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2016 (9) TMI 175 - CESTAT MUMBAI

2016 (9) TMI 175 - CESTAT MUMBAI - TMI - Valuation joint venture related parties relationship influencing the price - transaction value - Rule 4(3)(b) of the Customs valuation Rules Held that: - merely by holding 40% equity by the foreign company, Indian company cannot become a related person to the foreign company. Therefore, when there is no relationship, transaction value cannot be questioned. Rule 4(3)(b) does not apply appeal dismissed decided against Revenue. - Appeal No. C/950 .....

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-cause notice was issued to them on 5.6.2000 proposing enhancement of value by 20% as the relationship appeared to have been influenced the price of the goods. It was contended that the respondent is a Joint Venture company in which the foreign collaborator M/s Verbatim Corporation, USA has an equity participation of 40%. In the adjudication, it was held that the respondent is a related person to the foreign company on the basis of 40% equity held by the foreign collaborator. Accordingly, 20% wa .....

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nnot be accepted. The respondent has not produced any documentary evidence to justify their transaction value. Therefore, the lower authority has rightly enhanced the assessable value by 20%. He also submits that as per the grounds of appeal, the Commissioner (Appeals) failed to appreciate that the importer has paid one lakh US $ as technical knowhow fee, which is addable in the declared value under Rule 9(1)(c) of the Customs Valuation Rules, 1988. 4. Shri M.L. Grover, learned Counsel appearing .....

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n'ble Supreme Court s decision in the case of Commissioner of Central Excise, Mumbai Vs. Fisher Rosemount (India) Ltd. 2001 (134) ELT 321 (SC) and the Tribunal s order in the case of Initiating Explosives Systems (I) Ltd. Vs. Commissioner of Customs, Kolkata 2002 (150) ELT 195 (Tri-Kol). According to which if the foreign supplier is holding less than 50% equity, the Indian company cannot be held as related person. 4.1 As regards the issue of addition of technical knowhow fee of one lakh US D .....

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person to the foreign supplier on the basis that foreign supplier is holding 40% equity in the respondent s company. We are of the view that merely by holding 40% equity by the foreign company, Indian company cannot become a related person to the foreign company. Therefore, when there is no relationship, transaction value cannot be question. The learned Commissioner (Appeals) has given detailed finding in this regard, which is reproduced below: - I have carefully gone through the impugned order .....

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to respond to the communications of the department. I find that the lower authority in the impugned order has stated that the order is based on various written and oral submissions by the importer , this implies that the appellants have indeed made some written and oral submissions. The appellants besides other grounds have submitted that this is contrary to the finding in the impugned order that the appellants neither made any written submissions nor did they attend personal hearing. The appel .....

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ated person on account of 40% equity participation and the appellants could not demonstrate the value under rule 4(3)(b). I observe from the judgment cited by the appellant that mere holding of equity in the share capital and having foreign directors on the Board of Directors does not constitute a relationship that has influenced the price. As held by the Tribunal in the case of M/s Initiating Explosives Systems (I) Ltd. Vs. Commissioner of Customs, Kolkata 2002 (150) ELT 195 (Tri-Kol) onus to p .....

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