News Update

India-Ghana Joint Trade Committee meeting held in AccraGhana agrees to activate UPI links in 6 monthsGST - Record does not reflect that any opportunity was given to petitioner to clarify its reply or furnish further documents/details - In such scenario, proper officer could not have formed an opinion - Matter remitted: HCED seizes about 20 kg gold from locker of a cyber scammer in HaryanaGST - Mapping of PAN number with GST number - No fault of petitioner - Respondent authorities directed to activate GST number within two weeks: HCGST - Circular 183/2022 - Petitioner to prove his case that he had received the supply and paid the tax to the supplier/dealer - Matter remitted: HCGST -Petitioner to produce all documents as required under summons -Petitioner to be heard by respondent and a decision to be taken, first on the preliminary issue raised with regard to applicability of CGST/SGST: HCGST - s.73 - Extension of time limit for issuance of order - Notifications 13/2022-CT and 09/2023-CT are not ultra vires s.168A of the Act, 2017: HCSun releases two solar storms - Earth has come in its wayRequisite Checks for Appeals - RespondentInheritance Tax row - A golden opportunity to end 32-years long Policy Paralysis on DTCThe Heat is on: Preserving Earth's Climate in the Face of Global WarmingVAT - Timeline for frefund must be followed mandatorily while recovering dues under Delhi VAT Act: SCIndia, Australia to work closely for collaborative projectsCX - All the information was available to department in 2003 itself, therefore, SCN issued four years after gathering information is not sustainable and is highly barred by limitation: HCPowerful voices of amazing women leaders resonated at UN Hqs75 International visitors from 23 countries arrive to watch world's largest elections unfoldCentre asks States to improve organ donation frequencyCus - Revenue involved in the appeal filed by Commissioner is far below the threshold monetary limit fixed by the CBEC, therefore, department cannot proceed with this appeal - Appeal stands disposed of: HCAdani Port to develop port in PhilippinesUS Nurse convicted of killing 17 patients - 700 yrs of jail-term awarded
 
Cus - Decision of adjudicating authority is an apology of an Order and is not speaking Order - AA has not even touched upon Valuation Rules, which provide legal basis of arriving at correct AV - Revenue's appeal rejected: CESTAT

By TIOL News Service

MUMBAI, SEPT 25, 2015: THIS is a Revenue appeal against the order passed by the Commissioner (A).

The respondent imports goods from their related person M/s. Lenze Drive System GMBH, Germany. They also import goods from subsidiaries of the Principal located worldwide. A price-list exists at which the goods are supplied by the related supplier to the importers after giving suitable discount. The suppliers also supply the goods to other unrelated customers in India from whom they charge higher prices than the price in the Global Price-list by 10% to 30%.

Revenue built its case around a mail dt. 21.7.2006 to the respondent saying that "all drives, electronic or mechanical shall be supplied as per price-list with 50% discount".

The contention of respondents is that the difference between the prices charged to third party unrelated buyers and the prices at which they received the goods is paid to them by their Principal as a commission and this is for the "after sale" issues such as warranty period servicing, repairing, and replacement of parts.

The adjudicating authority in his order after referring to statements submitted by the importer observed that the price variation between the prices for importer and unrelated buyers is ranging up to 55%. Inasmuch as the price is not uniform to all buyers, therefore, the price is influenced by the relationship between the buyer and the seller, he held. Accordingly, he rejected the declared invoice value and directed the assessing group to enhance the same to the value at which contemporaneous identical goods are imported by unrelated buyer.

The Commissioner (Appeals) set aside the adjudication order and, therefore, Revenue is in appeal.

The AR 'vehemently' stated that the discount of 55% is not a normal discount.

The Bench after considering the submissions observed -

+ On facts, we find the order of the adjudicating authority woefully inadequate. The Annexure 3 referred clearly indicates that the difference in prices for the respondent and independent buyers is much less than 55% for most of the products. It is not at all brought forth in the adjudication order as to how the verification is taken as 55% uniformly. In fact, the decision of the adjudicating authority is an apology of an Order and is not a speaking Order. The Commissioner (Appeals) has also noted this fact that the invoices shown by the appellant during the hearing do not indicate that the difference in price is 55% uniformly. In majority of sales, the price to unrelated buyer was higher by 5.5% to 7.5%.

+ It is a well known commercial practice that the related buyer is given commission in respect of supplies by the supplier abroad to unrelated buyers in India. The Sales Promotion Agreement also provides for this commission. And this manner of grant of commission is upheld in various judicial pronouncements.

+ We agree with the finding of the Commissioner (Appeals) that the difference in commercial levels, quantity levels, cost incurred by the seller (in this case respondent) have to be considered while examining the influence on price by the relationship between the supplier and the importer. Therefore, even if similar goods sold to the unrelated buyer are taken as the basis of value of impugned goods in terms of Valuation Rules 4 & 5, adjustments have to be made on account of such factors as stated in proviso to Rule 3 (3) (b) of the Valuation Rules. In any case, the adjudicating authority simply considered the difference in price, which he states wrongly to be 55%, without examining the reasons for the price difference in proper prospective. He has failed to proceed legally to determine the value by sequentially following the Valuation Rules. In fact, he has not even touched upon the Valuation Rules, which provide the legal basis of arriving at the correct assessable value. Nor do the grounds of appeal appreciate the situation correctly in these terms.

Noting that the case laws relied upon by the AR do not apply to the facts of the present case, the CESTAT held that there was no reason to reject the impugned order of Commissioner(A).

In fine, the Revenue appeal was dismissed.

(See 2015-TIOL-2029-CESTAT-MUM)


POST YOUR COMMENTS
   

TIOL Tube Latest

Shri N K Singh, recipient of TIOL FISCAL HERITAGE AWARD 2023, delivering his acceptance speech at Fiscal Awards event held on April 6, 2024 at Taj Mahal Hotel, New Delhi.


Shri Ram Nath Kovind, Hon'ble 14th President of India, addressing the gathering at TIOL Special Awards event.