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TMI Blog2024 (4) TMI 693X X X X Extracts X X X X X X X X Extracts X X X X ..... vailable. The valuation provision itself thus distinguishes transaction value and transaction value not being determined which calls for recourse to the Rules framed under that empowerment. The Rules provide for substitution when transaction value of imported goods are not available, for inclusion in transaction value for adjustment to conform to value and for empowering the deeming of transaction value as not being available. Merely owing to the remedies for these contingencies being collated in one statutory instrument, every recourse is not to be attended by taint on transaction value meriting rejection. The franchise fee and international marketing charges are to be included in the transaction value for conformity with section 14 of Customs Act, 1962. To that extent, and in the context of not being pressed on behalf of the appellants, the includibility attains finality. On the issue of inclusion of third element in order of Commissioner of Customs, Air Cargo Complex (ACC), it has been submitted that the dispute for subsequent period has been remanded to the original authority. It is, however noted, that dropping of that element in the adjudication orders has not been appealed a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hivaji Maharaj International Airport (CSMIA), Mumbai, for addition, of certain costs incurred and of services obtained, in transaction value under the authority of rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007, are taken up for disposal together. The appellant, now known in the name and style of Apparel Group India Pvt Ltd, is an aggregator of branded fashion goods of foreign origin, and undertakes regular imports from suppliers under separate licence agreements that provide for certain fees to be paid to the overseas entities or for certain costs to be incurred by the appellant. The case of customs authorities in the impugned proceedings was that these are liable to added to the transaction value for assessment of the goods to duty. 2. Several notices, covering different periods, were issued to the appellants for not having included all or some of the impugned elements of cost/expense, viz., entrance fee, franchise fee, contribution to advertisement in international market, cost of local advertising and sales promotion and value of imported advertisement and sales promotion material. In the first of these, pertaining to import of 2009 to 2014, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are common with the addition of cost of import of advertising and sales promotion material exclusive only to one of the appeals here. It was contended by Learned Counsel for appellant that, by way of one reason or other, the controversy over the three elements are no longer res integra. According to him, the includibility of franchise fee and contribution to international marketing, confirmed by the Tribunal in Giorgio Armani India (P) Ltd v. Commissioner of Customs, New Delhi [2018 (362) ELT 333 (Tri-Del)], had attained finality upon dismissal of appeal of Revenue before the Hon ble Supreme Court. He submitted that cost of local advertisement stood excluded with order of the Tribunal in Commissioner of Customs, ICD Patparganj v. Addidas India Marketing Pvt Ltd [2020-TIOL-604-CESTAT-DEL] and in Indo Rubber and Plastic Works v. Commissioner of Customs, Delhi [2020 (373) ELT 250 (Tri-Del)] which attained finality upon dismissal of appeal of Revenue by the Hon ble Supreme Court. 6. He further contended that the Hon ble Supreme Court, in GMR Energy Ltd v. Commissioner of Customs, Bangalore [2015 (325) ELT 445 (SC)], has held that it is for the assessing officer to seek documents requir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tive adjudicating authorities had, in the impugned orders, concluded that ingredients warranting the period of limitation beyond the normal, than in vogue, existed for recovery of duty and for like recourse to section 114A of Customs Act, 1962. 9. This is a dispute over short-payment of duties of customs at the time of import. It is not the case of the customs authorities that the assessable value as declared then did not mirror the consideration for which goods were transferred by sale on each occasion to the appellant. However, this was not a normal transaction of autonomous, and episodal, sale and purchase between two parties known to each other commercially; not only was there an engagement for regular commercial intercourse but also a special equation considering the nature of goods, i.e., identifiable by brand, which, though no different from a normal trading chain of sale and purchase, was, nonetheless, conditioned by the intangible of goodwill attaching to the products. It was in acknowledgement thereof that the importer and seller entered into a licence agreement , encompassing responsibilities, liabilities and obligations during its tenor, which may be designated as franc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l or use of the imported goods that accrues, directly or indirectly, to the seller; (e) all other payments actually made or to be made as a condition of sale of the imported goods, by the buyer to the seller, or by the buyer to a third party to satisfy an obligation of the seller to the extent that such payments are not included in the price actually paid or payable. Explanation.- Where the royalty, licence fee or any other payment for a process, whether patented or otherwise, is includible referred to in clauses (c) and (e), such charges shall be added to the price actually paid or payable for the imported goods, notwithstanding the fact that such goods may be subjected to the said process after importation of such goods. xxxxx (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 shall be made to the price actually paid or payable in determining the value of the imported goods except as provided for in this rule. of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 which is the sole repository of reference to intangibles in the scheme of levy of duties of customs on ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision, concatenated with confirmation of liability to duty as proposed in the notice or even as modified, is but a poor excuse for statutory imperative. 11. In the order pertaining to imports at Air Cargo Complex, it was held that section 114A of Customs Act, 1962 is not invokable owing to the consequence of finding of goods being liable to confiscation under section 111(d) and section 111(m) of Customs Act, 1962 and, thus, to the alternate penalty. This, itself, is mystifying because goods that are prohibited for import, with liability to confiscation inhering by entering customs jurisdiction, are manumited from evaluation for conformity with declaration owing to chronology of occurrence. Indeed, the impugned order has failed to demonstrate the prohibition operating on the goods and even resort to section 111(m) of Customs Act, 1962 is not backed by any justification. All that we are permitted to discern is 6.9.1 I find that the proper value has not been declared/included in the assessable value by the noticee i.e. Franchise Fee, reimbursements to franchisors and various advertisement expenses as discussed hereinabove as required under Rule 10(1)(c), Rule 10(1)(d) and Rule 10(1 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the adjustment, that the adjudicating authority felt obliged to take recourse to rule 3(4) of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 for addition is untenable. Therefore, the order of Commissioner of Customs (Export), Air Cargo Complex (ACC) is flawed in not having resorted to the available provision for addition and for having resorted to the provision for substitution which is not intended to reach rule 10 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. This adjudication order must, therefore, be set aside for revisit. 13. The other Commissioner of Customs had not resorted to rule 12 of Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 but has effected adjustments as set out in rule 10 of the said Rules. That authority has, however, proceeded to impose penalties under section 112 and section 114AA of Customs Act, 1962 on the finding that 5.69 I have gone through, the allegations in the SCN and the reply of the Noticee and find that as-discussed above, the goods were correctly held liable to confiscation and hence the Notices is liable to penalty under Section 112(a) of the Customs Act, 1962. F ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such goods to the best of his knowledge and belief and certify to its truthfulness. In the instant case, importer have failed to declare the correct values of the product imported and have thus, contravened the provisions of Rule 11 and Rule 14 of the Foreign Trade. (Regulation) Rules, 1993 as also provisions of Section 11(1) of the Foreign Trade (Development and Regulation) Act, 1992, in as much they knew that the declarations made by them were incorrect with regard to value of products imported. The contravention of the provisions of the Foreign Trade (Regulation) Rules, 1993, is a prohibition of the nature as described under the Section 11 of the Foreign Trade (Development and Regulation) Act, 1992. Now, in terms of Section 3(3) of the Act ibid the provisions are deemed to be a prohibition under Section 11 of the Customs Act 1962. In terms of the Section 111 (d) of the CA, 1962, any goods which are imported or brought within Indian waters / brought within the limits of any Customs area for purpose of being imported contrary to any prohibition imposed by or under this Act or any other law for the time being in force are liable to confiscation. Further, as the assessable value ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ms Act, 1962. It also empowers framing of rules to that end besides resort to rules for attending upon circumstances in which transaction value is not available. The valuation provision itself thus distinguishes transaction value and transaction value not being determined which calls for recourse to the Rules framed under that empowerment. The Rules provide for substitution when transaction value of imported goods are not available, for inclusion in transaction value for adjustment to conform to value and for empowering the deeming of transaction value as not being available. Merely owing to the remedies for these contingencies being collated in one statutory instrument, every recourse is not to be attended by taint on transaction value meriting rejection. And it is also a further misconception that every rejection of transaction value for replacement with surrogate transaction value is a penalizable taint. Hence, the facts and circumstances of each recovery under section 28 of Customs Act, 1962, arising from re-valuation, must inform the invoking of penal provisions in Customs Act, 1962 connected thereto. 16. Furthermore, a tax on goods can extend to include cost of services, enta ..... X X X X Extracts X X X X X X X X Extracts X X X X
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