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2015 (7) TMI 789 - MADRAS HIGH COURT

2015 (7) TMI 789 - MADRAS HIGH COURT - 2015 (322) E.L.T. 611 (Mad.) - Valuation - import of gods from related party - original copy of the agreement is not available - Non acceptance of the certified copy of the document, namely, Technology Transfer Agreement - Held that:- Commissioner of Customs (Appeals) has already come to a definite conclusion against the petitioner that they have not produced the corresponding annexures without which the agreement cannot be said to be complete or implementa .....

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urther finding that the declared value cannot be accepted in terms of Rule 3(3)(a) / 3(3)(b) of the Customs Valuation Rules, 2007.

Certified true copy of the Technical Transfer Agreement has been filed before this Court with supporting affidavit sworn to by one of the two signatories to the Technical Transfer Agreement dated 1.1.2009 relating to Wind Turbine Model AE 59 / 800 KW on behalf of Gamesa Innovation and Technology, S.L. with Gamesa Wind Turbines Private Limited stating that .....

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mpediment for the second respondent to consider the same as per Section 63 of the Indian Evidence Act, which says that the certified copy of the original, accompanied by a sworn affidavit of one of the signatories to the original Technical Transfer Agreement dated 1.1.2009 relating to Wind Turbine Model AE 59 / 800 KW on behalf of the company, can be taken as secondary evidence - photograph of an original is secondary evidence of its contents, though the two have not been compared, if it is prov .....

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al No.C.Cus.II No.382 of 2015 dated 31.03.2015 passed by the second respondent, on the ground that the second respondent has wrongly refused to accept the certified copy of the document, namely, Technology Transfer Agreement (TTA). 2. Mr.P.S.Raman, learned senior counsel for the petitioner submitted that the petitioner is a subsidiary of world-renowned company called M/s Gamesa Corporation having its registered office at Spain in Europe. Its principal business is the manufacture of wind energy g .....

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argued that one of the special features of the company is that the installed energy prevents the emission of more than 45 million tonnes of carbon dioxide in the atmosphere and also prevents the use of fossil fuel and saves the usage of approximately 6.4 million tonnes of petroleum. While so, the petitioner company has started its operation in India in the year 2009 and has installed close to 2,000 MW of wind energy generators and is in the process of setting up 10,000 MW of wind farms in India .....

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he Customs and other Acts. 3. Adding further, the learned senior counsel submitted that when the petitioner company is a wholly owned subsidiary of M/s Gamesa Technology and Innovations, Spain, they are related in terms of Rule 3(3)(a) of the Customs Valuation Rules, 2007. In this background, the valuation of imports of M/s Gamesa Wind Turbines Private Limited, Chennai from M/s Gamesa Eolica SL, Spain and group companies were taken up for investigation on the assumption that both the importers a .....

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reply to the questionnaire along with the following documents by their letter dated 19.1.2010: (i)Memorandum of Association; (ii)Balance sheet for the year 2006-07 & year ending report for December 2008 and 2009; (iii)Details of the directors of the Indian company and (iv)Company profile. In the reply to the standard questionnaire, the Indian company has made it clear that it is a subsidiary of M/s Gamesa Eolica SL, Spain and is importing from M/s Gamesa Eolica SL, Spain and other group com .....

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re of suppliers' products; that the imported goods are not supplied to any other person in India by the supplier, etc. This apart, the importers in their letter dated 22.7.2010 submitted the cost construction statements along with local sales invoices for the goods manufactured using the imported components and declared that they are not paying any royalty and commission to the related supplier by showing the gross profit margin as 5%, which does not include the storage and transport cost an .....

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le of the imported goods indicate that the relationship did not influence the price, accordingly, held that no additions to the transaction value are warranted under Rule 10(1)(c) of Customs Valuation Rules, 2007. 4. However, the department has filed appeal against the order-in-original on the ground that no investigation has been carried out examining the circumstances surrounding the sale nor the petitioner was asked to demonstrate the correctness of the declared value, hence, the order of acc .....

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f conditions of sale conclusions have to be drawn based on that. Besides, when the balance sheet shows the flow back of ₹ 18,11,20,000/- in the year 2010-11 to the related supplier in the name of fees for shared services, the petitioner company has not produced any original agreement in this regard. Although the petitioner company has submitted a copy of service agreement dated 1.4.2010, on their failure to produce the original of the same, the unwillingness strengthens the suspicion of ta .....

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ology in Gamesa Innovation and Technology S.L. was one of the two signatories to the Technical Transfer Agreement dated 1.1.2009 relating to Wind Turbine Model AE 59/800 KW on behalf of the aforesaid company, Gamesa Innovation and Technology, S.L. with Gamesa Wind Turbines Private Limited and has also sworn to an affidavit that the certified copy is to be considered as true copy of the original of the aforesaid agreement, as the original agreement is not traceable despite diligent search, a dire .....

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natories to the original agreement has sworn to an affidavit stating that the original agreement was executed by him as an authorised signatory of Gamesa Innovation and Technology, S.L., Spain. Adding further he submitted that if the matter is remanded back to the appellate authority to reconsider the issue on the basis of the latest affidavit filed by the Managing Director-Technology of Gamesa Corporation Technologica, S.A., accepting the certified true copy of the Technical Transfer Agreement .....

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id section, only in cases where an order enhancing any penalty or fine in lieu of confiscation or confiscating goods of greater value or reducing the amount of refund, the petitioner would be given an opportunity of showing cause against the proposed order. Being so, the present case is not an enhancement of penalty or fine or confiscation of goods of greater value or reduction of refund amount, but it is a case of examination of related party transactions, wherein it is explicitly clear that ro .....

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itioner that they have not produced the corresponding annexures without which the agreement cannot be said to be complete or implementable. Further more, while dealing with the balance sheet which shows the flow back of ₹ 18,11,20,000/- in the year 2010-11 to the related supplier in the name of fees for shared services, the second respondent-appellate authority has given a finding that the petitioner has not produced any agreement in this regard, on this basis, the assessing officer has be .....

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t dated 1.1.2009 relating to Wind Turbine Model AE 59 / 800 KW on behalf of Gamesa Innovation and Technology, S.L. with Gamesa Wind Turbines Private Limited stating that the original of the Technical Transfer Agreement executed by him as an authorised signatory of Gamesa Innovation and Technology, S.L, Spain is not traceable despite diligent search, however, as per the established internal practice of the company, as soon as an agreement is executed, the original is scanned and the scanned copy .....

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