Higher discount justified if Goods imports in Bulk & maintain inventory by incurring Additional Cost

Lutron GL Sales & Services Pvt. Ltd. Vs Commissioner of Customs (CESTAT Delhi)

The issue under consideration is whether the percentage of enhancement to the transaction value ordered by the Deputy Commissioner of Customs is justified in law?

In the present case, the appellant M/s Lutron GL Sales & Services Pvt. Limited imports lighting control systems from their parent company, “related party”, M/s Lutron Electronics Co., Inc. USA. These products include sensors and dimmers, processors, controllers, radiofrequency, transmitters, interfaces, shades, etc. which are used for convenience and energy-saving solutions to customers. The appellant is registered with SVB. Revenue started an investigation into the matter of the influence of their relationship on the invoice value of imported goods. The Deputy Commissioner directed enhancement of value by 77%, to make it at par with the price offered to the ASD. It was further held that substantial incontrovertible documentary evidence could not be provided by the appellant, for acceptance of the transaction value.

CESTAT while allowing the application of the appellant held that the appellant imports in bulk for resale and also stock the goods in sufficient quantity to meet the demand for the goods which results in an additional cost to them in warehousing and reselling of the goods. Further, the appellant also undertakes sales promotion activity which is not done by the Authorised Stocking Distributors  (ASD) and other importers. Accordingly, the higher discount enjoyed by the appellant on the list price as compared to the ASD has got reasonable justification. Further they states that some of the identical goods imported by the appellant and other importers, there appears to be a requirement of some adjustment. Accordingly, we modify the direction of enhancement of transaction value by 77% to 20% for the period 2013-14 to 2016-17. For the year 2017-18, there is apparently no such difference in the import value by other importers and the appellant and as such, no enhancement in the transaction value is required.

Accordingly, CESTAT allow this appeal by way of remand to the Court below to the Deputy Commissioner, SVB to re-determine the adjustment, if any, in the transaction value on the basis of deductive value and computed value.

Please become a Premium member. If you are already a Premium member, login here to access the full content.