Triumph Motorcycles (India) Pvt. Ltd. Vs Addl. Director General (Adjudication) (CESTAT Delhi)
The appeal was filed by Triumph Motorcycles (India) Pvt. Ltd. challenging the order dated 24.09.2020 issued by the Additional Director General (Adjudication), DRI, New Delhi. The order had re-determined the transaction value of imported motorcycles, accessories, and parts by including payments made towards Management Service Fees (MSF) and Advertisement and Promotional Expenses (APE) as part of the customs value under Section 14(1) of the Customs Act, 1962, read with Rule 10(1)(e) of the Customs Valuation Rules, 2007. The order demanded recovery of differential customs duty along with interest and penalty under various provisions of the Customs Act and held the goods liable for confiscation.
Triumph India, a wholly owned subsidiary of Triumph Motorcycles (Singapore) Pte. Ltd., imports completely built and completely knocked-down motorcycles and related products from Triumph Motorcycles Ltd., UK and Triumph Motorcycles (Thailand) Ltd. The company had entered into two agreements — a Distributor Agreement (01.07.2013) with Triumph UK governing sale, marketing, and distribution of goods, and a Management Services Agreement (28.06.2013) under which Triumph UK provided management and administrative support. Both agreements were renewed on 01.07.2017.
The DRI investigation, which began with summons in 2016, resulted in a show cause notice dated 30.09.2019, alleging that MSF and APE payments constituted a “condition of sale” of imported goods, warranting inclusion in customs valuation under Rule 10(1)(e). The notice covered the period from July 2014 to June 2019 and alleged undervaluation of imports.
