Amada India Pvt. Ltd vs Commissioner Of Customs, Mumbai

(Arising out of Order-in-Original No. 256/MCH/DC/GVC/2013 dt.05.04.2013 passed by the Commissioner of Customs (Appeals) Mumbai)

For approval and signature:

Honble Mr. Anil Choudhary, Member (Judicial) Honble Mr. P.S. Pruthi, Member (Technical)

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1. Whether Press Reporters may be allowed to see : the Order for publication as per Rule 27 of the CESTAT (Procedure) Rules, 1982?

2. Whether it should be released under Rule 27 of the : CESTAT (Procedure) Rules, 1982 for publication in any authoritative report or not?

3. Whether Their Lordships wish to see the fair copy : of the Order?

4. Whether Order is to be circulated to the Departmental : authorities?

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Amada India Pvt. Ltd. : Appellant

VS

Commissioner of Customs, Mumbai : Respondent

Appearance

Shri T. Viswanathan, Advocate for Appellant

Shri M.K. Mall, Assistant Commissioner (A.R) for respondent

CORAM:

Mr. Anil Choudhary, Member (Judicial) Mr. P.S. Pruthi, Member (Technical)

Date of hearing : 13/03/2015 Date of decision : 13/03/2015

ORDER NO.

Per : P.S. Pruthi

The appellant are in appeal against the order dt. 5.4.2013 passed by the Commissioner of Customs (Appeals) MumbaiI.

2. The appellant is a wholly own subsidiary of Amada Company Ltd. Japan. They import machineries for demonstration purposes and also spares and tools for the purpose of undertaking after sales service in respect of capital goods imported by third parties from the holding company. As regards machinery, the imports are valued at cost plus basis. However, they received commission equal to the difference of price charged to the appellant and third parties, after February 2011. Being related to their Principal in terms of Rule 2(2) of the Valuation Rules, their case was referred to the Special Valuation Branch for determining the assessable value in respect of their imports of spares. Vide order-in-original dt. 31.1.2006, the Dy. Commissioner ordered loading of 400% to the invoice value of 5 imported spare parts. This order had attained finality. As this order was to expire after 3 years i.e. in 2009, it was taken up for review and vide SVB Order dt. 14.11.2011, the Assistant Commissioner held that for spare parts imported till February 2011 a loading of 100% is ordered. For the period after February 2011, in view of the invoicing pattern and commission pattern, the transaction value of spare parts was ordered to be accepted. In respect of machines, the transaction value was accepted as the value at which they were being sold to the appellants and to the third parties was the same and in some cases even higher than the value of imports by the third parties.

2.1 Revenue reviewed the order of Assistant Commissioner and directed to file an appeal before the Commissioner (Appeals) with the following observations:

(i) In order dt. 31.1.2006, the five parts were imported at much higher prices than the invoice prices.

(ii) No consideration is to be paid to importers contention that enhancement of value cannot be done only on basis of price lists meant for end user when no actual imports have been made.

(iii) Amada Japan has two separate pricelists  one for all subsidiary companies world over and the other for Japanese domestic market.

In the appeal proceedings, the appellate authority i.e Commissioner (Appeals) vide impugned Order dt 5.4.2013 set aside the order dt. 14.11.2011 of the Assistant Commissioner with the following observations:

* No factual data has been recorded to arrive at the loading of 100%.

* The changed circumstances viz-a-viz the earlier order of Assistant Commissioner dt.31.1.2006 have not been elaborated. * Details of third party import have not been taken into account.

* The importers contentions were accepted without due scrutiny of evidence regarding relationship on the pricing.

The appellant is in appeal before us against this Order of Commissioner (Appeals).

3. Heard both sides and considered the submissions.

4. We find in this case that both the review directions (of the Commissioner) to the department to file appeal before the Commissioner (Appeals) as well as the order of Commissioner (Appeals) are very perfunctory, lack substance and have been passed with non- application of mind. A strict legal analysis of the order of Commissioner (Appeals) can lead to the conclusion that as the Assistant Commissioners order has been set aside without any Order to redetermine the value, the same is non est and therefore no loading of value would be required to be done. The Order of Commissioner Appeals could not have been more vague. The review directions too, do not indicate how the loading should be done. The wording of the review directions is such that it restrict itself only to 5 parts which were considered in the earlier order of the AC dt. 31.1.2006. It gives no indication whatsoever as to why loading of 100% should not accepted for the remaining parts. The Commissioner (Appeals) has made a wrong statement in saying that Nor have any factual data been recorded to arrive at the loading of 100%.

We find from the records as well as the Assistant Commissioners order that he had considered the difference in prices of imports made by the appellant and third party buyers in India. We have seen a copy of one invoice considered by the AC, that is invoice number Y15510 dt. 16.10.2007 appearing at page 550 of the document files submitted by the appellant before the Assistant Commissioner at the time of hearing. This invoice shows that the difference in prices ranges from 27% to 175% in respect of different parts covered in the invoice. According to the Ld. Counsel, the Assistant Commissioner considered various invoices at random and found the price variation ranging from 22% to 183%. After allowing 15% commission earned by the importer on the third party transactions, he found the price difference ranging from 7% to 168%. Thereafter he concluded that the average price difference is 100% and accordingly loaded the invoice values uniformly for all spares and tools by 100%. It is strange that although the AC had scrutinized factual data, the Commissioner (Appeals) did not even care to see the records and made an arbitrary statement .

This attitude of the appellate authority is neither in the interest of revenue nor does it provide justice to the appellant; it only prolongs litigation by many years.

4.1 At the same time we also observe that the basis for selecting invoices (there may be hundreds of invoices according to the Ld. Counsel) is not forthcoming in the order. Neither is it evident as to what statistical tool was used by the adjudicating authority to arrive at the average loading of 100% uniformly in respect of all parts even though the range of price difference differs appreciably from one spare part to another as illustrated by the invoice referred to above. Therefore we have come to the conclusion that is no alternative to remanding the matter back to the adjudicating authority who would be well advised to decide the matter afresh quickly keeping in mind the facts and the law on Valuation including the Valuation Rules.

4.2 The Commissioner (Appeals) has not disputed the decision of the Assistant Commissioner on the acceptance of transaction value of parts imported from March 2011 onwards. He has also not disputed the valuation in respect of machinery imports. Therefore, these two issues having attained finality need not be decided afresh by the Assistant Commissioner.

5. In the end we order that the case is remanded to the Assistant Commissioner for de novo consideration only in respect of determination of value of the imported spares for the period upto February 2011. Needless to add, an opportunity of personal hearing shall be given to the appellant. The appellant will provide all documents necessary, if not already provided. The Assistant Commissioner should keep the observations of the Tribunal in mind while deciding the case. The Assistant Commissioner should decide the matter within four months of the receipt of this Order.

6. Appeal is allowed by way of remand in the above terms.

(Pronounced in court)

(Anil Choudhary) Member (Judicial)

(P. S. Pruthi) Member (Technical)

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