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2015 (9) TMI 1261 - SUPREME COURT

2015 (9) TMI 1261 - SUPREME COURT - 2015 (324) E.L.T. 17 (SC) - Valuation - Misdeclaration of value - import of Mencozeb Technical 85 % at US$2.10 per kg., CIF - sole distributor - rejection of value - contemporaneous import - Held that:- On perusal of the transaction between M/s. R & H and the assessee, as it is clear from the reading of agreement, was at arms length. By no stretch of imagination it can be said that M/s. R&H had been controlling the assesee either directly or indirectly. In fac .....

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ght on record to show that they were contemporaneous sales/transactions at high price. Reliance upon the agreement between M/s. Indofil and M/s. R&H is of no avail as admittedly the transaction between the aforesaid two parties were for the period prior to 01.11.1995 and they were not contemporaneous. We, thus, do not find any error in the judgment of the Tribunal - Decided against Revenue. - Civil Appeal No. 4469/2006 - Dated:- 8-9-2015 - Mr. A.k. Sikri and Mr. Rohinton Fali Nariman, JJ. For th .....

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dent/assessee herein had entered into agreement dated 01.11.1995 with one M/s. Rohm Hass Company (hereinafter referred to as "M/s. R&H"). In this agreement, the assessee was to import the product known as Mencozeb Technical 85 % at US$2.10 per kg., CIF, Mumbai. Large quantities of the aforesaid product were imported by the assessee from M/s. R&H under the said agreement. Agreement also provided that the assessee was to be the sole distributor for the aforesaid product and it wa .....

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ion of M/s. Modipon Ltd. Agreement with M/s Indofil was entered on 03.05.1965 which continued up to 31.10.1995 and on termination of the agreement between M/s. R&H and M/s. Indofil, arrangements were entered into by M/s. R&H with the assessee on 01.11.1995. The Revenue found that M/s Indofil had paid the price of the product at US$2.71 per kg., CIF, Mumbai during the period from December, 1994 to March, 1995 and US$2.85 per Kg. for the period from August, 1995 to February, 1996. Since M/ .....

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assessee. The assessee challenged this order by filing appeal before the Customs Excise and Service Tax Appellate Tribunal (CESTAT) and the CESTAT has allowed the said appeal. A perusal of the order of Adjudicating Authority would show that the assessee was treated as related person of M/s. R&H and for this reason the price at US$2.10 per kg. shown in the invoices was discarded as to be the transaction value. Rule 2(2) of the Customs Valuation (Determination of Price of Imported (Goods) Rul .....

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ctly controls the other; (vi) both of them are directly or indirectly controlled by a third person; (viii) together they directly or indirectly control a third person; or (viii) they are members of the same family. Explanation I-The term "person" also includes legal persons. Explanation II-Persons who are associated in the business of one another in that one is the sole agent or sole distributor or sole concessionaire, however described, of the other shall be deemed to be related for t .....

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ake a 'related person' as a sole distributor only if it falls within the criteria of this sub-rule. Therefore, mere sole distributorship is not the conclusive consideration. It has also to be demonstrated that the case falls in one of the clauses mentioned in Rule 2(2) out of clauses stipulated therein. The transaction between M/s. R & H and the assessee, as it is clear from the reading of agreement, was at arms length. By no stretch of imagination it can be said that M/s. R&H ha .....

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ead as under: "11. On a plain reading of Section 14(1) and Section 14(1A), it envisages that the value of any goods chargeable to ad valorem duty has to be deemed price as referred to in Section 14(1). Therefore, determination of such price has to be in accordance with the relevant rules and subject to the provisions of Section 14(1). It is made clear that Section 14(1) and Section 14(1A) are not mutually exclusive. Therefore, the transaction value under Rule 4 must be the price paid or pay .....

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fore, what has to be seen by the Department is the value or cost of the imported goods at the time of importation, i.e., at the time when the goods reaches the customs barrier. Therefore, the invoice price is not sacrosanct. 12. However, before rejecting the invoice price the Department has to give cogent reasons for such rejection. This is because the invoice price forms the basis of the transaction value. Therefore, before rejecting the transaction value as incorrect or unacceptable, the Depar .....

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on has to be proved. If the charge of under-valuation cannot be supported either by evidence or information about comparable imports, the benefit of doubt must go to the importer. If the Department wants to allege under-valuation, it must make detailed inquiries, collect material and also adequate evidence. When under-valuation is alleged, the Department has to prove it by evidence or information about comparable imports. For proving under-valuation, if the Department relies on declaration made .....

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ence of contemporaneous imports at higher price, the onus shifts to the importer to establish that the invoice relied on by him is valid. Therefore, the charge of under-invoicing has to be supported by evidence of prices of contemporaneous imports of like goods. 13. Section 14(1) speaks of "deemed value". Therefore, invoice price can be disputed. However, it is for the Department to prove that the invoice price is incorrect. When there is no evidence of contemporaneous imports at a hig .....

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