Custom, Excise & Service Tax Tribunal
M/S.Dott. Ing. Scandura Calibration & ... vs Commissioner Of Customs, Chennai on 7 September, 2011
IN THE CUSTOMS, EXCISE AND SERVICE TAX APPELLATE TRIBUNAL
SOUTH ZONAL BENCH AT CHENNAI
Appeal No.C/358/2004
[Arising out of Order-in-Appeal No.C.Cus.165/2004 dated 27.2.2004 passed by the Commissioner of Customs [Appeals], Chennai]
For approval and signature:
Honble Ms. JYOTI BALASUNDARAM, Vice-President
Honble Dr. CHITTARANJAN SATAPATHY, Technical Member
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 the Members wish to see the fair copy of
the Order? :
4. Whether Order is to be circulated to the Departmental
Authorities? :
M/s.Dott. Ing. Scandura Calibration & Instrumentation (India) Pvt. Ltd.
Appellant/s
Versus
Commissioner of Customs, Chennai
Respondent/s
Appearance :
Shri T.Ramesh, Advocate Shri Parmod Kumar, Jt.Commr. (A.R) For the Appellant/s For the Respondent/s CORAM:
Honble Ms. Jyoti Balasundaram, Vice-President Honble Dr. Chittaranjan Satapathy, Technical Member Date of hearing : 7.9.2011 Date of decision : 7.9.2011 Final Order No.____________ Per Jyoti Balasundaram We have heard both sides on the appeal against the order of the Commissioner of Customs (Appeals) enhancing the level of price list price for unrelated buyer minus adjustment of 5% for commercial level difference.
2. The assessee herein is a 100% subsidiary of Dott.Ing.Scandura & FEM S.r.l. Milano, Italy (manufacturers of various instruments) who has appointed the assessee as exclusive agent for India. As per term 6 of the Agency Agreement, normal sales transactions shall be free of any discount but on a job to job basis special cases may be considered and in such cases, a discount not exceeding 20% can be given and in such cases 50% of the granted discount will be deducted from the agents commission. Thus when the goods are supplied without discount on price list to third party customers, the agent gets commission which is remitted to him and in case a discount is given, the agent gets a different commission. Both the authorities below have held that the importer and the supplier are related to each other. The importer / assessee is 100% subsidiary of the supplier and this finding is not disputed by the importer. As the seller settles the prices differently when it sells to third party customers as compared when it sells to the related buyer, declared value cannot be accepted in view of proviso (h) to Rule 4 (2) of the Customs Valuation Rules, 1988.
3. Unlike those cases where discount is available to agents customer, no commission is available to agent when goods are imported by the agent working as distributor. The agent is given discount because he does not get commission. This type of arrangement is not available for commercial transactions involving independent buyers. Thus the value in such cases has rightly been determined by comparing it with values charged to independent buyer after giving due considerations for difference in quantity and commercial available. There is no error in the order of the Commissioner (Appeals) giving adjustment for difference in commercial level to the extent of 5% as the third party imports are at actual user level whereas goods imported by the subsidiary are at distributor level; both related importer and the independent importers are entitled to a discount; the discount to independent importer is available only in case of competition, new customers etc. whereas discount available to related buyer is without any basis, and even these discounts available to independent buyer are not allowable. In the case of sale to unrelated importers, the discounts available range from 0 to 20% whereas that available to related buyer is in the range of 25% to 35%. This is the reason why it has been held by the Commissioner (Appeals) that the total discount available to related buyer is in excess of the price lists price charged to unrelated buyer, which cannot be allowed. There is no need for further adjustment as when the related buyer acts as an agent, he is compensated in the form of commission paid by the supplier for various services rendered, and if the discount difference minus the adjustment is disallowed, then value charged to related buyer gets enhanced to the extent of the excess discount difference minus the adjustment.
4. The decision of the Apex Court in Coromandel Fertilisers Ltd. Vs Union of India and Others [1984 (17) E.L.T. 607(S.C.)], relied upon by the assessees, is not applicable in the context of the present case as the agency commission received by the appellants is in the nature of a trade discount received in the capacity of an exclusive agent of the holding company which is not permissible as per Rule 4(2) of the Customs Valuation Rules, 1988.
4.1 The decision of the Apex Court in the case of M/s.Eicher Tractors is also distinguishable as, in the present case, discounts were given in addition to what is normally given and the importer has not demonstrated that it is a distress sale and further, the terms of the sale are already decided as per the agreements.
4.2 The Apex Court judgment in M/s.Mirah Exports Pvt. Ltd. Vs Collector of Customs [1998 (98) E.L.T.3 (S.C.)] cited by the appellants is not applicable, as the importer herein is the exclusive agent of the holding company and there are no sales to independent buyers by the overseas supplier without involvement of the appellants where similar levels of discounts have been offered.
5. In the light of the above discussion, we see no reason to interfere with the impugned order and, accordingly, uphold the same and reject the appeal.
(Operative part of the order was pronounced
in open court on 7.9.2011)
(Dr. CHITTARANJAN SATAPATHY) (JYOTI BALASUNDARAM)
TECHNICAL MEMBER VICE-PRESIDENT
Gs
21-09-2011
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