Adjudicating Authority can reject transaction value if assessee fails to prove that relationship had not influenced price

[Arising out of Order-in-Appeal C.Cus.763/06 dated 23.10.2006 passed by the Commissioner of Customs (Appeals), Chennai]

Brief of the case:

The CESTAT Chennai in the case of Ansaldo STS Transportation Systems India Pvt. Ltd vs. Commissioner of Customs, Chennai held that if the importer had entered into transaction with related persons and failed to prove that the price had not been influenced by the relationship then adjudicating authority was justified in rejecting transaction value and arriving value as per Rule 5 to 8 of Customs Valuation Rules, 1988.

 Facts of the case:

• The appellants have entered into agreements with various sister subsidiary companies i.e. 100% subsidiaries of its Netherland based holding co. – M/s Ansaldo Signal NV, Netherlands for import of components and parts and also for technical knowhow, software maintenance, design and servicing etc.
• Since both the assessee and the foreign company were found to be related, a case was registered in Special valuation Branch to examine the relationship and its influence on the transaction value. Pending completion of proceedings, provisional assessment was ordered with the deposit of 1% Extra Duty Deposit.
• Special Valuation Bench rejected the transaction value and assessed the value as per Rule 8 of Customs Valuation Rules, 1988 by considering assessee and the foreign companies as related persons in terms of Rule 2(2)(vii) of Customs Valuation Rules,1988.
• The findings of Special Valuation bench was upheld by Commissioner of Customs (Appeals), against which assessee is in appeal before the CESTAT Chennai.

 Contention of the Assessee: