Service charges paid by Assessee will not form part of assessable value of raw materials imported if the services received are not a condition for sale of imported goods
Alcan India Pvt Ltd. (the Appellant) entered into Agreements with Alcan Packaging Singen GMBH, Germany for availing certain Management Consultancy services and paid BU charges. Similarly, the Appellant also entered into an Agreement with Pechiney Plastic Packaging for deputation of staff and paid the emoluments to the staff deputed.
The Department contended that without these services, the Appellant could not have run their plant in India and therefore, these expenses should form part of the assessable value of the raw materials imported under Rule 10(1) of the Customs Valuation (Determination of Value of Imported Goods) Rules, 2007(the Valuation Rules), which was further upheld by the Adjudicating Authority.Being aggrieved, the Appellant preferred an appeal before the Hon’ble CESTAT, Mumbai.
At the outset, the Hon’ble CESTAT, Mumbai observed that the Order of Adjudicating Authority does not specify under which clause of Rule 10(1) of the Valuation Rules, service charges are includible in the assessable value of the goods imported. Further, Clauses (a) to (d) of Rule 10(1) of the Valuation Rules have no application to the facts in the instant case and if at all, only Clause (e) would be relevant, the crucial factor for application of the said Clause is that the payment should have been made as a condition of sale of the goods imported.
Accordingly, the Hon’ble Tribunal held that since the services received are not a condition for sale of the imported goods, the payments made for the services received will not form part of assessable value of imported goods. Hence, the pre-requisite for application of Rule 10(1)(e) of the Valuation Rules is not satisfied. The Hon’ble Tribunal further held that while alleging under valuation, it is for the Revenue to lead evidence which is absent in the instant case. Thus, the matter was decided in favour of the Appellant.
(Bimal Jain, FCA, FCS, LLB, B.Com (Hons), Mobile: +91 9810604563, Email: firstname.lastname@example.org)