Case Law Details
Krishak Bharti Cooperative Ltd Vs Commissioner of Central Tax (CESTAT Hyderabad)
Introduction: The recent order by the Customs, Excise, and Service Tax Appellate Tribunal (CESTAT) in the case of Krishak Bharti Cooperative Ltd (KRIBHCO) vs. Commissioner of Central Tax, Hyderabad, has brought relief to KRIBHCO. The central issue revolved around the alleged relationship between KRIBHCO and OMIFCO, an Omani company exporting goods to India, and whether this relationship influenced import prices, resulting in a demand for differential duty and penalties.
Detailed Analysis: The case unfolded with the Directorate of Revenue Intelligence (DRI) scrutinizing urea imports by KRIBHCO and IFFCO (Indian Farmers Fertilizer Cooperative) based on intelligence gathered. The investigation revealed that while the prevailing import price was $410 per MT, KRIBHCO imported urea from OMIFCO at $160 per MT. OMIFCO was a joint venture between the Oman Oil Company, IFFCO, and KRIBHCO.
The Tribunal found that the matter had already been adjudicated by a Coordinate Bench in the appellants’ case, along with IFFCO, where it was determined that the undervaluation claims lacked merit. The judgment highlighted the long-term agreements, the equity structure, and the government’s role in the joint venture. It emphasized that the relationship between the parties did not influence the import prices.
The Tribunal examined various rules under Customs Valuation Rules (CVR) 2007 to determine the relatedness between the parties. It concluded that the appellants and the government were not related persons as defined in the rules. The Tribunal emphasized that the burden of proof lies with the authority making the allegations, and in this case, the revenue failed to establish how the relationship influenced the declared prices.
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