Appeal No. C/51334/2018-CUS(DB) (Arising out of Order-in-Appeal No. CC (A)/CUS/D-1/Gen/NCH/23/2018 dated: 12.02.2018 passed by the Commissioner of Customs (Appeals) New Delhi) and Final Order No. 53049/2018

Decided On: 27.09.2018

Appellants: Hi-Lex India Pvt. Ltd.
Respondent: Commissioner of Customs, New Delhi

Hon'ble Judges/Coram:
Anil Choudhary, Member (J) and Bijay Kumar


Bijay Kumar, Member (T)

1. The present appeal is filed by the appellant against the Order-in-Appeal No. CC(A)/CUS/D-1/Gen/NCH/23/2018 dated 12/2/2018 passed by the Commissioner(Appeal), wherein he has set aside the Order-in-Original No. SBB/CUS/Prev/140/RK/2014-15.

2. The brief facts of the case are that the Appellant is engaged in the manufacture of mechanical control cables, transmission cables and window regulators. The Appellant also imports various inputs which is mostly imported goods from their group companies, including Hi-Lex Corporation, Japan (Hi-Lex Japan) for use in the manufacture of final products.

3. The appellant has not executed any agreement with overseas related entities for purchase of imported goods. The price of imported goods is determined based on the price list which in turn is based on the various factors such as cost of raw-materials and technology involved in their manufacture, manufacturing and general over rates and profit margin. The appellant has executed a License and Technical Assistance (LTA) Agreement dated December 1st, 2005 with Hi-Lex, Japan. This agreement was substituted vide LTA agreement dated October 1st 2013. In terms of LTA agreement, the appellant has been granted a right to manufacture assemble and sell licensed product of their principal. The appellant mandated for the remittance of royalty of 1 percent of net selling price excluding value of the goods imported from overseas related entities. The appellant has also executed following agreements for its manufacturing activity from Hi-Lex Japan;

4. The appellant vide its later dated 29th January 2015 submitted the SVB questionnaire with the Customs Authority for the renewal of the SVB order. The SVB vide its order of March 2015(Original order) accepted the transaction value declared by the Appellant to be at the arms length and no hence adjustments were to be made under Rule 10 of the Customs Valuation(Determination of Price of Imported Goods) Rules 2007. Against this order, the appeal was filed before this Commissioner (Appeal) by the Revenue. After examining the grounds of appeal, the Ld. Commissioner (Appeal) set aside the order of the ld. Adjudicating Authority and allowed departmental appeal and hence this appeal.

5. The appellant has preferred the appeal on the ground that the pricing mechanism has been repeatedly examined and consistently accepted by the Department vide order dated 2nd February, 2009 and 29th February, 2012 wherein the department has accepted the order and had not challenged the same. Having not done so, these orders and the valuation mechanism as adopted by the appellant attended in its finality and cannot be disturbed at this point of time without any changed circumstances. The Appellant has relied upon the judgment of this Tribunal in case of CCE v. E.I. Dupont India Pvt. Ltd. final order no. 53360/2017 dated 21st April 2007. That the ld. Adjudicating Authority has passed the order after dully considering their balance sheet a copy of LTA agreement and other agreements and the specimen copies of Bills of Entry. The certificate was also issued by the Hi-Lex Japan certifying the price of imported good has been determined in normal course of business without being influenced by their relationship. The appellant has also filed affidavit before the Appellate Authority that there has been no challenge in the pricing mechanism since 2012 when the issue was examined by the SVB Branch of the Customs House. Therefore, the appellant is of the opinion that the impugned order quashing the subject Order-in-Original by the appellate authority is without the proper appreciation of the factual matrix of instant case.

6. The Commissioner (Appeal) has set aside the order of the ld. Adjudicating Authority on the ground that the Adjudicating Authority has not examined the balance sheet of the last three years, NIDB data of the relevant period and without examining the Rule 4 and Rule 5 of the Customs Valuation Rules. It was also held in the impugned order that the Adjudicating Authority failed to verify the issue of any payment made over and above the price of goods of the foreign supplier which is evident from balance sheet from the appellant. The reason from such payment was not on account of price of the goods but for other heads such as royalty.

7. The Ld. DR has reiterated the ground contained in the appeal memorandum filed before the Commissioner (Appeal) and also submitted that the Adjudicating Authority has not examined the transaction between the appellant and their principle with respect to the NIDB data and balance sheet as explained in the impugned order.

8. We have heard the rival submissions and perused the case records.

9. It is a fact, not disputed, that the Appellant has imported the goods from their principle (Hi-Lex Japan) for the manufacture of goods and sale thereof. This import had been affected since 2009 and 1998 when first such import was made in year and the transaction value was examined by the Special Value Branch of the Customs House. The Assistant Commissioner, SVB passed first order dated 2.01.2006 and thereafter reviewed the same vide renewal order dated: 2.02.2009 and 29.02.2012 wherein it was categorically concluded that imported price is not influenced by the relationship as per Rule 2(2) of the Customs Valuation (Determination of value of imported goods) Rules, 2007. From the impugned order, we find that the Commissioner (Appeal) has not given any categorical finding as to how the relationship had influenced the transaction value especially when it is on record by way of affidavit that the LTA agreement of 2005 and 2013 have not changed. The pattern of sale transaction the terms and conditions in the two LTAs are same. Even in the impugned order which has been passed against O-I-O No. SVB/CUS/Review/HO/RK/2014-15 dated 4.03.2015 by the adjudicating authority has examined the agreement in detail and came to the conclusion that the relationship has not influenced the transaction value under the Customs Valuation Rules. On this finding of the Commissioner(Appeal) has not given as to how the NIDB data will be relevant in this case when it is apparent from the facts on records that there is no import/sale of the products in India. The issue NIDB data has never been taken up by the Revenue in the previous imports made by the importer for this reason. We are in agreement that the appellant's contention that when the Revenue has accepted the previous orders of 2006, 2009 and 2012 and has not challenged the same before any higher forum the valuation adopted by the Appellant. Thus the same attended finality as there was no challenge in to those orders. After going through the impugned order, we find that the Commissioner (Appeal) has simply accepted the grounds of appeal filed by the Revenue in without giving any independent findings on the point received in the appeal. On the other hand we find that the lower Adjudicating Authority has dealt with the valuation of the imported by the Appellant as per Customs Valuation Rules after going through the LTA, and examining the affidavit filed by the Appellant. There is no application of NIDB data in the case where the issue is examination of adoption of valuation under Rules, 2(2) Customs Valuation Rules, 2007 Ipso-facto. For this we refer and rely on the decision of Hon'ble Supreme Court in the case of Either Tractors Ltd. v. Commissioner of Customs(2000(122) ELT-321 (SC), where in it is held that the NIDB data merely provides price indicator of the producer to the Assessing Officer. It is not substituted for assessable value. It is trite that the assessable value can't be rejected merely on the grounds of NIDB data. In the case of Commissioners (Appeal) in the impugned order has not taken any pain to find out the NIDB data available for the product in question especially when there is a categorical acceptance by the Adjudicating Authority that there is no import/sale price available before him.

10. In view of the above we set aside the impugned order and restore the order passed by the primary Adjudicating Authority.

(Pronounced in open court on 27/09/2018)

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