JKM DAERIM AUTOMOTIVE LTD. Vs. CC

JUDGEMENT

(1.) Both these appeals filed by the party and revenue arise from a common Order -in -Appeal No. 800/2001 dated 7.12.2001 by which the Commissioner (Appeals) has confirmed the Order -in -Original passed by the Dy. Commissioner of Customs loading the invoice value by 20% However, he has agreed with the importer's contention that they are not related person of supplier's company who held 20% of the share capital of the appellant's company. He has noted that as per Rule 2 (2) (iv) of customs Valuation Rules, 1988 persons shall be deemed to be related if any person directly or indirectly owns, controls or holds 5% or more of the outstanding stock or shares of both of them. He has noted that it is well settled that "any person" referred to here is a person other than the importer and the supplier (decision in the case of CC Mumbai Vs. Modi GBC Ltd., 1999 (114) ELT 931 (T). He has noted that, in the instant case, it has not been shown that any third person owns more than 5% of the shares in both the appellant -importer and the supplier's companies but only the supplier is holding 20% of share capital of the appellant -company. Therefore, he has noted that the conclusion arrived at by the Dy. Commissioner in Order -in -Original that they are related person as per Rule 2 (2) (iv) of Valuation Rules is not tenable. Both the revenue and importer are aggrieved with the findings of the Commissioner.

(2.) Appellants had imported 18 nos. of CNC Tapping machines and declared the value in the invoice at US 46,400 per machine. However, the department proceeded to load the value to US 58,000 per machine as per Rule 8 of Customs Valuation Rules, 1988. It is appellant's case that Korean currency deteriorated against US Dollar between the time of entering into the agreement and the time of opening of Letter of Credit / payment. As such the price was renegotiated with sustained correspondence and only after appellant's banker IDBI agreed with revised value in terms of revalued depreciated price of the Korean currency, the invoice price was fixed. It is stated that the agreement was modified in terms of correspondence and subsequent agreement rendered into by them with regard to re -structure of the price Therefore, the subsequent price of the price which should prevail and should be accepted. The lower authority as well as Commissioner (Appeals) did not agree with their contention including with the Board's circular which stated that as per exchange allowed by exchange banks with the concurrence of shippers on account of loss of exchange banks with the concurrence of shippers on account of loss of exchange need not be included in the real value if it is proved that the shipper's decision to absorb exchange loss had been reached and the letter announcing it, was despatched before the goods were cleared. The Commissioner has noted that no correspondence was produced to show the negotiated price was taken due to exchange loss. Therefore, he held that the price reduction had not been established as due to the exchange value deterioration. It was also held that reduction of price had not been shown as due to purely commercial considerations or as one that was extended to any other buyer under identical circumstances and so on.

(3.) It was argued by Shri Subramaniam, learned consultant that all the correspondence had been placed before the Commissioner who has failed to see the same. He drew our attention to the correspondence appellant -importer had with the supplier and the letter given with the help of their bankers Industrial Bank of India (IDBI). The letter of credit was opened only after the price was re -fixed on the imported item in terms of prevailing price and therefore that should be accepted as the transaction value. He submits that appellant and the supplier are not related person and in this regard relied on large number of judgments. It is his submissions that revenue has challenged the finding of the Commissioner to hold that they are not related persons which is not in keeping with the ration of the judgment relied by him. He submitted that the negotiated price should be accepted and the agreement price was no longer invoked and cannot be taken to load the invoice value.