing capacity) quantity and for excess quantity It had furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... includes legal persons. Explanation 2. - Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionare, however described, of the other shall be deemed to be related for the purpose of these rules, if they fall within the criteria of this sub-rule. From the above, it is seen that in sub-clauses (i) to (viii) of Rule 2 (2) of CVR, 2007 indicates that each of these sub-clause deals with different means of establishing deemed relationship between two persons. In terms of Rule 2(2)(i) persons can be deemed to be related only if they are officers or directors of one another s business. In terms of Rule 2(2)(ii) persons can be deemed to be related only if they are legally recognized partner in business and in terms of rule 2(2)(iv) persons can be deemed to be related only if both of them are directly or indirectly controlled by the third person. In the present matter we find that department has failed to prove that as to how the Appellants on one hand and DOF, GOI on the other hand were officers or directors of one another s businesses. Thus, the condition prescribed in sub-rule 2(2)(i) is not satisfied in the in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clared value of the imported goods shall continue to be accepted as transaction value under Rule3(3)(a) of the CVR, 2007. For the sake of reference said rule is reproduced below. (3)(a) Where the buyer and seller are related, the transaction value shall be accepted provided that the examination of the circumstances of the sale of the imported goods indicate that the relationship did not influence the price. 15.1 We find that alleged relationship between the Appellants/ GOI and OMIFCO has not influenced the price of the imported goods. Urea- Off Take agreement and Ammonia- off Take agreement both are long term international contract finalized between two sovereign countries. From the MOUs and agreements it is also clear that rates were finalized for 15 years. Further it is evident that GOI had agreed to purchase 100% of rated production on the basis of fixed Long Term Pricing (LTP) for 15 years. These facts would evidence that there was a long term agreement as regards production and sale of goods by OMIFCO and purchase of the same by GOI/ Appellants. Further LTP for 15 years has been worked out in such a manner that the LTP was substantially higher than the projected impor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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, we find that the reasons for rejecting the transaction value is not in consonance with law and therefore liable to be set aside. 17. We also find that the issue in question involved in the present case on the similar facts and MOU and agreements has also already been decided by the Chennai Bench vide final Order No. 41756/2020 dated 09.12.2020 (supra) in favour of the assessees. In view of the said order also the issue is no longer res integra, hence the we are of the view that the impugned orders are liable to set aside. 18. Since the charges of misdeclaration undervaluation are not sustainable in law, the differential duty demand along with interest and penalties imposed is liable to be set aside. 19. Accordingly, the im ..... X X X X Extracts X X X X X X X X Extracts X X X X
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