Case Law Details
In re Foxconn Technology (India) Pvt. Ltd. (CAAR Mumbai)
1. The applicant M/s. Foxconn Technology (India) Private Limited (hereinafter referred to as FTIPL / applicant) is engaged in the business of manufacturing and trading electronic products, particularly communication network products and components, computers and computer parts, devices and systems for use in various industrial and domestic sectors. The applicant company is a subsidiary of Ingrasys (Singapore) PTE Ltd (hereafter referred to as “Ingrasys Singapore”) which holds 99% of the share capital of the applicant company. The applicant imports various electronic products, components, etc., from Ingrasys Singapore and engages in the manufacture and sale of network cabinets and server cabinets. The applicant is also engaged in a trading activity whereby they import goods like server racks from Ingrasys Singapore and then sell the same in the domestic market. This application for Advance Ruling dated 19.11.2022 is pertaining to the Customs valuation of imported goods for trading activity.
3.1 Applicant’s submissions are reiterated as follows:
M/s Amazon Data Services Private Limited (hereafter referred to as ADSPL), a third party buyer, has contracted with M/s Ingrasys Singapore (foreign parent company of the applicant) for the purchase of server racks and the terms of the contract are agreed to between them and this agreement is for the global operations of ADSPL. In pursuance of the same, the applicant imports the goods based on purchase order (PO) raised by ADSPL on them and in turn the applicant raises a similar PO on Ingrasys Singapore for import of the required products. The said goods are classifiable under Chapter heading 8471 of the Customs Tariff and the Basic Customs duty is exempted for the same, but IGST @ 18 % is payable. The freight for import of the goods is paid directly to the carrier / freight service provider by ADSPL in terms of the master agreement between ADSPL and Ingrasys Singapore. The applicant does not engage in trading of goods in this model with any other domestic purchaser.
3.2 The applicant does not undertake any value addition on the goods. It earns a margin of 3% while trading imported goods. The assessable value for payment of customs duties has been determined by the applicant as the sum of price at which the goods are sold by Ingrasys Singapore to the applicant plus freight. It may be noted that such freight is directly met by ADSPL.
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