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2023 (6) TMI 1012 - AUTHORITY FOR ADVANCE RULINGS,CUSTOMS ,MUMBAIValuation of imported goods - imported goods were sold to unrelated buyers in India at a higher price - whether the value arrived by using the new process is acceptable as Customs Value on which Customs Duty is required to be paid in terms of Section 14 of the Customs Act, 1962 read with the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007. HELD THAT:- The CBIC has issued a Circular no. 5/2016 dated 9.02.2016 on the issue of "Procedure for investigation of related party import cases and other cases by the Special Valuation Branches". On examination of the contents of the application as well as arguments put forth during the course of hearing I find that the CBIC Circular No. 5/2016-Customs dated 9th February, 2016 is relevant for all related party transactions Moreover, CBIC circular 5/2016 dated 09.02.2016, as stated in para 2 therein, has taken cognisance of WCO's Guide to Customs Valuation and Transfer Pricing (June 2015) which recognises TPuS method, however there is no separate dispensation provided in the CBIC circular to this method in related party transaction cases. This CBIC circular remains applicable on equal footing to the importer following TPus method as per WCO guide as well as to any other related party importer. It is observed that the Rule 10 of CVR, 2007 stipulates addition of price elements on account of certain goods and/or services to the transaction value ill the correct transaction value. CBIC Circular provides that the transactions where any payments are sought to be made which are in the nature of instances given at (a) (Rule 10(1) (c)), (b) (Rule 10(1)(d)) and (c) (Rule 10 (1)(e)) above, shall be examined with respect to the need for S VB investigations. The applicant has stated that they are not making any such payments (in the form of royalty, license fee etc.) which are required to be added in order to arrive at the transaction value - the application of Rule 10 is not warranted due to absence of financial flows on account of any such cost elements. TPuS method clearly shows that the proposed transaction value is sum total of manufacturing cost (direct cost & indirect cost) and administrative expenses, other expenses and profit represented by CAR indicating absence of any financial flows which can fall under the scope of Rule 10(1)(c), Rule 10(1)(d) and Rule 10 (1)(e). The applicant's proposed valuation method, Transfer Pricing System and Steering Concept (TPuS) method also known as Resale Price method/Resale Minus method, for determination of transaction value under Section 14 of the Customs Act 1962 for goods proposed to be imported from the related party suppliers, after compliance with the procedure prescribed in the CBEC (now CBIC) Circular No. 5/2016 Customs from F. No. 465/12/2010-Cus V dated 09/02/2016 on the issue of "Procedure for investigation of related party import cases and other cases by the Special Valuation Branch", is consistent with Rule 3 as well as Rule 7 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 - This ruling will apply prospectively only to the TPuS method proposed to be adopted by the applicant for transaction value determination w.e.f. 1st May 2023.
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