In re Adama India Private Limited (CAAR Mumbai)
The Customs Authority for Advance Rulings (CAAR), Mumbai, considered an application filed by the applicant under Section 28H of the Customs Act, 1962 seeking an advance ruling on the valuation of products imported from related parties outside India under a proposed intercompany pricing methodology aligned with its transfer pricing policy. The applicant sought rulings on three issues: (i) whether the proposed methodology incorporating periodical adjustments was acceptable as the transaction value under Section 14 of the Customs Act read with Rule 3(3)(a) of the Customs Valuation Rules, 2007 (CVR); (ii) alternatively, whether the methodology was acceptable under Rule 7 read with Rule 3(3)(a); and (iii) whether residual royalty paid in relation to domestic procurement and third-party imports was not includible in the assessable value under Rule 10 of the CVR, 2007.
The applicant stated that it is part of the ADAMA Group and undertakes formulation, packaging, marketing and distribution of agrochemical products in India. It imports active ingredients and finished products from related overseas entities as well as from third-party suppliers. It also referred to earlier Special Valuation Branch (SVB) orders dated 31 August 2016, 30 September 2022 and 4 October 2022, under which the declared invoice values had been accepted as transaction values after examination of the relationship between the parties, pricing methodology, intercompany agreements and transfer pricing documentation.
