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2013 (10) TMI 1000 - AT - CustomsValuation - Related party transaction - Relationship with supplier - Influence on price - Held that:- relationship of the appellant to the supplier influence the price of the imported spares. The refurbishable spares were found to have been exported through courier from January to May 2006. The courier who handled the export shipments confirmed that there was no foreign exchange involved in the shipments. The appellant’s bankers also confirmed this. The officials of the appellant, who were incharge of bank-related works also stated that they had not received any remittance towards export of re-furbishable spares. Though some FIRCs were produced by the appellant during the course of DRI investigations, no connection was found between the FIRCs and the export of refurbishable spares. The values shown in the invoices produced by the appellant at the time of export were found to be very minimal. As against these invoices, the appellant claimed before the adjudicating authority that these were not correct invoices and that there were other invoices available which carried the actual values of the exported spares. However, such other invoices were not submitted to the Customs authorities at the time of exports. They were not even produced before the DRI. The learned Commissioner also found that the set of invoices filed with Bills of Entry in Singapore for clearance of the spares was the same as those produced by the appellant before the Indian Customs authorities at the time of export. It was also found that, in the financial statements of the appellant, the sale of refurbishable spares was not mentioned towards foreign exchange income. On the basis of all these findings, it was concluded that the defective spares were exported free-of-cost by the appellant. Prima facie, there is no reason to doubt the correctness of the learned Commissioner s finding that such exports were made as a contractual obligation amounting to a condition of sale of the spares by Sun (Sing.) to the appellant. The monetary benefit of the export of refurbishable spares apparently accrued to Sun (Sing.) thereby constituting a flow-back. We have also examined the findings recorded by the learned Commissioner with regard to ALC charges, AEC charges, unbilled/underbilled amounts, professional charges etc. and have found such findings to be, prima facie, cogent. The declared prices of the imported spares have not been shown to be negotiated prices. Indeed, under the so called global pricing policy of the Group Company, there was hardly any scope for negotiations between the Sun entities. Though the PWC reports cited by the learned counsel indicate sale of spares by Sun(Sing.) to independent unrelated buyers in the Asia Pacific Region at similar deeply discounted prices, the learned counsel has not been able to cite any corroborative documentary evidence to support the PWC reports. M/s. PWC are the private accountants/auditors of the appellant and their reports, without independent corroborative evidence, cannot be accepted as conclusive proof of sale of spares at equally discounted prices by Sun(Sing.) to unrelated buyers in the same region. In the result, the Revenue appears to have made out a prima facie case for rejecting the declared value on the ground that such value was substantially influenced by direct and indirect flow-backs between the importer and the supplier being related Sun entities. The grant of discount to the extent of 61-70% on US Price List was also not disclosed to SVB. The learned special consultant submitted that the appellant had obtained SVB order fraudulently by suppressing material facts having a bearing on valuation of the goods. In the circumstances, it was argued, the Department could lawfully invoke Section 28 of the Customs Act as had been done in this case. Prima facie, these arguments of the learned special consultant for the respondent are acceptable on the facts and circumstances of this case and in view of the Hon’ble Supreme Court’s ruling in UOI Vs. Jain Sudh Vanaspati [1996 (8) TMI 108 - SUPREME COURT OF INDIA]. - Stay granted partly.
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