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2005 (3) TMI 225 - CESTAT, BANGALOREValuation (Customs) - Import of sim cards - Related person - Whether the relationship has affected the price of the imported goods - foreign supplier are related as per the Customs Act/Customs Valuation Rules, 1998 - HELD THAT:- Our supplier invoices us on FOB/CIF basis after deducting the necessary margin, sales tax/octroi and duty. The pricing methodology adopted is based on OECD transfer price Guidelines. Gemplus India takes risk of exchange variation, customs duty risk, receivable risk, direct expenses of salesmen/operations (including Travel and Communication) and other risk of local tax variations on its own account". They have also stated in the questionnaire submitted to the DC, Customs, the methodology of transfer price in the case of the imported products. This method is indicated as Transfer pricing-Priceless method. It is stated that as per this method, the price taken into account is the customer's sales price negotiated by the sales person with the external (non group) customer. A specific margin is fixed by the Tax Department for each range of products. Therefore, there is not any basis to come to the conclusion that the relationship between the foreign supplier and the appellant has influenced the price of the imported goods. It is very difficult to compare the prices of the cards imported by the appellants and the other independent buyers. The appellant, who has a Product Supply Agreement with the supplier, is a regular importer whereas the imports of others are very negligible. We cannot expect the same prices in both the cases by reason of difference in commercial level and quantity of imports. Moreover, in order to apply Rule 5 of the Customs Valuation Rules, we have to take into account the commercial level and the quantity of goods being valued. As rightly contended by the appellant, the transaction value of the imports made by them as traders/dealers cannot be compared with the transaction value of the imports made by the actual users. In summing up, we observe that :- 1.Though the appellant and the foreign supplier are related, the price of the imported goods is fixed based on market driven prices leading to the conclusion that the relationship has not influenced the price. 2.The appellants regularly import the goods in huge quantities for testing the market conditions. In doing so, they function as traders of the goods imported. But, the independent buyers who imported goods directly are actual users. The trader and the actual user are not at the same commercial level. 3.The quantity of import by independent buyers is quite negligible compared to the quantity of imports by the appellant. Imports of independent buyers are sporadic in nature. Imports of the Appellant are regular. 4.With regard to the direct imports by the independent buyers, the personalization has been done by the foreign supplier. Hence, the price in respect of direct import is higher than that of the appellants. Thus, there are no grounds to reject the transaction value. We allow the appeal with consequential relief.
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