TMI Blog2008 (10) TMI 546X X X X Extracts X X X X X X X X Extracts X X X X ..... GAT, MADRAS] , wherein the valuation in respect of different classes of buyers have been elaborately dealt with. Related persons importing goods in bulk for stock and sale whereas individual consumers importing a small quantity of actual use, both constitute different classes of buyers especially when the relation between the buying company and the seller is not affecting the transaction. Here also, the transaction between the buyer and the seller is based on the Inter Company Price Agreement. It is not something very arbitrary. The appellants carry out stock and sale. They also undertake after sales service. All these factors have been taken into account while giving a discount of merely 76% to the appellant from the International Price List. We should not take that 76% as abnormal and fix an arbitrary discount. It has also been held that activities of stock and sale undertaken by subsidiary company should not be considered as indirect payment to seller as it is beneficial both to the subsidiary company and the seller. Cost of such activities should not be added to the price actually paid or payable in determining the value of the imported goods. In fact, the Interpretative Not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 74) E.L.T. 126 (Tri.-Del.) (b) Star Wire (India) Ltd. v. CC, ICD, TKD, New Delhi - 2003 (151) E.L.T. 307 (Tri.-Del.) (c) Auto General Engg. Co v. CC, Ahmedabad - 2002 (150) E.L.T. 1214 (Tri.-Del.) In all the above decisions, it has been held that Show Cause Notice should be issued to the party even in case of provisional assessments. In the present case, it was urged that the Show Cause Notice was not issued and also the Order-in-Original has not invoked any section of the Customs Act while confirming the duty. (2) It was stated that out of the total of four imported items, declared values were accepted for two categories namely Special Precision Cutting Tools and Tool Holders. Only in respect of Spare Parts and Consumables, the declared value has not been accepted. This point is urged by the appellant stating that there is no reason for rejecting the declared value when in respect of two items, the declared value has been accepted. It was also urged that the decision to accept the invoice value in respect or two items had been taken on the basis of the information supplied by the appellant, which is as follows : TABLE-A Comparative chart for all four imp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s in bulk for stock and sale whereas individual consumers importing a small quantity for their actual use. Both of them constitute different class of buyers and their transactions are not comparable. The following case-laws were relied on ; (a) CC, Chennai v. Hewlett Packard Ltd. - 1999 (108) E.L.T. 221 (Tribunal) (b) ATCO Industries Ltd. v. CC - 1992 (57) E.L.T. 654 (Tribunal) -affirmed by Supreme Court as reported in 1996 (86) E.L.T. A76 (S.C.) (c) Bently Nevada (Sales Services) P. Ltd. v. CCE, Delhi - 2005 (182) E.L.T. 168 (Tri.-Del.) (d) Basant Industries v. ACC, Bombay - 1996 (81) E.L.T. 195 (S.C.) (7) The O-I-O has taken International Price List (IPA) and discounts given thereafter as basis for determining the value of imported goods. Price list of the foreign supplier/manufacturer is not a proof of transaction value invariably and existence of price list cannot be the sole reason to reject the Transaction Value. The price list is really no more than a general quotation. It does not preclude discounts, which may be granted for a variety of reasons. In the following cases, it was held that price list by itself is no basis for rejection of Trans ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ubsidiaries and dealers of other countries. A statement showing the normal profit margin on the sale of KOMET products in India was also enclosed on the basis of 8% commission paid to the dealers by KOMET India, the administrative cost incurred by them, the additional cost of Customs Duty to be borne by them vis- -vis the EOU customers. From the said statement, it is clear that the import price of KOMET India to KOMET Germany is on principal to principal to basis. Hence, the Transaction Value, based on Inter Company Purchase Price declared by KOMET India, should be accepted. (9) Further, the Interpretative Note to Rule 4(3)(b) of the Customs Valuation Rules is as follows :- A number of factors must be taken into consideration in determining whether one value closely approximates to another value. These factors include the nature of the imported goods, the nature of the industry itself, the season in which the goods are imported, and whether the difference in values is commercially significant. Since these factors may vary from case to case, it would be impossible to apply a uniform standard such as a fixed percentage, in each case. For example, a small difference in valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service and post import activity and charges towards the same cannot be added while determining the price of the imported goods. (14) The Transaction between the appellant and the exporter is at arms length as the price charged for them is based on inter company transfer price. The discount offered to EOUs is based on lesser quantity imported by them and taking other factors such as customs duty exemption into consideration. They have undertaken after sale services to KOMET s customers and also offer 8% margin to dealers to promote KOMET s products. The value of the products is to determined based on Rule 4(3)(a) read with Rule 3(i) of the Customs Valuation Rules instead of Rule 5(i)(b) read with Rule 3(ii) of these Rules. When the relationship did not influence the price and the transactions are at arms length, then their invoice price should be accepted as transaction value. In view of the above, it was prayed that relief may be given to the importers. 6. The learned Departmental Representative reiterated the impugned Order-in-Original and also the Order-in-Appeal. It was urged that it is not in dispute that the appellant and the exporter are related parties. Therefore, str ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is only 59% in view of this administrative cost incurred by them. This point has not been taken into consideration by the learned Joint Commissioner and also the Commissioner (Appeals). Moreover, a similar case was the subject matter of the decision of the Tribunal in the case of CC, Chennai v. Hewlett Packard Ltd. which has been cited supra, wherein the valuation in respect of different classes of buyers have been elaborately dealt with. Related persons importing goods in bulk for stock and sale whereas individual consumers importing a small quantity of actual use, both constitute different classes of buyers especially when the relation between the buying company and the seller is not affecting the transaction. Here also, the transaction between the buyer and the seller is based on the Inter Company Price Agreement. It is not something very arbitrary. The appellants carry out stock and sale. They also undertake after sales service. All these factors have been taken into account while giving a discount of merely 76% to the appellant from the International Price List. We should not take that 76% as abnormal and fix an arbitrary discount. It has also been held that activities of stoc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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