Case Law Details
Hanil Automotive India Pvt.Ltd. Vs Commissioner of Customs-III (CESTAT Chennai)
The CESTAT Chennai has held that the declared prices cannot be reviewed without any evidence to the effect that the relation between the appellant and the foreign supplier has influenced the declared price or to the effect that there was a flow back of money from the importer to the related foreign supplier. The Tribunal noted that where neither the reviewing authority nor the Commissioner (Appeals) produced evidence to show that the prices were influenced by their relation or there was certain amount of flowback to the foreign supplier, the transaction value could not be rejected.
FULL TEXT OF THE CESTAT CHENNAI ORDER
Appellants M/s. Hanil Automotive India Pvt. Ltd. are engaged in the manufacture of automotive parts for Hyundai cars since 2002; they have been importing 15% to 20% parts required for the manufacture from M/s. E-Hawa Co. Ltd., Korea who have become their principals in 2007. Before the appellants have become a subsidiary of the foreign supplier, the department have been accepting the pricelists declared by the appellants as transaction value. On the appellant becoming of its subsidiary, the appellant-importer and foreign supplier have become related parties in terms of Rule 2 (2) (i) (iv) and (xi) of Customs Valuation Rules, 2007. Special Valuation Branch (SVB) orders, dated 27.12.2007 and 11.05.2011, were issued holding that there is no change in the pattern of sale and there was no flow back in any manner. These orders were accepted by the Commissioner. In 2015, the appellant approached the SVB in respect of the supplies from M/s. Hanil Interior Co. Ltd., Korea which is also owned by the foreign company of the appellant. Order-in-Original dated 05.06.2015 was passed taking into account the material facts accepting that the import from the overseas supplier was on principal to principal basis only; Indian company has not entered into any additional arrangements other than those already declared; there is no change in the share holding pattern of the company and that the Indian company have entered into an Engineering Support Agreement and SAP Project and Support Agreement which does not have any bearing on the value of the imported goods. The department reviewed the order and filed an appeal before Commissioner (Appeals) who passed the impugned order dated 11.01.2016.
2.1 Learned Counsel for the appellant submits that the Commissioner (Appeals) has failed to consider a settled fact and law involved; he failed to notice that the original authority referred not only to the price list but also to other factors, including the earlier orders passed by SVB; Commissioner (Appeals)’ observation that the original authority has not examined whether the pricelists are applicable to the unrelated buyers in other countries, in the same commercial level and quantity or applicable exclusively to the importers in India, is incorrect as it was maintained all the while that there was only one buyer, i.e. the appellant.
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