INDOSHEEL MOULD LIMITED Vs. UNION OF INDIA

JUDGEMENT

(1.) The petitioner-Indoshell Mould Limited invokes the jurisdiction of this Court under Article 226 of the Constitution of India inter alia seeking relief and protection from unjustified investigation being carried out by respondent No.4 into import of Mercedes-Benz Engine Oil on alleged grounds of undervaluation; vacating of the seizure of two consignments of Mercedes-Benz Engine Oil by respondent No.4; unconditional release of the said two consignments of Mercedes-Benz Engine Oil without furnishing bank guarantee of Rs.2 Crores as directed by respondent No.3 and closure of investigation into alleged undervaluation by respondent No.4 against the petitioner.

(2.) It is the respondents ' case that the petitioner imported Mercedes-Benz Engine Oil ('engine oil' for short) in retail packs of one litre and 5 litres from Sinopec Lubricant (Singapore) Pte Ltd through Shanfari and Partners, Oman by payment of Customs duty on a very nominal price as compared to the price declared on the MRP label affixed on the retail packs, which in turn was supplied by the petitioner to Mercedes-Benz India Private Limited and sold by them at a very high price to authorised service centre/dealer. It is the case of the respondents that the said import is from related parties and that the restriction on sale of the imported engine oil only to Mercedes-Benz India Private Limited is a situation covered by the proviso to sub-rule (2) of Rule 3 of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007 (hereinafter referred to as 'the Customs Valuation Rules' for short).

(3.) It is the petitioner's case that they imported the engine oil in terms of framework contract for the supply of Mercedes-Benz labelled lubricants (hereinafter referred to as 'the framework contract' for short) entered into between Daimler AG and Sinopec Lubricant Company Limited on January 26, 2018. As per the framework contract, Sinopec Lubricant Company Limited is required to supply private label products to the Daimler Group in the countries set forth in the contract. The price at which Sinopec Lubricant Company Limited would supply the goods to Daimler AG or another Daimler AG Group member is set out in the framework contract. The framework contract allows Sinopec Lubricant Company Limited to appoint agents/distributors for supply of the engine oil. It also permits other members of Daimler Group to enter into an individual contract with Sinopec Lubricant Company Limited or a member of their group. Since Sinopec Lubricant (Singapore) Pte Limited is not registered in India and Salalah Overseas Company LLC/ Shanfari and Partners LLC (Oman based companies) were authorised to supply Sinopec products for the Indian market, Sinopec Lubricant authorised Salalah Overseas Company LLC/Shanfari and Partners to handle this business. Hence, a framework distribution agreement between Sinopec Lubricant, Salalah Overseas and the petitioner was executed in November, 2017 (hereinafter referred to as the 'Tri-Partite Agreement '). The Tri-Partite Agreement was amended vide Addendum 1 to include the name of Shanfari and Partners LLC, Oman in place of Salalah Overseas Company LLC Oman. As per the Tri-Partite Agreement the Mercedes-Benz Oil was to be supplied by Sinopec Lubricant to Salalah Overseas/Shanfari and Partners and which in turn was to be shipped to India to the petitioner for final supply to Mercedes-Benz India Private Limited. In terms of the agreement Salalah Overseas/Shanfari and Partners would receive purchase order for supply of Mercedes-Benz Oil from the petitioner and in turn place purchase order on Sinopec Lubricant. The petitioner on receipt of the purchase order from Mercedes-Benz India Private Limited would supply Mercedes-Benz Oil to them. The petitioner has to pay Salalah Overseas/Shanfari and Partners after receipt of payment from Mercedes-Benz India Private Limited.